Study Finds Wal-Mart Increases Poverty

Date: 9 Jun 2006 | posted in: Retail | 0 Facebooktwitterredditmail

A new study published this month in Social Science Quarterly has documented a correlation between Wal-Mart’s presence and higher poverty rates.

“These results have potentially profound implications for public policy related to big box operations,” note the study’s authors, Stephan J. Goetz of Pennsylvania State University and Hema Swaminathan of the International Center for Research on Women. “The chain is not the engine of local economic growth that the company’s spokespersons and public relations materials suggest.”

Controlling for other factors that influence poverty rates, the study found that U.S. counties that had more Wal-Mart stores in 1987 had a higher poverty rate in 1999 than did counties that started the period with fewer or no Wal-Mart stores.

The study also found that counties that added Wal-Mart stores between 1987 and 1998 experienced higher poverty rates and greater usage of food stamps than counties where Wal-Mart did not build, all other things being equal.

Although the study does not attempt to draw a conclusion about why Wal-Mart expands poverty, the study’s authors suggest several possible factors. One is that retail workers displaced from local businesses may end up taking jobs at Wal-Mart that pay less. Another is that the demise of independent retailers causes local businesses that previously provided those stores with goods and services — such as wholesalers, accountants, etc. — to lose revenue and layoff workers.

Yet another possible factor is that “by destroying the local class of entrepreneurs, the Wal-Mart chain also destroys local leadership capacity.” Without this social capital, communities are less able to address complex problems like poverty.

See our Key Studies page for more.

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Stacy Mitchell

Stacy Mitchell is co-director of the Institute for Local Self-Reliance and directs its Independent Business Initiative, which produces research and designs policy to counter concentrated corporate power and strengthen local economies.