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1-07-06, 8:49 am
Did you know that about $44 of every $100 you spend in locally-owned businesses gets recycled back into your community? In comparison, when you spend the same amount of money at a national (or multinational) retail chain store like Wal-Mart, only about $14 goes back into your community. According to a recent report from the Institute for America's Future (IAF), this means local communities may be losing over $30 for $100 spent at a Wal-Mart.
IAF notes that during this past holiday season, despite an overall tepid growth in sales, Wal-Mart took in more than $66 billion in sales in the two months before Christmas, outpacing its top three competitors by more than 3 to 1. From the perspective of local communities, Wal-Mart's great success drains tens of billions of dollars that might help build roads, fund school programs, pay for parks, and provide other services.
According to IAF, if the $66 billion had been spent in locally owned businesses, close to $30 billion would have been re-circulated in local economies. Based, on analysis of the loss described above, however, local economies will see only about $9.4 billion of that amount, representing more than a $20 billion loss.
The drain on local economies that these figures demonstrate radically transforms smaller communities and forces smaller businesses to go under. Within the first five years of Wal-Mart’s arrival in nearly 1,800 U.S. counties, an average of four small businesses, one mid-sized store and one large store went out of business.
The IAF report notes, "Wal-Mart’s entrance into communities provides few of the promised benefits and if the initial shock of the retailer’s arrival does not constitute 'killing local business,' the slow death caused by draining money away from local economies certainly does." In other words, when Wal-Mart shows up, its short-term impact is to force smaller competitors out of business, and its long-term impact is to stunt or even harm local economic growth by siphoning cash out of the economy.
When consumers spend their money in locally owned businesses, wages and benefits, inventory and service purchases from other local businesses, tax revenue, and charitable contributions accrue to stimulate the local economy as well as public and private services. When that money is turned over to a multinational corporation, especially one like Wal-Mart that pays as little in benefits as it can and which pressures local governments to give it enormous tax breaks, the resulting drain damages local communities.
Is a company that pays poverty wages, exploits its employees and fights their attempts to organize a union, pays few benefits, drives small businesses into bankruptcy, and demands enormous public services and subsidies from local governments is good for us?
The next time you are tempted by the yellow smiley face, think about where your money is going and support mom and pop instead.
--Joel Wendland can be reached at jwendland@politicalaffairs.net.
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