Monday, November 21, 2005

Wal-mart in Saranac Lake - Again?

Rumors are rampant about Wal-mart looking to locate in Saranac Lake. They were thwarted a few years ago when someone bought a parcel of property out from under the company. Although we only have rumors, I'm sure someone in the Village government could shed some light on the situation, but they are keeping mum. I guess they are following the G. W. Bush school of governing.

What are some of the effects of Wal-mart locating in a small rural community? That question was addressed over 15 years ago by Dr. Kenneth Stone, a Professor of Economics and Extension Economist at Iowa State University. Some conclusions about the economic effects:

Positive Effects
General mechandising stores
Eating and drinking establishments
Home furnishing stores
Total sales

Negative Effects
Grocery stores
Building materials
Specialty stores (hardware, toy, books, music, etc.)
Apparel stores
Services (not understood why)

Effect on outlying towns
"On average, small towns surrounding Wal-Mart towns (20 mile radius) suffered greater losses of retail sales than similar size towns elsewhere in the state. The average first year per capita loss of sales for the nearby towns was 6.3% when compared with 2.0% for all other towns of a similar size population".

Morality of Wal-mart as a company
Wal-mart knows its customers though. That's why they need to have prices cut to the bone in order to keep sales high. Wal-mart caters to the poor. Primarily women struggling to make ends meet. An economist at the U. of Conn., Andrew Franklin, has shown that Wal-mart operates primarily in poor and working class communities. To keep sales high, Wal-mart has got to keep labor costs low period. Some Wal-marts provide employees with instructions and forms on how to apply for food stamps and healthcare because they know their employees cannot live on what they are being paid. At any one time Wal-mart has 8000+ ongoing lawsuits (mostly from their employees) and currently is involved in 33 class action suits. Maybe someone can explain why a company that employs 1 out of every 100 Americans, has sales of over 285 billion dollars and a gross profit margin of almost 24% cannot provide for its employees.

Hidden costs of doing business with Wal-mart in California
Reliance by Wal-mart workers on public assistance costs $86 million annually.
Families of Wal-mart workers utilize ~40% more in taxpayer-funded health care than the average for families of all large retail employees. If other large retailers adopted Wal-mart's wage and benefits standards it would cost CA taxpayers $410 million in public assistance annually. (From Dr. A. Dube and Ken Jacobs, UC Berkeley, 2004).

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