Thursday, February 08, 2007

FWIW

As anyone in Austin knows, Wal-Mart has planned an unusually big box on the edge of a residential neighborhood, and this has generated considerable controversy. (We call this litotes.) Being a researcher, I wanted to see whether assertions made by critics of the current plan had something significant to back them up. For me, an article in a peer-reviewed journal is the gold standard, so that's what I was looking for. I also looked at web sources, studies cited by various sides, and arguments made by advocates. I only spent a few hours on the task, so this is my highly personal take on just a few hour perusal of that research. YMMV.

There are two major issues about the current Wal-Mart plan: traffic, more general impact on neighborhood.

The first is traffic, and that one I stopped researching pretty quickly, as everything I looked at suggested that the ANA newsletter has it dead to rights. I didn't come across anything that caused me to doubt that analysis, and much to support it.

The plan will not result in 900 trucks a day unloading, nor will it result in hundreds of 18 wheelers on Mo-Pac, but, assuming the same number of cars as other Wal-Marts, it is likely to result in approximately 20,000 cars a day visiting that location. (Since this is an unusually big location, I wasn't clear if that number is conservative--my hunch is that people should assume that Wal-Mart expects the number of cars for which they are providing parking.)

The current plan is inadequate in regard to public transportation (for which, I have heard anecdotally, Wal-Mart is notorious). The (already barely adequate) roads in the immediate vicinity will almost certainly be overwhelmed, so there will, necessarily, be some kind of spillover effect on other potentially arterial roads like Foster, Shoal Creek, Cullen, but it's hard to say just how bad that will be.

The second issue is, generally, effect on the neighborhood. Within that general category, there have been three main accusations: that crime would increase; that small businesses would be hurt; that Austin would have to pick up a tab. My research suggests the first claim is neither verified nor falsified (but my brief research has made me pretty skeptical); the second is true (admitted even by defenders of Wal-Mart); and the third is supported by very good research (and not refuted by defenders of Wal-Mart).

Here's the science, as they say:

A study of crime at Wal-Mart v. Target (as reported in news outlets): www.walmartcrimereport.com/report.pdf
See also: http://www.wakeupwalmart.com/press/20060511.html

Personally, I wasn't wild about this study for several reasons. It depends upon news reports (rather than crime stats compiled by the Feds, for instance), and does not control for fairly important variables (like crime in the city being studied). It was better than the only other thing I found on the topic, though, which was an undergraduate thesis. I couldn't find any articles in refereed (scholarly) journals on the issue of Wal-Mart and crime (but maybe I wasn't using the right search terms or databases). I didn't expect to find studies of Wal-Mart specifically, but I did think there would be studies of the impact of 24 hour stores and crime.

I did notice that several of the anti-Wal-Mart sites did not claim an increase in crime, so I'm not sure what to make of that. (My intuition is that, if they could make an even plausible case for an increase, they would, but there are various reasons I might be wrong about that.)

General Impact of Wal-Mart on Communities:

The wikipedia entry "Criticism of Wal-Mart," especially the section "Economic Impact" summarizes the issues. It has some good sources, although very few of the scholarly studies. Still and all, it seemed to me pretty good.

If you have access to CQ Researcher, the relevant report is "Big Box Stores." It presents both sides of the issue very well. I highly recommend it. (If you have access to the UT Library databases, you can find it under "Databases and Indexes" and then under "CQ Researcher.")

A frequently cited study is:

Dube, Arindrajit and Ken Jacobs. "Hidden Cost Of Wal-Mart Jobs: Use of Safety Net Programs by Wal-Mart Workers in California" also at: http://www.dsausa.org/lowwage/walmart/2004/walmart%20study.html

This study concludes that Wal-Mart pays very low wages and "At these low-wages, many Wal-Mart workers rely on public safety net programs— such as food stamps, Medicare, and subsidized housing—to make ends meet. The presence of Wal-Mart stores in California thus creates a hidden cost to the state’s taxpayers."

Although I wasn't wild about the fact that this was not published in a peer-reviewed journal, I couldn't find any obvious faults in the methodology. (But, I didn't recalculate their numbers, and statistical analysis is not my long suit.) Perhaps more important, other studies come to same conclusions. Probably most important, the most damning evidence on that point is from Wal-Mart itself--look at the figures that Wal-Mart releases about their pay and number of employees who have benefits, and then try to figure out how their employees are supporting a family. Even Wal-Mart does not claim that they provide a wage that could support a family, and they're open about being opposed to providing benefits for employees. (The defense is that low wages and no benefits are offset by low prices, but, until doctors and pharmacies start accepting low prices as payment, that doesn't really answer the question.)

Stephan J. Goetz, Hema Swaminathan, "Wal-Mart and County-Wide Poverty" SOCIAL SCIENCE QUARTERLY, Volume 87, Number 2, June 2006.

Stephan Goetz is co-author of two of the most thorough articles on the topic. This one concludes that Wal-Mart is not always bad, but, on the whole:

"After carefully and comprehensively accounting for other local determinants of changes in poverty, we find that the presence of Wal-Mart was unequivocally associated with smaller reductions in family-poverty rates in U.S. counties during the 1990s relative to places that had no stores. This was true not only in terms of existing stores in a county in 1987, but also an independent outcome of new stores built between 1987 and 1998. The question of whether the cost of relatively higher poverty in a county is offset by the benefits of lower prices and wider choices available to consumers associated with a Wal-Mart store cannot be answered here. However, if Wal-Mart does contribute to a higher poverty rate, then it is not bearing the full economic and social costs of its business practices. Instead, Wal-Mart transfers income from the working poor and from taxpayers, though welfare programs directed at the poor, to stockholders and the heirs of the Wal-Mart fortune, as well as to consumers. These transfers are in addition to the public infrastructure subsidies often provided by local communities. Regardless of the distributional effects, the empirical evidence shows that the Wal-Mart business model extracts cumulative rents that exceed those earned by owners of other corporations, including Microsoft and Home Depot. In conclusion, the costs to communities in terms of labor displacement and higher poverty need to be weighed against the benefits of lower prices and greater shopping convenience. Similarly, once local businesses have been driven out, the possibility of monopolies or oligopolies emerging in retailing (both on the input and the output side) needs to be considered carefully by public policymakers."

(Both of those studies are available at http://www.wakeupwalmart.com/research/
although they were not performed by that organization)

Personally, the article I recommend most is:

Irwin, Elena G. and Jill Clark. "Wall Street vs. Main Street: What are the Benefits and Costs of Wal-Mart to Local Communities?" Choices 2nd Quarter 2006 (21:2): 117-122. (available through http://www.choicesmagazine.org).

Conclusion:
"Consumers have benefited from Wal-Mart's tremendous cost efficiencies in the form of greatly reduced retail prices, which generate substantial savings to U.S. customers annually. However, evidence also shows that Wal-Mart does not bear the full economic and social costs of its business practices. As a result, the benefits and costs are unevenly distributed across individuals. Those who are employed in non-retail sectors of the economy reap substantial benefits from lower prices and absorb some of the potential costs if tax revenues are needed to cover increased social costs. Those employed in the retail sector absorb the additional cost of lower wages, fewer benefits and a potentially shrinking employment base" (119).


My take on the whole issue

Having looked over the various arguments, I've come to these conclusions (again, I emphasize, YMMV):

1) the opening of a Wal-Mart means the closing of a significant number of small businesses (even the defenders of Wal-Mart grant this, but argue that it doesn't really matter).
2) if those businesses are supporting families or giving a "living wage" (that is, they provide full-time employment with benefits), then Wal-Mart replaces good jobs with bad ones.
3) Wal-Mart costs a community a lot, indirectly in terms of infrastructure (especially transportation, costs of providing the benefits that Wal-Mart intentionally ducks through keeping people to part-time employment, and so on) and often directly in terms of subsidies.
4) the community benefits to the extent that they get a lot of part-time, low-wage, no-benefit jobs and lower prices. If all of Wal-Mart's employees are married to people who have jobs with good wages and benefits, then this is a significant benefit to a community (but, as far as I can figure, iff).
5) however, those lower prices are achieved through forcing supplying businesses to shift to lower wages (and the claims of union-busting are very well-supported), so that the impact of a single Wal-Mart reaches far beyond the community in which it is located. In other words, for Wal-Mart to have an overall beneficial impact on the economy, two conditions have to prevail:
a) Wal-Mart's employees be married to people with jobs that have good wages and benefit packages, AND
b) the people working for the companies that supply Wal-Mart must be married to people with good wages and benefit packages.
5) Wal-Mart strives for a monopolistic business model, so, it's deeply opposed to the free market model of capitalism. That's a fairly important point, and it's one that's often missed. Defenders of Wal-Mart sometimes try to spin the opposition as simply coming from an anti-business contingent, but it's worth remembering that a lot of the hostility to Wal-Mart is from businesses. If you believe that capitalism is the best economic system because it fosters competition, then you have to be really troubled by Wal-Mart. That's why some of the really critical articles about Wal-Mart are in business magazines (see, for instance, http://www.fastcompany.com/magazine/77/walmart.html).
6) there isn't any really good evidence as to whether Wal-Mart increases crime, nor whether a 24-hour retailer increases crime (although I did run across quite a few scholarly pieces that argued that mixed living/retail plans do reduce crime).


This research did change my view on this whole issue. I've never been a huge supporter of Wal-Mart (I assume I've shopped there at some point, but I don't remember when), but I'd always had the attitude that, since we're in a capitalistic system, and since some people do shop at Wal-Mart, NIMBY is a perfectly valid response. The weird thing about doing this research is that it persuaded me that it's precisely from the viewpoint of capitalism that Wal-Mart is most destructive. Wal-Mart undermines the free market. Wal-Mart benefits the community only to the extent that other businesses behave better than they do--giving better wages and benefits. That means that this really is not just about whether there is a Wal-Mart within a mile of my home, or whether this Wal-Mart is 24 hour, or two story, or how much parking they have. It means that this is about whether Wal-Mart provides a living wage with benefits to its employees, and whether it allows its suppliers to do so with theirs.

19 comments:

Mike said...

"As anyone in Austin knows, Wal-Mart has planned an unusually big box on the edge of a residential neighborhood,"

Nope.

http://mdahmus.monkeysystems.com/blog/archives/000373.html

"The current plan is inadequate in regard to public transportation (for which, I have heard anecdotally, Wal-Mart is notorious)."

Hard to support. Other Wal-Mart sites (on frontage roads) supported by your neighbors are far worse for public transportation access

http://mdahmus.monkeysystems.com/blog/archives/000372.html

"The weird thing about doing this research is that it persuaded me that it's precisely from the viewpoint of capitalism that Wal-Mart is most destructive."

Yup.

http://mdahmus.monkeysystems.com/blog/archives/000376.html

Mike said...

Guess I should have turned those into clickable links. Here they are, again:

It's not "on the edge of a residential neighborhood" (your claim is more supportable than "in the middle of a residential neighborhood" but still so generous that it would include most other malls in the area)

Public transportation vs. frontage roads (The Northcross site is actually about as good as it gets for public transportation this far from downtown)

Mike said...

Sorry for the multiple comments; it's way too early in the morning for me to hit the Publish button so fast.

Why I also hate Wal-Mart

and

transit map of the area - I have changed buses several times at Northcross (while dealing with a flat tire and no spare tube on the bike). Northcross has the best transit access of any major retail center outside downtown. Highland is close, except there aren't any lines the caliber of the #3 running through it.

Hugh said...

Thank you Chester. I strongly recommend people do their own research, but for a lot of us there just isn't enough time. It is nice to hear an objective opinion.

In response to the "edge of a neighborhood" argument Mike presents, my big question concerning road congestion is....
If traffic fails on the major arterials, which my research indicates it will, the ONLY place the traffic can go is through residential areas., hence the "in or near a residential neighborhood" argument

This is the reason people support putting these stores on highways. It allows the builder to incorporate feeders and high volume entrances into their design plans and on their own property. It makes much more sense to have a magnet store that attracts tens of thousands of patrons a day pulling people off a 65 mph highway directly into their parking lot than have those same thousands driving 35 MPH through clogged city streets, or trying to get their many bags of groceries home on a bus.

Mike said...

Hugh, the mall used to have a lot of traffic; the arterials in the area are UNDERutilized compared to most major roads in central Austin.

And, again, putting big retail or employment destinations on frontage roads means people have to drive there - even if they WANT to take the bus - because it's just impossible to deliver good transit service on frontage roads.

Brillig said...

Can you hyperlink some of the jargon? What, for example, is NIMBY?

Hugh said...

Not going to start a rant, I'm going to leave this one last note and invite those who have time to do their own research.

Concerning "Used to create traffic" vs. "Will create traffic"

Northcross created traffic when the neighborhood was the northern edge of town. The fact that the property hasn't created this traffic for years doesn't release the new owners from their obligation to improve the infrastructure they are affecting. According to the TIA submitted by Lincoln:
http://www.ci.austin.tx.us/news/2006/downloads/attach3_tia_memo.pdf
on page 4 they label the intersection of Burnet Road and Anderson as currently a "D" on a scale from A to F. the only grade it could get worse is "failing".

That seems to me to indicate overutilization, not underutilization.

This is the arterial intersection Northcross is closest to.

What this also indicates to me, is that this Mall, as anything other than a mixed use destination, might be a bad investment. People simply can't get in and out of it very quickly if 20,000 or so people are trying to go there a day. Office space and apartments to dilute the traffic impact of a shopping center makes sense to me. *IF* Northcross is a bad investment in terms of being a destination for huge numbers of people, that is nobody's fault but the investor.

As for the suggestion that people will HAVE to drive if it's on a frontage road. I am all for alternative transportation. However, I'm under the impression that people don't go to a super Wal-Mart to buy just a bagel or the evenings dinner. Generally people go to a Wal-Mart to get everything they need for the week along with clothes and anything else they are short of. Also, the Wal-Mart looks like it's a long walk to the bus stop. How can someone walk or take the bus with 10 or even 5 bags of groceries? Need I mention the fact that if only 5 percent of 20,000 visitors a day were to take the bus, and then use a shopping cart to get the the groceries to the bus, that would make 1000 shopping carts a day being left at the bus stop.
I would argue the huge majority of people have to drive already.

I'm all about bringing realistic alternatives to the table regarding transportation to Northcross. What I don't see is a Super Wal-Mart encouraging that.

Anyway that's it for me here.

Jammer said...

brillig

NIMBY stands for Not In My Back Yard.

Mike said...

Hugh,

Most workers could use public transportation (and that would go a long ways to solving some of the "unlivable wage" arguments). A few customers could. In other cities, people do, in fact, shop via public transportation all the time.

The fact that they don't here is an indictment of how hard it is to get where you need to shop by the bus. Even so, you do see people riding the bus to the few places in town that make it feasible - such as the HEB at Hancock (#15 bus runs right through the parking lot and is heavily used, by shoppers AND employees).

Chester Burnette said...

I should have included this study: Basker, Emek. "Job Creation or Destruction? Labor Market Effects of Wal-Mart Expansion." Review of Economics and Statistics, February 2005, v. 87, iss. 1, pp. 174-83

The abstract is:

"This paper estimates the effect of Wal-Mart expansion on retail employment at the county level. Using an instrumental variables approach to correct for both measurement error in entry dates and endogeneity of the timing of entry, I find that Wal-Mart entry increases retail employment by 100 jobs in the year of entry. Half of this gain disappears over the next five years as other retail establishments exit and contract, leaving a long-run statistically significant net gain of 50 jobs. Wholesale employment declines by approximately 20 jobs due to Wal-Mart's vertical integration. No spillover effect is detected in retail sectors in which Wal-Mart does not compete directly, suggesting Wal-Mart does not create agglomeration economies in retail trade at the county level."

Chester Burnette said...

Mike, I know that you're given to hyperbole, but don't you want to rethink: "Most workers could use public transportation (and that would go a long ways to solving some of the "unlivable wage" arguments"?

Mike said...

"Mike, I know that you're given to hyperbole,"

That's not a real good way to continue a conversation either, by the way. When I want to be hyperbolic, it's obvious.

Yes, at Northcross, most workers could use public transportation(*) to get to the site, and yes, that would go a long ways to solving the "unlivable wage" issue - considering how much it costs to own and maintain a car compared to the Wal-Mart hourly wage.

(* - doesn't mean "most WILL" but "most COULD" is far better than "nearly none can", which is the state of affairs at sites located on frontage roads.)

Chester Burnette said...

Change "hyperbole" for "wishful thinking," then. You still didn't support the "long way" argument. There are two problematic assumptions you're making: first, that people could abandon their cars if they didn't need them to drive to their Wal-mart jobs. Second, that the Wal-Mart plan (not the current design at Northcross) has an adequate off-street area for public transportation.

The plan needs to have an increase in public transportation--can you show that it does? (A sincere, not a rhetorical, question--I haven't seen the plan, but have heard from people who have that it does not.)

Mike said...

You risk defining terms down to meaninglessness if you assert that the large (existing) transit-center right across from the Wal-Mart site doesn't count. If you want to be so pedantic, we can certainly go there, but I doubt it will provide much useful information to anybody.

That's what I'm referring to; the large number of buses from all over town which come through there (primarily for transfers, now, since the mall is dead). That makes this site preferable to practically any other site in the city for big-box retail; the fact that workers (and some customers) CAN come by the bus in a practical manner is a huge win. This spot and Highland Mall are the next two right behind downtown on this scale, and I don't think we're going to see Wal-Mart downtown (although I was excited about the eventually-shelved plans for an Urban Target at 6th/Lamar years ago; Wal-Mart is a long ways away from being ready to deal with those sites). So again, it may not be the best possible site in the world, but it's at least #1 or #2 of all the possible sites in Austin.

As in other thread, I'll compare/contrast to Highland Mall's similarly situated transfer center, which is highly utilized for both transfers and local traffic - i.e. kids going to shop _and_ work at the mall.

The primary reason you don't see many Wal-Mart workers taking the bus to work today is that it's nearly impossible to do so - even when the money value of time is so low compared to so-called "choice commuters". This is directly due to the fact that it's impossible to deliver attractive transit service which must operate on frontage roads (i.e. in other big cities where big boxes are always on arterial roadways, you see much better transit penetration).

My friend and colleague DSK interviewed some people at the transfer center during the protest, by the way, and they all said they'd love to see a Wal-Mart there.

Chester Burnette said...

Okay, so, indirectly, you're granting that there is not a transit center in the mall.
I do know a teeny tiny bit about argumentation, and I do know bad faith argumentation when I see it. And you're engaged in it.

There are many ways in which you do this, but I will mention just three. First, you keep shifting the stasis. Second, when proven wrong, you simply drop the point, without acknowledging error. (For instance, you were wrong to say "Nope" to my initial comment, but you've never acknowledged that--nor have you acknowledged the various points that Hugh has made.) Third, and most important, you hold others to different standards from what you hold yourself.

So, for instance, in your blog, on the discussion of the issue of neighborhood, you say, "To the west, you have to pass Mopac before you find any residential development."

Wow. I don't live in a residence. I wonder what I and my neighbors live in. Looks residential to me. Will you correct your statement? Will you acknowledge your error? I'm not going to hold my breath.

I love a good argument, but, to be blunt, an argument with you is not a good one. I don't like bile. And there is no way to argue with someone like you without looking bilious myself--either I have to dispute each of your (often over-stated and slightly inaccurate and non-trivially fallacious) assertions and arguments, or I look like I'm granting them. If I dispute them, I look like a petty, sniping jerk. Antagonistic argument, by leaving the interlocutors few options, makes all parties look equally bad. (That one person is actually behaving much worse than the other gets lost on the viewers.) If I don't, it looks like I grant them. So, I'm not playing.

Some day I'll write a post about the very real damage that people like you do to public argument. The short version is: "Don't wrestle with a pig. You get covered in mud, and the pig likes it."

DSK said...

Chester,
I believe you missed M1EKs point. I don't think he was asserting that there was a transit center within Lincoln's property. He is challenging your preceeding implication that (if I may paraphrase), in order to have adequate, non-disruptive mass transit access to the mall, the transit center must be on Lincoln's property. I challenge that implication as well.
M1EK's point was that the present location of the transfer center is actually quite adequate, and I agree with him.
Let's assume good faith here and concentrate on clarifying data and exploring assertions that are in contention. I hope you'll reread M1EK's position with an open mind.

Mike said...

Your entire last comment is so disrespectful and so obnoxious that I'd have to try my hardest to match half the bile contained within. The lack of introspection and self-awareness is truly breathtaking.

To address just one small piece:

"So, for instance, in your blog, on the discussion of the issue of neighborhood, you say, "To the west, you have to pass Mopac before you find any residential development.""

YES, if you go directly west from Northcross Mall, as the crow files, you do in fact penetrate single-family residential use on Allandale. My error. I should have made it clear I was referring to the tilted axis of Austin's arterial roadways, i.e., a parallel line to Anderson Lane. And even then, you slice a small portion of single-family residential by doing so.

And to address one of your other complaints - the reason I don't include an apartment complex or two is because your neighborhood themselves do not - they've made it clear they care about single-family residential use.

Bad faith buys bad faith. I started this attempt to converse with you in good faith, and you come back with crap about wrestling with pigs. No more.

eric said...

"My friend and colleague DSK interviewed some people at the transfer center during the protest, by the way, and they all said they'd love to see a Wal-Mart there."

Well, duh. They're just passing through the area so they could care less how a Wal-Mart impacts the area. They'd finally have something to do while waiting 30 minutes for their bus...

Chester Burnette said...

My nine year old son insists that we respond to this:

"YES, if you go directly west from Northcross Mall, as the crow files, you do in fact penetrate single-family residential use on Allandale. My error. I should have made it clear I was referring to the tilted axis of Austin's arterial roadways, i.e., a parallel line to Anderson Lane. And even then, you slice a small portion of single-family residential by doing so."

Okay, so you should have said that, when you said, straight, I meant, not straight. And when I said "none" I meant some. And when I said "residences" I meant something else.

(This is one clue that someone is engaged in bad faith argumentation: when I say one thing, I mean the other thing that makes my argument work.)

But, let's grant your odd geometry. There are still residences. For your argument to work "residence" does not mean "places where people reside" but "um....something else...rilly." And "small portion" means "um....places where people live...but that don't count."

Look, Mike, you were wrong. You're also wrong about what's to the south of the mall. Wrong. Deal with it.

My son--the one who insisted I post this--had a much longer post suggested, but it came down to "Pbbbththth" and "get a dictionary."