Big Box, Big Mistake

At the Deerfield Community meeting on August 14, 2013, Colorado Springs Mayor Steve Bach and city employees attempted to explain his upcoming budget and proposed Economic Revitalization Plan (if you’d like to read a brief summary of the budget, click here). The city’s efforts to simplify the message certainly showed some inspiration. For instance, they broke down expenditure percentages using the $100 spending model. The plan touts big-box store attraction and capital building projects as mainstays for our economy’s growth. Still, while some consider Bach’s strategy tenable, in reality, the Economic Revitalization Plan doesn’t really support a policy of long-term economic sustainability.

Toward the end of the meeting, Mayor Bach’s team leader Bob Cope, a Broker Associate at Front Range Commercial, discussed the Economic Opportunity Zone Program. This plan would revitalize Colorado Springs in specific target areas, focusing on three main areas: Downtown, the North Nevada Corridor, and Southeast Colorado Springs. As part of the program, Colorado Springs would build a new Sky Sox Stadium and United States Olympic Committee (USOC) Museum downtown, expand parts of the University of Colorado at Colorado Springs campus / surrounding area, and attract new developers into the region.

Cope discussed the addition of several new big box retail stores, such as the new Lowes at Citadel Crossings and the Neighborhood Market at Chelton and Academy (Wal-Mart grocery stores), touting these installations as successes in economic revitalization. While these stores do provide economic stimulus and create jobs, studies regarding the economic sustainability and impact of national retail chains on communities have found that large retailers do not contribute as much money to local economies as locally owned and operated businesses. According to a 2005 study, Wal-Mart retail workers earned an estimated 12.4% less than retail workers as a whole, and 14.5% less than workers in large retain in general. In their findings, Dube & Werthheim stated that “Wal-Mart entry into an economy does not lead to net new jobs, and overall it reduces total take-home pay for retail workers” across the retail industry. These “successes” may create a certain breed of new jobs, but such jobs are not always quality ones and don’t spell long-term economic success.

Big-box stores alone cannot improve a community’s quality of life. In a 2013 study, researchers in British Columbia found that independent or locally owned retailers recirculated 45% of their revenue into the local economy. In stark and shocking contrast, chain retailers only recirculated 17% of their revenue into the local economy. Similarly, a 2011 study in Portland, Maine concluded that $100 spent in a local store would amount to $58 in local impact, whereas $100 spent at a national chain store would only generate $33 in local impact. This phenomenon redistributes local money into national and international corporations. In essence, these large companies can limit communities’ local economic viability every time we shop in them.

In addition to causing long-term local economic problems, Wal-Mart and similar businesses do not provide economic independence from the state, and this sub-standard earning potential strikes many economists as a sub-standard bargain. Survey data taken directly by the Wal-Mart company in 2005 reported that at least 24% of Wal-Mart workers and 46% of their dependent children were either uninsured or enrolled in public health programs. While Wal-Mart has worked hard to remedy this problem, they still do not offer quality, affordable health care to their part-time workers, which equates to at least one-third of their workforce. Unfortunately, as all too many Wal-Mart employees know from experience, surviving comfortably on a regular Wal-Mart associate’s salary is difficult to say the least, and taxpayers are picking up the slack for one of the World’s richest companies. One can only imagine surviving on such a salary with a family to feed and just one or two breadwinners.

Proof of the long-term effects of large, multinational retailers can be seen all over the country with one’s own eyes. Locally in Colorado Springs, simply visiting the Wal-Mart at 707 S. 8th St. provides serious food for thought. This store is located in one of the economic sinkholes of Colorado Springs. It was built in 1988, and the effect on the surrounding economy is obvious. This area is rife with strip malls, fast food joints, and other big box stores. Less than 30 years after being built, the place is a hotbed of criminal activity and poverty because we just planted a Wal-Mart seed, praying it would grow a magical beanstalk and fix the issue.

While large retailers can cause problems in local economies, several solutions come to mind, and some may be easier than we think to implement:

1. In order to balance local and non-local economies, business and community leaders can encourage local entrepreneurs to move into targeted areas by offering incentives.

2. As shoppers, we can distribute our money across the spectrum of local and non-local businesses by shopping at different stores. Supporting local business begins with locals, and we all need to be more conscious of our our spending impacts the local, national, and world economies.

3. As community members interested in our neighbors’ qualities of life, perhaps we can reach out to retail employees and help them discover how to leverage their own power base. Adequate salaries and acceptable standards of living will take a large burden off our government and place it upon the shoulders of the corporations.

4. Local eyesores, like our own Wal-Mart on 8th Street, could be the focus of nonprofit groups interested in revitalizing the area. Community commons areas and gardens are just one way we can create a more inviting space around large retail stores and foster small business at the same time.

5. We might want to stop pitting large and small businesses against each other as if they are enemies in an economic war. We can begin fostering partnerships between bigger and smaller businesses. Both multinational corporations and local technology start-ups are part of our economy, and they’re not going anywhere anytime soon unless they decide to move.