Union-supported, anti-Walmart study heavily biased, misguided | Jim Hebert
April 27, 2012 · 10:10 AM
By Jim Hebert
As one of the most experienced, respected and well-versed research firms in the country, we were both disappointed and offended by the recent attempts of Puget Sound Sage to tarnish our reputation – and to downright misrepresent – the conclusions we reached in our unbiased, straightforward analysis of Walmart’s future economic impact in Bellevue.
To that end, we’re taking this opportunity to set the record straight (“Study says Walmart leads to drop in income, spending,” April 12).
We strenuously refute the methodology, data, and conclusions of the CS Fowler “Economic Study for the Impact of Walmart in Skyway,” and have outlined below just some of the many flaws we identified in the report.
Fowler, used an inaccurate hourly wage for Walmart associates in Washington state. Walmart’s current average wage for regular full-time associates in Washington state is $12.87 an hour, a figure that easily available and regularly updated at http://www.walmartstores.com/pressroom/StateByState/State.aspx?st=WA. It is also worth pointing out that this figure is well above the state’s minimum wage, which is the highest in the country.
Fowler also used King County union-only jobs as a point of comparison to Walmart jobs, when only about 10 percent of area retail clerks are unionized. Again, with very little effort, Fowler could have easily obtained unbiased figures from the Washington State Employment Security Department, which includes both union and non-union wages in its employment reports.
If the Fowler model is recreated using the correct data, Walmart’s average wage in Washington is in fact slightly above that of most area grocery clerks and cashiers, which is $12.22 per hour.
Then, to draw conclusions that contained big numbers, the Fowler study projected its findings 20 years into the future. But given that flawed numbers were used for both the base Walmart average wage and the average competitive wage, the projected trajectory is highly inaccurate.
Another oversight of the Fowler study is that it doesn’t take into account the positive economic impact of a new Walmart due to an increase in consumer traffic (both vehicular and foot).
Major retail anchors, such as Walmart, increase the desirability of nearby commercial locations, and premiums are paid by smaller retailers to be in the development. Bellevue Square is a good example of how small retailers are willing pay premiums to be in closer proximity to larger retailers.
This dynamic is already playing out at the Kelsey Creek Shopping Center where Walmart recently announced its new Walmart Neighborhood Market. Once it was learned that Walmart would lease space at Kelsey Creek, a number of other businesses followed, with several existing tenants extending their leases with center owner PMF Investments, Inc.
Overall, the Fowler model is overly simplistic. According to his study, as long any new grocery store pays lower wages than the union average, it will have a negative impact on the economy. This is just too limited an assessment and it comes from a clearly biased viewpoint.
Much has been written about how Walmart stores fit into their communities. Based on the comprehensive research we conducted, we found that on the whole, Walmart stores bring more jobs and a general increase in local economic activity. This is why our report on Walmart in Bellevue concluded that the two new stores will overall be beneficial to the local communities.
Economic analysis must be conducted by looking at all the data, not just that which is likely to lead to a desired outcome. The Fowler Walmart study cherry picks and manipulates data in order to reach conclusions desired by the study’s backers. For that reason, it should be disregarded.
Jim Hebert is resident and founder of Herbert Research, Inc.