PALOUSITICS EXCLUSIVE - Wal-Mart: What's Next? Part Three

This is Part Three of a series of articles that will explore what happens when a Wal-Mart Supercenter comes to town.

The information contained below is being made publicly available on the web for the first time.

I've always dreamed that one day the opponents of Wal-Mart in Pullman will make a factual argument to support their case, rather than resort to "special-interest propaganda," "symbolism over substance," "pejorative labels," and "playing on the average citizen's distrust of corporate America," as detailed by Richard Carson. I'm still waiting.

"Progressive" Amir Hassan writes in today's Summer Watermelon:

Likewise, small businesses find themselves unable to compete with Wal-Mart’s rock-bottom prices. A Pullman Supercenter will choke and kill much of our beloved local commerce.

I suppose one can't argue with a self-styled "expert" on Pullman economics who is also a Rhetoric and Composition grad student from Seattle who uses apocryphal stories and far-left websites to support his arguments. Nevertheless, let's take a look at some hard data anyway.

The Simeon Partnership, an economic and public policy consulting firm in Bainbridge Island, WA, prepared a study in 2005 of long-term economic impacts of the Wal-Mart that opened in the small coastal Washington city of Aberdeen back in 1994. The study examined impacts on local businesses, as well as tax revenue and worker wages. The brief summarizing the study can be downloaded here.

Some highlights:

“Not one business went out of business because of Wal-Mart,” says Michael Tracy. He should know. Tracy heads up the Grays Harbor Economic Development Council. His organization has tried to identify and help businesses affected by Wal-Mart’s decision to locate in Aberdeen in 1994.

“Understand,” says Tracy, “there was high unemployment at the time and businesses were going out of business right and left. But, not because of Wal-Mart.” Wal-Mart slowed the flow of people leaving Grays Harbor to do their shopping in Olympia, he says.

Aberdeen and Grays Harbor County had real gains of 13 percent and 7 percent, respectively in taxable retail sales from retail trade from 1995 through 2003.

“The threat to locally owned businesses is not Wal-Mart,” Tipton says, “it’s I-5 to Tumwater, Lacey and Portland. Wal-Mart has slowed [Aberdeen’s retail sales leakage] considerably.” When local shoppers stay in town to buy their basics at Wal-Mart, he says, they are more likely to look locally first for their other needs and to comparison shop at home, given the opportunity.

Wal-Mart captured an increasing share of a increasing retail sales base in Aberdeen and Grays Harbor County between 1995 and 2002. As Figure 3 shows, taxable retail sales from retail trade in Aberdeen and Grays Harbor County kept pace with inflation even without Wal-Mart over this period, demonstrating that Wal-Mart not only increased its market share, it helped grow the size of pie.

...the city’s revenues have grown in all categories since 1994. Sales and Use Taxes have been a good source of revenue growth – up 9 percent after inflation from 1994 through 2003 – but the big growth category for the city’s general services has been Business and Utility Taxes, which was up 16 percent after inflation. These are taxes levied by the city on various special services like water, sewer and garbage.

Adjusted for inflation, Wal-Mart’s sales tax contribution to the city grew 89 percent from 1996 to 2002. At the same time Wal-Mart’s share of city sales taxes paid doubled as its tax contributions grew well ahead of overall city sales tax growth.

Total wages in Grays Harbor County paid by stores in the general merchandise category, like Wal-Mart, grew from $4.6 million in 1993 to $6.5 million in 1994 the year Wal-Mart opened – a 39 percent increase after inflation. And, average general merchandise employment went from 345 to 477 jobs.

On average general merchandise stores in Grays Harbor County paid their employees about $13,263 annually in 1993 before Wal-Mart came to town. By 2003 this average annual wage had grown to $21,432. Even after adjusting for inflation, general merchandise workers experienced 21 percent growth in their real average wages.

Tuesday: We'll take a look at what happened over in Sequim, after much controversy in opening a Wal-Mart Supercenter there.

Technorati Tags: wal-mart walmart

Pullman Wal-Mart Supercenter: A No-Brainer

Dnews.com commenter David (Hall of Moscow, the New York Times quotin' anti-growthnik) wrote:

Considering the downturn in the economy, forget about building more superstores until conditions are more favorable?

Sorry David. Your understanding of economics is about as shallow as it is of water.

The Tacoma News-Tribune recently reported that:

Now, looking at an almost 20 percent rise in company stock since last year, [Wal-Mart] shareholders have much to cheer about.

Shares, which had been in the doldrums for several years, are now trading close to the top of the company’s 52-week range after Wal-Mart refined the “save money, live better” campaign, begun last year, as the economy hit the brakes.

Wal-Mart has benefited as Americans, squeezed by higher gasoline and food costs, tighter credit and a slumping housing market, try to shop at cheaper stores. The company, which had been bruised by unrelenting attacks by union-backed groups, has seen criticism diminish.

What better time could there be to build a Wal-Mart Supercenter in Pullman than when food prices are skyrocketing? It is a proven fact that the opening of a Wal-Mart Supercenter saves the average family considerably on food expenditures, not just from shopping at Wal-Mart but also by forcing other grocery stores to lower their prices as well. When budgets are squeezed, even the leftists will swallow their ideology and go strolling down the aisles of Satan's Big Box of Horrors.

And the old canard of just drive over to Moscow to Wal-Mart and Winco just doesn't hold water when gas is $4.30 a gallon.

Who the economic downturn is bad for is unreflective people blindly supporting Target, like Chris Lupke. The more upscale Target's sales are down and its stock had dropped 17% since September to trade near the 52-week low.

"High-tech hits its stride"

Like Gerard Connelly, B.J. Swanson cannot be that ignorant of economics and be the vice president of a bank. I'd like to think that all the nonsense she expresses in this Lewiston Tribune article from yesterday is just claptrap for the masses to cover her left-wing snobbery. But nevertheless, let's hang her with her own words, shall we?

"The economy on the Palouse is stagnant?" The article states that between 1997 and 2007, the number of high-tech jobs increased from 322 to 460 in Latah County. That represents about 43% growth in 10 years. Not spectacular, but not exactly stagnant either.

Whitman County now has 1,363 high-tech, including 1,100 at SEL, which had 230 employees in 1997. That means the growth of jobs at SEL has been 380% over 10 years. That is spectacular sustained employment growth probably unequaled anywhere in the U.S., much less a rural county.

Has other growth in Whitman County kept pace? Swanson says that "each high-tech employee supports as many as four other jobs." So the growth at SEL alone should have created 3,480 new retail/service jobs on the Palouse, including about 1,392 in Whitman County (some 40% of new SEL employees live in Pullman/Whitman County.) There has not been anything like that amount of retail/service jobs created here in the last 10 years. The only thing "stagnant" in Whitman County is the retail sector.

According to the Washington Employment Security Department, there were 1,227 retail trade jobs in Whitman County in January 2008. That's DOWN from January 2000 when it was 1,250. You can see why retailers are so interested in the Palouse, particularly our side of the border. Can't Swanson and the Tribune reporter runs these numbers themselves and see the need for Wal-Mart and other retail? Exactly why is B.J. Swanson being allowed to speak for Pullman and Whitman County anyway? It's very biased reporting.

In what way does the effort, in Whitman County anyway, to capture these dollars by building a Wal-Mart believes keep us from "realizing more of our potential" in the high-tech sector? It's just the opposite. I mean if people make $50,000 a year, they're going to want to spend it somewhere, right? Trust me, if we had more retail amenities, SEL and other companies would have an easier time attracting potential employees. Swanson obviously forgets Ed Schweitzer is a big supporter of a Pullman Wal-Mart.

Yet liberal fascist Swanson claims that Wal-Mart is a threat because every time a new store or restaurant opens, another closes. Really? Is that why we have two Safeways, two Rite-Aids, two Les Schwabs, two Radio Shacks, two Subways, two Pita Pits, two Pizza Huts, four McDonald's, two Arby's and untold Starbucks in Pullman and Moscow? What closed in Moscow when Old Navy and Bed Bath and Beyond opened? Did Staples close when Office Depot opened? Did Snap Fitness and Absolute Fitness close when the Pullman Athletic Club opened? I would sure hate to ask Swanson for a business loan with a ridiculous zero-sum attitude like that.

High-tech hits its stride

MOSCOW - A building under construction at the east edge of Alturas Technology Park is one of the most tangible signs of the slow but steady growth of the high-tech sector on the Palouse.

The 10,000-square-foot building will house Alturas Analytics and Anatech Labs, which have outgrown their 7,200-square-foot space at the park in Moscow.

Anatech Labs began in 1992, doing water tests and other environmental work. About eight years ago its founders brought in a new partner and diversified into doing pharmaceutical testing under the name of Alturas Analytics.

Others are thriving too.

Economic Modeling Specialists is on the verge of outgrowing its leased space in Alturas. And EcoAnalysts is preparing to more than triple its office space with a move from downtown Moscow to Eastside Marketplace (see related stories), where it will be near another home-grown, high-tech Palouse venture, First Step Internet.

It's the kind of economic development that represents the brightest hope for Moscow and Pullman, says B.J. Swanson, commercial loan officer and vice president of AmericanWest Bank. "That's our quickest and easiest way to provide good-paying jobs."

Between 1997 and 2007, the number of high-tech jobs increased from 322 to 460 in Latah County, while Whitman County now has 1,363. The growth there reflects that of Schweitzer Engineering Laboratories, which in 1997 had 230 employees and now has 1,100 in Pullman, making it the second-largest manufacturer in the region.

Swanson believes more of the potential in the sector could be realized if members of the community focused on high-tech job growth more and worried less about real estate development and where Wal-Mart might locate.

The kinds of jobs the high-tech sector provides would strengthen weak spots in the economy at a time when it's unlikely significant expansion will occur at the universities, Swanson says.

Part of the reason Wal-Mart is such a threat is the economy on the Palouse is stagnant, Swanson says. Every time a new store opens, another closes. The same pattern happens with restaurants.

Each high-tech employee supports as many as four other jobs because the wages are so high and much of the revenue the companies generate comes from out of state, Swanson says.

The average pay of the 150 jobs at Alturas, where many of Moscow's high-tech businesses are located, is $50,000 a year, Swanson says.

The proximity to universities has made the success possible. Almost every high-tech company has some link to the universities, Swanson says.

The founder of SEL earned his doctorate from Washington State University. Basic research at the universities formed the foundation of other companies.

Once companies are up and running, the universities and Lewis-Clark State College provide a steady source of qualified applicants for the internships and jobs they have, Swanson says.

The availability of internships on the Palouse helps the schools because their students get on-the-job training and take classes in the same semester since they're not having to leave the area, Swanson says.

"It's our future if you look at our base and the assets the universities bring."