Big-box retailers often result in net job losses and depressed retail wages, peer-reviewed studies show
By Summit Voice
SUMMIT COUNTY — An economic study that purports to evaluate the impacts of a new Lowe’s store on existing businesses is missing key information, according to an independent expert who reviewed the document on behalf of the Summit Independent Business Alliance.
The study, financed by Lowe’s, concluded that other businesses selling similar merchandise would only take a moderate hit, and that Lowe’s could even create additional retail activity by stopping “leakage” of shoppers from Summit County to other areas.
But the independent review by the Institute for Local Self-Reliance concluded that Lowe’s would have “a severe and probably fatal impact on many existing businesses, resulting in job and wage losses, and lost sales tax revenue.”
Lowe’s impact study didn’t include a thorough market analysis, which is the fundamental first step in determining economic and fiscal impacts, said Stacy Mitchell, who reviewed the study.
Mitchell is no fan of big-box retailers, but she knows the topic. In her book, Big-Box Swindle, she makes a strong argument showing how mega-retailers exacerbate problems like a shrinking middle class, increasing pollution and even diminished civic engagement.
Without a retail market analysis, it’s not possible to complete an economic and fiscal impact analysis, Mitchell wrote in her comments on the report.
Mitchell also addressed the leakage theory in the same context, saying that it’s impossible to determine leakage without a market analysis. She also said that her own review of Summit County’s economic census data suggests there is no retail leakage, as the numbers show that Summit County’s overall per capita retail sales and building materials sales are substantially higher than the state average.
“That suggests Summit County has a net surplus, not net leakage, both in retail sales overall and building materials in particular. Therefore, it’s unclear that Lowe’s could bring net gains in overall retail sales; it seems far more likely that its sales will come at the expense of existing retailers in the county,” she wrote.
Large net retail surpluses like Summit County’s are an indication of tourists and other non-residents adding to the spending that residents do. An economic impact analysis should consider what brings outsiders to Summit County and whether a Lowe’s development would add or detract from that draw.
She also said the presence of big-box home improvement stores in neighboring counties, makes it unlikely that a Lowe’s store would draw many shoppers from beyond Summit County.
Mitchell also said that, without a market analysis, you cannot estimate net employment impacts, net wage impacts, or the economic impact of employee expenditures. Yet there is plenty of evidence showing that big-box retailers often lead to net job losses on a county level, as well as a net reduction in retail wages, with obvious impacts on spending.
“In order to have comprehensive and reliable data on the potential impact of Lowe’s (and Home Depot), Silverthorne needs a market, economic, and fiscal analysis conducted by an independent consultant not employed by Lowe’s,” Mitchell concluded.