Politics from the Palouse to Puget Sound

Thursday, August 24, 2006

"UI economist tries to dispel Wal-Mart myths"

Coverage of the Moscow Chamber of Commerce luncheon from today's Daily News:
Peterson: Supercenter would be a benefit to Moscow’s economy

Steven Peterson says a proposed Wal-Mart Supercenter may not be a sign of the apocalypse, as many people seem to believe.

The University of Idaho economist was hired by the Moscow Chamber of Commerce to research Wal-Mart and its potential economic effects on the region. He presented the results of his three-month study during a crowded Chamber of Commerce luncheon at the Best Western University Inn on Wednesday.

“There has been so much misinformation swirling around the issue,” Peterson said. “Everyone has an opinion about Wal-Mart.”

Peterson tried to dispel a variety of myths about the large-scale retail business, addressing wages, taxes, benefits, competition, water issues and Moscow’s economy.

The Moscow Wal-Mart pays about 24 percent more than the average retail trade wage, at $22,006 or $10.58 an hour, and its average wage is higher than the local average supermarket wage of $19,040 per year, Peterson told attendees.

Peterson said the Moscow Wal-Mart pays higher than the average supermarket wage of all 50 states.

At $10.58 an hour, the wages are higher than the $10.25 per hour living wage ordinance passed by the Moscow City Council on Tuesday night.

Despite rumored bad working conditions at Wal-Mart, Peterson said people still seem to be flocking to the store for employment.

When Lewiston’s Wal-Mart opened in 1993, 3,500 people applied for 270 positions. Figures for the Moscow store weren’t available, but Peterson estimated interest to be about the same.

Peterson said people often receive incorrect information about Wal-Mart for a variety of reasons. When the average wage is compared with that of Microsoft or General Motors employees, or the facts are misunderstood or distorted, people end up with wrong information.

He said 75 percent of Wal-Mart employees are covered by the company’s health plan, and the 25 percent who aren’t are covered by their spouse’s insurance.

Peterson said instead of hurting small businesses on Main Street, a Wal-Mart Supercenter might have the opposite effect.

In addition to the goods Wal-Mart normally carries, a Supercenter offers groceries, tires and gas.

“Shoppers vote with their feet,” he said. “If big retailers aren’t here, they will travel to where they are.”

In response to Moscow’s debate over whether a stores like Wal-Mart suck up the limited water supply, Peterson said a Wal-Mart Supercenter uses less water than people might think.

Moscow’s Wal-Mart is responsible for about .38 percent of Moscow’s total water usage, he said.

He said a high-tech firm with 64 employees would use more water than a Wal-Mart Supercenter.

Those in attendance questioned some of Peterson’s findings.

“There is a lot of good information here, but did you find out anything negative about Wal-Mart?” asked Bill Parks, owner of Northwest River Supplies.

Parks said he supported development of the Supercenter on the west side to draw more business from Pullman.

Peterson said Wal-Mart spent $500,000 trying to locate on the Thompson property before the Council rejected its application.

“I think Wal-Mart made the right decision (to withdraw),” he said. “They would have had a hard time locating here.”

Moscow resident Janice Hess has seen instances on the East Coast where Wal-Mart has been predatory and shut down local businesses, but she thinks Moscow’s environment is different.

“It’s a different market here,” she said. “We don’t see busts or booms.”

She said even though she doesn’t like Wal-Mart, it’s hard for Moscow to live without it.

Moscow resident David Hall said Peterson’s report seemed pretty one-sided.

“He seemed to question why would we want to keep business from coming in; if a business fails, then we are left with a dark store and disruptions,” he said.
A little fact checking:

  • "Those in attendance questioned some of Peterson’s findings." Shouldn't that have been "a few in attendance" instead? What slanted and biased reporting. The vast majority of the audience were obviously in favor of Wal-Mart. Drawhorn conveniently forgot to mention the thunderous applause Peterson received when he said it is not government's place to make business decisions, but the market's. I watched Drawhorn interview people afterwards. She singled out the few opponents in attendance.

  • "Parks said he supported development of the Supercenter on the west side to draw more business from Pullman." Oh really? Then why did the following appear in a May 11 Daily News story:
    Bill Parks, owner of Northwest River Supply, said a large general purpose retail store could suck the life out of businesses not directly in competition. “A person wakes up with a certain number of dollars every morning, but if they buy a raft at Northwest River Supply, they won’t have that money to spend elsewhere, like the bike shop in town.”
    That sure doesn't sound like "support" of Wal-Mart to me.

  • “They would have had a hard time locating here.” Let;s finish what Peterson actually said "...with processes currently in place like the big-box ordinance."
  • "Moscow resident Janice Hess has seen instances on the East Coast where Wal-Mart has been predatory and shut down local businesses..." Alrighty, name one then. No Wal-Mart opponent can ever seem to give specifics. And why reporters see fit to report these unsubstantiated allegations is beyond me.

  • "Moscow resident David Hall said Peterson’s report seemed pretty one-sided." I'm sure it did to him. In a July 1st letter to the editor, Hall wrote:
    Many of our local businesses have survived the large out-of-towners. But how many times must Moscow push them into the ring against outside money and morals?
    Like I said, there is no converting the jihadis. If a study is not completely negative about Wal-Mart, they will dismiss it and attack it.
  • "...if a business fails, then we are left with a dark store and disruptions..."Name a town where Wal-Mart has failed and left a dark store. Moscow only had one "dark store", the old Tidyman's, and it just got purchased by....Bill Parks. Why then are "dark stores" such a concern? Because opponents know that Wal-Mart would close up its existing store if it built a new Supercenter in Moscow. By putting big penalties on Wal-Mart if they did that, that's yet another strategem to keep Wal-Mart out.
  • Why no mention from Drawhorn that none of the Moscow City Council members who voted against the Thompson rezone, nor Mayor Chaney, were present at the luncheon? Were they afraid it would somehow ruin their elitist, preconceived notions of Wal-Mart as Hell on Earth? Would they have possibly felt guilty over their vote? If you're a liberal, the truth is to be avoided at all costs.
  • How could Home Depot's exit from the Moscow scene not have been reported by Drawhorn? That competely proves Peterson's point about how Moscow's policies will have a bad economic impact. Drawhorn totally missed the point of Peterson's presentation. "Moscow at a Tipping Point" wasn't about just Wal-Mart, it was about the direction the city is headed.

    All in all, a pretty poorly written article. I wonder if we both attended the same presentation.

    Technorati Tags:
  • 5 comments:

    April E. Coggins said...

    Does anyone else think Moscow is trying to close the barn door after the horse has bolted? What difference does it make to Moscow now if every study comes to the conclusion that no retail store in their right mind would locate in Moscow? It's a done deal. The bed was made when Moscow enacted the big box ordinance and was sealed when they elected their current government.
    No one stepped forward to throw the switch to avoid this train wreck. Something tells me that everyone will stand around and wonder what happened.

    Sam Dixon said...

    I believe your "Dark Store" post does not apply to Wal-Mart as much as you think. Wal-Mart has a policy that they will not sell old stores to another big-box competitor or similar retailer. Beyond big-box stores not many companies need that much space, especially in Moscow. Sometimes Wal-Mart will use their dark stores as inventory facilities if there are none nearby, however Wal-Mart already has a couple in Eastern and Central Washington, nor is Moscow an ideal hub for such an inventory facility.

    Tom Forbes said...

    Sorry Sam, but you have bought into more Wal-Mart myths. Wal-Mart has a whole division of 2,500 employees, called Wal-Mart Realty, devoted to disposing of old properties.

    See this link: http://www.buildings.com/Articles/detail.asp?ArticleID=2980

    Wal-Mart is the largest owner and manager of retail space in the country. It would be preposterous to believe that they would allow a property to sit vacant and lose money versus selling it to another retailer.

    The current Wal-Mart location in Moscow is so valuable, it would be snatched up right away, particularly when the Hawkins Companies development goes in across the border.

    Sam Dixon said...

    If you look in Wal-Mart Realty's Non-Binding Letter of Intent you will see their POV: "The demised premises cannot be used for a discount store, wholesale club or drug store/pharmacy."

    Interesting thought, they currently are leasing at least one store to Best Buy, who classifies as a discount store, which leads me to think they bend the rules after a store has been sitting for a few years. They also have somewhere in the neighborhood of 300 Dark Stores for sale right now, leading me to think that it takes a while to move stores, especially in smaller towns such as Moscow.

    Tom Forbes said...

    I found no such language in a Wal-Mart Realty Non-Binding Letter of Intent:

    http://www.walmartrealty.com/Buildings/Territory/0_REGIONS/EastCoast/LOISamHarper.doc

    Reading too much Crazy Al Norman can be bad for you. He just flat out makes stuff up.

    Why, if Wal-Mart will not deal with competitors, did it sell a location to Sears?:

    http://www.highbeam.com/doc/1G1:124312759/Sears+debuts+new+concept+in+Pekin,+Ill.html?refid=ency_botnm

    As far as the location in Moscow being a bad one to sell/lease, I remind you that it is located smack dab in the middle of a 400,000+ sq. ft. shopping mall, 4 baby box stores, and a proposed 750,000 sq. ft. strip mall. That, my friend, is what you can call a high traffic area; the retail heart of the Palouse.