Editor’s note: Jon Margolis is VTDigger’s political columnist.
The Great Northeast Kingdom underwear hoax returned to Vermont last week.
The hoaxer-in-chief was Gov. Peter Shumlin. Speaking at the ceremonial opening of what will be (the permit process consenting) a new Walmart store in Derby up near the Canadian border, Shumlin noted with pleasure that when the store opens, the folks in the Kingdom will no longer have to trek all the way to New Hampshire to buy underwear.
It’s a familiar rallying cry, one used for years by locals campaigning to get a big box chain store to move in. It paints a bleak scene. Picture the thousands in Orleans, Essex, and perhaps Caledonia counties forced to spend hours and burn gallons to cross the Connecticut River lest their butts be bare to the winter breezes, their pectorals prey to the elements, their torsos topped by the torn, threadbare remnants of the underclothing of yore. What a calamity.
What a lot of hooey.
Any man, woman or child can buy all the underwear he or she needs at the Pick & Shovel in downtown Newport, roughly three miles from where the new Walmart would be.
In fact, any sane man, woman, or child, can find almost any non-food product he or she needs at the Pick & Shovel. Well, not a car. But anything needed to fix or spruce one up, not to mention building materials, TV sets and their various accessories, the tools and material needed to clean, fix, or expand a house, or to tend a garden, or to take care of a pet (in this case, even the food). Also tents, sleeping bags, sports paraphernalia, lights, fans, pots, pans, and more.
And assuming one is not seeking something to wear at the Duchess’ tea or the Inaugural Ball, just about any article of clothing a normal person needs in his or her daily life. Socks, shoes, shirts, pants, belts. And underwear. Regular or thermal. In several varieties and in high quality. No one in the Northeast Kingdom has to wander to another state to find something to protect his or her loins from the ravages of nature or the chafing of outerwear. It’s right there in Newport.
None of which means there will be no advantages to having a Walmart nearby. In and of themselves, low prices are good. They allow people to buy what they need for less, leaving them more money left over to spend elsewhere. That’s good for the local economy.
There is also something to be said for being able to buy everything in one place. A single mother heading home from her job rarely has time to stop at two or three different stores. Yes, she can buy almost everything she needs now at the Pick & Shovel. But the 146,000-square-foot Walmart is likely to include a supermarket, so she’ll be able to stock up on groceries, too.
Furthermore, Walmart is in many ways a good corporate citizen. It is trying, apparently with some success, to be environmentally responsible, using less energy and throwing away less junk. It just announced plans to hire 100,000 veterans over the next five years. Though first lady Michelle Obama praised the company for setting “a groundbreaking example for the private sector to follow,” this may not be entirely public-spirited; there’s a generous federal tax break involved. Still, the recently mustered-out veteran unable to find work elsewhere may appreciate the opportunity.
Assuming that the former soldier appreciates being able to earn as little as $8.81 an hour, the average wage of a Walmart “associate” according to research by IBIS World, which calls itself “the world’s largest independent publisher of U.S. industry research.” Walmart claims its full-time sales workers earn $12.57 an hour. but considering that most of its workers are part-timers, the IBIS World assessment would appear to be on the mark.
Another assessment, based on an examination of leaked Walmart internal documents, concluded that after six years the average Walmart employee earns $10.60. But Walmart has a high worker turnover, so, again, that IBIS World figure appears plausible.
Either way, it’s a low wage, which raises another question about the accuracy of the way Shumlin, other officials, and the local chroniclers of public events (that’s the news folks) greeted the announcement of the impending Walmart.
“The good economic news just keeps coming for the Northeast Kingdom,” led the Burlington Free Press story. The reporter cited Shumlin as the source of this assessment, but by never questioning it appeared to concur. The reporter for St. Johnsbury’s Caledonian-Record noted that “sunlight broke through morning clouds” as the ground-breaking ceremony began, apparently seeing a metaphor for the brighter economic future the Walmart will bring to the Kingdom. Every account noted that the new store would bring 300 jobs to the area.
“This is an example of how we create jobs in the Kingdom,” Shumlin said.
Maybe and maybe not. Perhaps the governor, being a mere governor, should not be held responsible for checking out the truthfulness of what he says. The journalists have no such excuse. Granted, they are overworked on their under-staffed organizations these days, but they all have access to the Internet, where a quick search raises some doubts about how much good a new Walmart does for a local economy, especially in a rural area.
In fact, the actual data – as opposed to cheerleading and conjecture – indicate that a new Walmart may do quite a bit more harm. Many of those 300 Walmart workers will have been laid off from stores driven out of business by Walmart’s low prices. If the past is any guide, many if not most will be earning less at Walmart than they did at their former post. More often than not, according to economic studies, the net impact of the Walmart is fewer jobs, lower pay, more poverty and a local economy that is worse off.
A 2010 paper by three academic economists for the prestigious National Bureau of Economic Research, the nation’s largest economic research organization, concluded that “a Walmart store opening reduces county-level retail employment by about 150 workers, implying that each Walmart worker replaces approximately 1.4 retail workers. This represents a 2.7 percent reduction in average retail employment. The payroll results indicate that Walmart store openings lead to declines in county-level retail earnings of about $1.4 million, or 1.5 percent.”
Other studies reach almost identical conclusions. One by the Hunter College Center for Community Planning and Development found that a new Walmart is likely to “kill three local jobs for every two they create by reducing retail employment by an average of 2.7 percent in every county they enter.”
For at least two reasons, Newport and Orleans County may escape this fate. First, the area’s other new economic news – the $500 million development plans to bring a hotel, condominium apartments, new factories and new shops right into the city – could add so much new money and so many new people (both visitors and residents) that there will be plenty to go around for both the old stores and the new one.
Second, aside from Pick & Shovel, whose owner said will survive the new competition even if it has to “change some of our product mix,” downtown Newport’s economy is not all that dependant on retail. The state office building, the Orleans County Courthouse, police headquarters, the library, two banks and four restaurants dominate Main Street.
But that still leaves two furniture stores downtown plus two north on Route 5, closer to the Walmart site. Also along that road, and in danger of extinction, are three drug stores, a stationery supply store, a carpet store, a farm implement dealers, two auto parts stores, two sporting goods stores, a small supermarket and an Agway.
Even closer are two supermarkets, a Shaw’s and a Price Chopper, either or both of which could be put out of business by a new Walmart. Neither company wanted to divulge how many workers its stores employ. But according to the small business research firm Manta.com, there are 129 employees at the Price Chopper and 111 at the Shaw’s.
The companies were not revealing their wages, either, but it’s likely that workers in both stores are earning slightly more than most Walmart employees. Retail is not a high wage industry, but according to the official statistics of the Vermont Department of Labor, the average annual salary of the 1,335 retail trade workers in the Newport area in 2011 was $23,884. Assuming that IBIS World estimate of Walmart wages is correct, a Walmart worker would earn $18,325 a year.
Full-timers would earn more, perhaps as much as $26,145, based on Walmart’s own claim of their average wage. But most Walmart employees are not full-timers. If the average worker with six years at the company earns $10.60 an hour, the annual salary would be $22,048. Furthermore, most Walmart workers do not get health insurance or other benefits.
Thus introducing another complication that the cheerleaders – government and journalistic – chose to ignore. Some of what a Walmart shopper saves at the cash register he or she pays to the Internal Revenue Service. More than most businesses, Walmart is government-subsidized. Because its wages and benefits are so low, many of its workers qualify for Food Stamps, Medicaid, or the Earned Income Tax Credit.
Last November, Rep. Alan Grayson, a Florida Democrat, said more Walmart workers than employees of any other company were eligible for Medicaid and Food Stamps and that every Walmart worker “costs the taxpayers an average of more than $1,000 (a year) in public assistance.” The Florida-based fact checkers at PoliticFact checked him out and judged his claims “mostly true,” though they noted that the thousand-dollar estimate was based on eight-year-old data.
Still, that is data, which more than either Peter Shumlin or your not-so-on-the-job Vermont press corps bothered to consult in this matter. They could have checked the Internet. Come to think of it, they could have wandered over to the Pick & Shovel. It’s a great store, with a fine selection of underwear.
