Economics professor finds counties with Wal-Marts see some gains, some losses in retail jobs.

Recently voters in Inglewood, Calif., rejected a measure allowing Wal-Mart to build a Supercenter in their community. Opponents of the corporate giant believe the stores are detrimental to employment, forcing competitors to close and putting people out of work. However, a study by Emek Basker, professor of Economics, shows that while an average of 20 wholesale jobs are lost in Wal-Mart-occupied counties, 50 new retail jobs are created.

"When Wal-Mart enters a community, retail employment increases by 100 jobs in the first year," said Basker. "Half of the gain disappears over the next five years as other retail establishments exit and reduce in size. Wholesale employment declines due to Wal-Mart’s ownership of its suppliers and its retail outlets, or buyers."

Basker examined employment data from 1,749 counties and 2,383 Wal-Marts across the country between 1977 and 1998. Wal-Mart had a store in 75 percent of the counties in the study. Basker examined each store over a 10-year period, beginning five years before and ending five years after a Wal-Mart entered the county. According to Basker, each Wal-Mart store employs 150 to 350 workers.

The results, which showed an initial increase of 100 new jobs, were still less than the full amount of Wal-Mart’s 150 to 350 employment capacity. Basker said part of the discrepancy can be explained by the buyouts of existing chain stores by Wal-Mart Corporation, and prompt exit and cutbacks by other retailers. Another possibility, although Basker believes it is unlikely, is that Wal-Mart replaces existing part-time jobs with full-time jobs.

"Wal-Mart does raise concerns in many communities about the changes it may cause to the size and structure of the retail industry," Basker said. "However, I conclude that Wal-Mart has a positive effect on retail employment on the county level while reducing the number of small retail establishments in the county."

Basker’s study is scheduled for publication in the Review of Economics and Statistics.

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Emek Basker
Department of Economics

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