November 5, 2005

Blog Reactions to the GI Conference

It's a small world. Jack Schultz of Boomtown USA wrote this post and later sat down at my table for lunch:

But, it is in the area of productivity that Wal-Mart really shines. The two keys here are information technology and supply chain management. In the area of supply chain management, one of the factors that I have argued for the past five years is that part of their advantage is the location of their Distribution Centers (DCs) in rural markets. I’m convinced that the lower costs and more productive labor in these markets is a huge benefit to the company.
Wal-Mart Watch profiles David Neumark, who sat down next to me at the same lunch:
Today we’ve chosen Dr. David Neumark, an economist with the Public Policy Institute of California who co-authored a paper for Wal-Mart’s self-funded academic conference today in Washington, DC. Neumark dared to challenge the company on its own dime, and presented a paper that contradicts today’s other rosy presentations. His study examined Wal-Mart’s effect on employment and earnings, and concluded that “Residents of a local labor market do indeed earn less following the opening of Wal-Mart stores.” From Neumark’s paper:

The Fark tagline is amusing: "Behold! Mighty Wal-Mart hath suppressed U.S. inflation". And in the comments, a serious discussion has ensued embedded in a flame-war. The first casualty: Tracy Sefl of Wal-Mart Watch, who is being quoted and satirized pretty unfairly,, although ""Wal-Mart is only telling part of the story, which is not the same as telling the whole story" lends itself mightily to such insignificant attacks.

More Later...

Posted by Kevin at 6:32 AM

Big Media (Part II)

The day-after brings more big-media reporting, much of it very diverse in subject matter an conclusions. As expected, the press accounts go straight to many of the pro and con findings, but fail to note just how tentative the results are.

Stephen Greenhouse of the NYTimes announces a mixed report card:

With critics hammering Wal-Mart day after day, the company sponsored an unusual conference on Friday about its impact on America's economy, and it got some good - and a few not so good - grades.
Amy Joyce of the WaPo talks about two things that I, personally, did not experience:
The event was a strange hybrid of academics and public relations at which attendees toted around registration information in plastic Wal-Mart shopping bags. A room full of people asking questions was reminded -- after a journalist asked about a statistic in a paper -- that reporters were not allowed to take part in the Q&A.

[KB: The reporter was Steven Greenhouse of the Times; he asked David Neumark to try to reconcile competing datapoints, and since the question was very good, nobody in the audience really cared that he's not an academic.]

Outside, Wal-Mart critics greeted attendees. About a dozen demonstrators with the United Food and Commercial Workers union and its Wake Up Wal-Mart organization gathered outside the J.W. Marriott to protest the conference, some arrayed behind a large Wake Up Wal-Mart banner. A few others handed out fliers headlined "Research Confirms: Wal-Mart Needs to Change" that touted some of the more critical findings of the academic papers.

Security guards checked attendees' identification before allowing them to the registration table.

Strange hyrbid, yes. But I did not even see the UFCW folks, because I entered using the Pennsylvania Avenue entrance, while the union folk were on the other side of the building. I hadn't even known that they protested until I was talking to some people after the conference. Also, I was NOT asked to ID myself when I registered, and very, very few people toted around plastic bags, although they were offered when you picked up the symposium materials.

Reporters were asking for opinions from economics Ph.D's. For the most part, I had to hold my lips sealed. But others could talk more. Alison Vekshin wanted responses to Global Insight's paper:

One academic at the conference expressed doubts about the study's methodology.

"I think it's a nice, good effort, but some of the analysis is not valid to what they studied," said Vishal Singh, assistant professor of marketing at the Graduate School of Industrial Administration at Carnegie Mellon University in Pennsylvania.

"They ignored the competition," he said. "But competition has to come into play, in the late 80s and 90s certainly, looking at what Kmart is doing or what Target is doing when making the location decisions."

Holling said the retailer created 210,000 jobs last year.

"When Wal-Mart moves into a county there is higher overall retail employment, but, yes, there is disruption in the retail sector," he said. "Wal-Mart does displace other employment."

Disposable income is 0.9 percent higher than it would be if Wal-Mart did not exist, according to the report.

The researchers also concluded that Wal-Mart has contributed to lower prices.

Thankfully, Wal-Mart did not even try to form a final, coherent message from the studies. I should add that Wal-Mart insisted that it will be a more transparent company, and is very interested in its own economic impact. To that end, it will make data available to economists who want to perform economic impact analysis...

Here's an earlier installment of Big Media Reports.


UPDATE: Maria Halkias of the Dallas Morning News was kind enough to quote me. :

Kevin Brancato, management scientist for Rand Corp., said the conference was billed as an event that would point to an overall trend. Nine independent studies were also presented at the daylong session.

"No one disagrees that Wal-Mart has lowered prices," he said. "But what impact on the economy in total does Wal-Mart have? I don't think the conference answered that."

Still, he said, the work presented by Global Insight was sincere and honest.

"The work Wal-Mart has done in the past was propaganda. This is a big first step."

That most certainly is representative of what I said, though the exact words aren't mine, which is perfectly fine, since I was talking off-the-cuff. Also, I think there is a consensus on some issues, but certainly not the hot-button ones of wages and benefits. The propaganda I was referring to were many -- not all -- local economic impact assessments...

I think that the question I want answered is, "If we let a Wal-Mart into Queens, what's the probability that wages in competing stores will decrease?" We're nowhere near that type of resolution, and I doubt we'll ever get there...

I should note that ALP is NOT affiliated with RAND, and that I have performed no RAND work involving Wal-Mart. My use of the RAND label was unwise...

Posted by Kevin at 6:28 AM

November 4, 2005

WM on its own Conference

Here's where Wal-Mart is putting up its PR, links, and even some data... It's hastily thrown up for a corporate site, and includes several typographical errors, but I prefer rapid response to perfection.

Here's Global Insight's page on the conference, and here is their study. (Here's my list of the rest of the studies).

Posted by Kevin at 9:54 PM

Big Media on the Economic Conference

Annie D'Innocenzio writes for the AP:

The all-day session, the latest effort by Wal-Mart to repair its reputation, included rosy findings from a Wal-Mart-commissioned report and mixed results from studies done by other economists. It was attended by about 100 people in the media and academia.

The seminar may have raised more questions than answers on Wal-Mart's impact on jobs, earnings and individual communities, but in the end the company appeared to make progress toward its goal of appearing more open to change.

Bloomberg has an interesting take on corporate sponsorship:
Several conference participants said while the corporate sponsorship was unusual, they welcomed the chance to share their findings. ``Any time a conference is not purely academic, one worries that the conference sponsor may try to influence the discussion,'' Basker said in an e-mail. ``I am hoping that the exchange of ideas will be free and open, and the more academics participate, the better the chance of that.''

Hicks said in an e-mail that he was reassured by Global Insight's reputation for ``unbiased high quality work.''

The sponsorship did dissuade one academic, whose paper on Wal-Mart's effects on local businesses was submitted and will be presented by a co-author.

In an e-mail, a retired Iowa State University economics professor, said he was boycotting the event, calling it ``rather self-serving for Wal-Mart.''

Emily Kaiser at Reuters has the data takeaway:
Wal-Mart Stores Inc. lowers consumer costs and adds jobs but has also led to a decline in wages and an increase in the number of people relying on government aid for health care, studies released on Friday show.

At a conference sponsored by Wal-Mart to examine its impact on the U.S. economy, researchers found that the world's biggest retailer accounted for some 210,000 net jobs last year while driving nominal wages down 2.2 percent.

The world's biggest retailer also lowered consumer prices by 3.1 percent, and real disposable income was 0.9 percent higher than it would have been in a world without Wal-Mart, researchers at Global Insight concluded.

The LA Times Abigail Goldman gets in a few good words:
When the scholars delivered, some of their findings didn't exactly cut in the company's favor. At the conference Friday in Washington, billed as "An In-Depth Look at Wal-Mart and Society," the retailer will be stuck with them anyway.

"To us it's worth the risk to have a real healthy discussion," said Robert McAdam, vice president of corporate affairs for the Bentonville, Ark., retailer. "We start out with a bias because we think we have a positive economic impact. If the results come back and they show that we don't have a positive economic impact, that will be a disappointment, but at least it's an honest look."

Wal-Mart critics say the company's willingness to hear dissent at the conference will be meaningful only if its executives decide to make changes.

Jennifer Waters of Marketwatch touches on what this conference wasn't:
Elizabeth Cohn, a Takoma Park, Md.-based consultant and professor at the conference, criticized the Global Insight study because it didn't include the indirect impact Wal-Mart has on people, suppliers, and other companies.

"The Wal-Mart business model is very good for consumers, but what does it do for workers and other companies?" she asked. "This study has a limited usefulness."

For example, she said, displaced workers may eventually find work at Wal-Mart, but the study doesn't take into account the disruption to their lives and their income.

Bob McAdam, vice president of corporate affairs for Wal-Mart, said the conference wasn't about the human effect.

"This wasn't a sociological conference," he said. "It was an economic conference and to that extent, the economic issues were what mattered.

"But I don't think the human factor was ignored," McAdam added. "When you talk about how much savings consumers get on an average day, that's a significant impact, not just for the people who shop at Wal-Mart, but those who shop at some of our competitors too.

Posted by Kevin at 9:31 PM

Liveblogging the WM Conference

Sadly, the wireless internet connection at the Marriot was behind a firewall, and I could not liveblog the conferece. However, I will be writing about it over the next couple of days...

Posted by Kevin at 6:04 PM

November 2, 2005

Papers from The Wal-Mart Economic Impact Conference

Anybody interested in the economic impact of Wal-Mart will know a lot more after Friday's conference, where in addition to the independent assessments linked to below, the results of Wal-Mart's own sponsored research will be presented. I will be live-blogging the conference, and hope to present detailed information: interviews with authors and corporate types, discussions, and formal analysis that most other media do not have space for:

Emek Basker - Selling a Cheaper Mousetrap: Wal-Mart's Effect on Retail Prices

Emek Basker and Pham Hoang Van - Putting a Smiley Face on the Dragon: Wal-Mart as Catalyst to US-China Trade

Marlon G. Boarnet, Randall Crane, Daniel G. Chatman, and Michael Manville -Emerging planning challenges in retail: The case of Wal-Mart

Jerry Hausman and Ephraim Leibtag - Consumer Benefits from Increased Competition in Shopping Outlets: Measuring the Effect of Wal-Mart

Albert Myles, Kenneth Stone, and Georgeanne Artz - The Economic Impact of Wal-Mart Supercenters on Existing Businesses in Mississippi

David Neumark, Junfu Zhang, and Stephen Ciccarella -- The Effects of Wal-Mart on Local Labor Markets

Michael Hicks has been very busy, and has three papers:

The Impact of Wal-Mart on Local Fiscal Health: Evidence from a Panel of Ohio Counties

What Do Quarterly Workforce Dynamics Tell Us About Wal-Mart?
Evidence from New Stores in Pennsylvania

Does Wal-Mart Cause an Increase in Anti-Poverty Program Expenditures?

Posted by Kevin at 11:28 AM