According to Wal-Mart's critics, the economic harm to small businesses caused by the world's largest retailer should be obvious to even casual observers. On the other hand, those eager to offer tax incentives and development variances to attract Wal-Mart to their communities view the economic benefits as similarly self-evident.
But, apparently, neither argument is as clear-cut as proponents would like us to believe, and last week's contribution to the research by the Federal Reserve Bank of Minneapolis gave little ammunition to either Wal-Mart's friends or foes in the Midwest.
The study, which looked at 89 non-metro counties in the six-state region, showed scant evidence that there is a significant loss of small business when a Wal-Mart comes to town. Median earnings from retail jobs declined in areas with a Wal-Mart, but declined less than in areas without one. Rates of poverty declined less in counties with a Wal-Mart than in counties without one. However, Wal-Mart counties saw higher increases in employment and population.
The study does not show that the introduction of a Wal-Mart caused any of these outcomes, only that they are correlated. The complexity of determining such a causation is one of the reasons that the company remains so controversial.
The study does not address the more politically charged criticisms of the company's labor and product sourcing practices. Nor does it cover the company's already well-documented influence on lowering prices across the retail industry, much to the benefit of lower-income shoppers.
Other studies on the economic impact of Wal-Mart on local communities are similarly mixed, with most either inconclusive or finding only mild impacts, positive or negative. However, if the impact of Wal-Mart was as dramatic as critics and proponents tend to argue, it seems like it would show up more convincingly in the data.
Wal-Mart undoubtedly hurts specific small businesses, but it appears that other businesses crop up to replace them. Similarly, specific individuals lose their jobs when a Wal-Mart opens near them, and it appears that many of those workers find other jobs or others take their place in the workforce at similar wages. In any case, those churns occur with the arrival of any new employer and are characteristics of a healthy economy. The appropriate public policy reaction should be to help communities cope with the changes in the economy, as opposed to standing in the way of change.
It seems that, despite its size, Wal-Mart may be much more a reflection of the broader economy, rather than the economy reflecting Wal-Mart. If we didn't have Wal-Mart to kick around or to throw economic development dollars at, we would find some other mega-retailer to take its place.