WASHINGTON -- Wal-Mart Stores, in a move to shore up its image, has attempted to answer its critics with the release of several economic studies highlighting the impact the retail giant has on prices, jobs and wages.
Seeking more "transparency" and balanced coverage, the Bentonville, Ark.-based retailer held a tightly controlled symposium here at the J.W. Marriott Hotel and released nine independent economic studies -- some of which revealed negative findings -- from academics and economists.
At least four of the nine studies focused on some aspect of the impact Wal-Mart Supercenters have on local supermarkets, food and consumer goods prices and employment.
The retailer also hired Waltham, Mass.-based Global Insight, a reputable economic research, analysis and forecasting company, to conduct a long-term study on the economic impact Wal-Mart has on local communities and the national economy as a whole.
The firm's study, titled "The Economic Impact of Wal-Mart," painted the company in a favorable light in terms of its benefits on consumers.
Focusing on Wal-Mart's contribution to lower consumer prices, Global Insight concluded that the expansion of Wal-Mart, from 1985 through 2004, led to the cumulative decline of 9.1% in food-at-home prices; a 4.2% decline in commodities prices; and a 3.1% decline in overall consumer prices as measured by the Consumer Price Index, a federal government gauge of inflation.
This impact, according to the economic research firm, amounted to $263 billion in savings -- the equivalent of $2,329 per household -- to the consumer by 2004.
Global Insight also concluded the company created 210,000 net new jobs by 2004, adding it had "not found evidence that Wal-Mart pays below market wages."
There was evidence, however, that Wal-Mart negatively impacts employment in certain sectors when it opens a store.
In its analysis of the company's impact on counties, the research firm revealed Wal-Mart affects the structure of county-level retail employment. When Wal-Mart opens a 150- to 350-person store in a county, retail employment "tends" to increase by 137 jobs over the short term and levels off to a 97-job increase over the longer term, although it leads to a net job decline in apparel and accessories stores of five jobs, a decline of 32 jobs in food stores and a decline of 30 manufacturing jobs, the report revealed.
Jerry Hausman, an economist at the Massachusetts Institute of Technology, and another economist found that Wal-Mart offers many identical food items at an average price of about 15% to 25% lower than traditional supermarkets.
"Wal-Mart's entry into a new geographic market creates a direct price effect by offering a lower price option to consumers and an indirect price effect by causing traditional supermarkets to lower their prices because of the increased competition," the study said.
Hausman said during his presentation that Wal-Mart also decreases the gross margins of its competitors.
He said profit margins at most major stores rose 50% during the 1990s, which gave Wal-Mart an opportunity to move.
"If you raise your profit margin and Wal-Mart is around, you are executing a death warrant," Hausman said.
However, Hausman stressed there would be a "large loss [in consumer well-being] created by the exclusion of Wal-Mart in local markets, adding there is a 3.75% increase in consumer [well-being] overall due to Wal-Mart.
"I'm not saying supercenters are totally good or totally bad, although I think some of their labor practices could be changed," Hausman said. "For those who claim for political purposes they want to help poor people, keeping out a Wal-Mart is probably not the policy you want to favor."
Emek Basker, assistant professor of economics at the University of Missouri, found in her study that Wal-Mart had a major impact on lowering prices on items as aspirin and shampoo.
"This decline is economically large -- 1.5% to 3% in the short run, and four times as much in the long run," Basker said.
Critics have long accused Wal-Mart of depressing retail prices and wages.
To bring their point home, the United Food and Commercial Workers Union and its WakeUpWalMart.com organization staged a small protest in front of the hotel where the symposium took place and announced it was launching a new group -- Wal-Mart Workers of America -- and a Web site to assist workers in protecting their rights.
The symposium attracted about 75 economists, academics and journalists.
The nine studies revealed a wide range of findings that were inconsistent with one another in some areas.
"We, for a long time now, have seen a number of studies that purport to be an economic look at our company," said Bob McAdam, vice president of corporate affairs at Wal-Mart, in an interview. "Many of them are fairly narrow in their scope, look only at specific data, or start with a bias, frankly. We decided it was time to do this in the most holistic fashion we could and try to get a really good picture and do it with as much integrity and honesty as we could possibly muster."
