Monday, December 12, 2005

Wal-Mart Accounting and Economic Development

In today's NY Times economist and columnist Paul Krugman examines the job growth claims by Wal-Mart and finds them to be specious ($). As he points out, "It's true, of course, that the company is getting bigger each year. But adding 100,000 people to Wal-Mart's work force doesn't mean adding 100,000 jobs to the economy."

What Krugaman is saying is something we have been pointing out for some time about big-box development in general and Wal-Mart in particular: "On the contrary there's every reason to believe that as Wal-Mart expands, it destroys at least as many jobs as it creates, and drives down worker's wages in the process." In making this case he is relying on the seminal work of University of California economist David Neumark ("The Effects of Wal-Mart on Local Labor Markets").

Which bring us once again to the accountable development discussion. In NYC it is indefensible to conduct "land use" reviews of major economic development projects without any concomitant review of the economic impacts. This does not mean, as we have seen in the Bronx Terminal Market ULURP, the kind of spurious analysis that sees a $60 million a year food store as having no impact on any supermarket in a five mile trade radius.

It means the kind of independent review that looks closely not only at the so-called collateral damages issue but also at the level of public subsidies being offered. The nature of the deal is as important as the various environmental criteria that are often used disingenuously as a surrogate for questions about the deal and the particular retailers in it.