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…and depletes
local leadership from the community. Study finds Wal-Mart
contributes to poverty
St. Louis Business
Journal - 7:02 PM CDT Wednesday
A study focused on the effects of Wal-Mart stores on poverty
rates found that an estimated 20,000 families nationwide have fallen below the official
poverty line as a result of the chain's expansion. Wal-Mart Stores Inc., based in Bentonville, Ark., ranked No.
5 on the St. Louis Business Journal's most recent list of the
area's largest employers. As of Dec. 31, Wal-Mart employed 13,005 people in the
St. Louis metro area. The study -- Wal-Mart and County-Wide Poverty -- written by
Stephan Goetz, a professor of agricultural and regional economics at
Pennsylvania State University, and Hema Swaminathan for the International
Center for Research on Women, was published in the latest issue of Social
Science Quarterly. Authors Goetz and Swaminathan write that the presence of
Wal-Mart was "unequivocally associated" with smaller reductions in
family-poverty rates in counties nationwide during the 1990s relative to places
that had no stores. During the last decade, dependence on the food stamp
program nationwide increased by 8%, while in counties with Wal-Mart stores the
increase was almost twice as large at 15.3%, according to the study. Although Wal-Mart
employs many people living in its communities, for most, the hours worked and
the wages paid do not help these families transition out of poverty, the study
said. The study, which sought to identify the independent effect
of Wal-Mart stores on changes in U.S. family-poverty rates at the county level,
found that one of the greatest effects of a Wal-Mart opening is the closing of
mom-and-pop-type operations. The authors state in the study that "by displacing the
local class of entrepreneurs, the Wal-Mart chain also destroys local leadership
capacity."
Poverty rates will rise if retail workers displaced from
existing mom-and pop-type operations work for Wal-Mart at lower wages because
they have no alternatives, all else equal, according to the study. The demise of mom-and-pop stores leads to the closing of
local businesses that supplied those stores, such as wholesalers, transporters,
logistics providers, accountants, lawyers and others. Many of these are
higher-paying jobs. The study concludes that it is likely that these more
highly-educated individuals depart from the rural community in pursuit of
better opportunities elsewhere, contributing to the rural-to-urban exodus over the last
decade,
leaving behind those with fewer opportunities and raising the poverty rate by reducing the number of nonpoor
households in the denominator. Wal-Mart is estimated to employ no more than 2% of the
average county's work force. The share of Wal-Mart's employment in total county
retail jobs is substantially greater than only 2%. In addition, the Wal-Mart
jobs may be part time as opposed to full time, leading to lower family incomes,
all else equal, the study said. A spokesperson for Wal-Mart was unavailable to comment for
this story. http://www.bizjournals.com/stlouis/stories/2006/05/15/daily29.html?f=et82&hbx=e_du |
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