WASHINGTON (AP) – Wal-Mart Stores Inc., which has been prickly about criticisms of its low-cost business model, opened itself up to a lively debate among economists Friday about how the world’s largest retailer affects the economy.
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.
“I learned a lot about Wal-Mart,” Ray Bracy, Wal-Mart’s vice president of corporate affairs, said in a closing address. “We are trying to listen more to be a better company.” Bracy promised that Wal-Mart would share more data in the future and invited more economists to do studies.
However, some participants said Wal-Mart was taking a chance by inviting scrutiny.
“I think this is a gamble by opening up to more research,” said David Neumark, a senior fellow at the Public Policy Institute of California, who presented findings that Wal-Mart’s presence causes earnings to fall. “Some will be good, and some will be bad.”
Wal-Mart’s critics have argued that the retailer’s low-cost model has bad effects on the economy and that its low pay and benefits drive down those at other companies trying to compete with Wal-Mart.
But Wal-Mart has long argued that its low-priced goods help raise the standard of living, particularly for low-income shoppers, and help control inflation. By holding its own economic conference, Wal-Mart appears to be trying to have some control over the information being disseminated.
Wal-Mart’s study, conducted by Global Insight, an economic forecasting company in Waltham, Mass., offered a positive assessment of the company that was in line with findings from some economists but were starkly different from others.
“Wal-Mart has been an economic positive to the U.S.,” said Chris Holling, executive director at Global Insight. He also emphasized that the study found that there was no evidence that Wal-Mart pays its workers below market wages, and said its low prices were not from driving down wages for workers, as its critics contend, but from its own economic efficiencies.
The study, conducted by a team of 18 economists who were given unfettered access to Wal-Mart’s data on wages, benefits and real estate, found that the expansion of the retailer over the 1985 to 2004 period saved American households on average $2,329 by 2004, estimating that it lowered the Consumer Price Index by 3.1 percent.
The study also found that Wal-Mart had a positive impact on employment nationwide, generating 210,000 jobs by 2004, a 0.15 percent increase relative to the number of jobs that would have existed without Wal-Mart.
The study did report that Wal-Mart caused nominal wages to decline by 2.2 percent, but that was more than offset by the fall in consumer prices, creating an increase in real disposable income of 0.9 percent.
In their presentations, both Bracy and Holling emphasized that Wal-Mart did not influence results and that the study was done independently. The study was also overseen by an advisory committee including representatives from the liberal Brookings Institution and the conservative American Enterprise Institute.
“Not only would we not, but we could not influence the outcome of this study,” Bracy told the audience. He added that the company wanted to have a “debate, a dialogue.”
Still, Wal-Mart and Global Insight faced plenty of tough questions from the audience, including why benefits were not included in the wages studied.
Some expressed concern that the study didn’t address the fact that Wal-Mart may be entering mainly high-growth regions, possibly inflating the positive impact it has on the economy.
“They seemed dismissive of the wage gap issue,” said Randall Crane, professor of urban planning at the University of California in Los Angeles.
Among Crane’s criticisms of the Wal-Mart-commissioned study was that the company seemed to lump all workers together instead of focusing on grocery workers, since 60 percent of all Wal-Mart’s are now supercenters, which sell groceries. “They are treating groceries like any other retail sector,” he said.
Crane presented findings that showed that in the San Francisco Bay area consumers saved between $382 million and $1.13 billion on groceries per year, but that wages and benefits in the grocery sector will fall by between $300 million and $576 million per year. He noted that price savings are spread thinly across all grocery customers, while wage losses are concentrated entirely on grocery workers.
Meanwhile, Wake up Wal-Mart, a union-backed anti-Wal-Mart group, tried to steal Wal-Mart’s thunder by holding a news conference before the seminar announcing that it was creating a national association for Wal-Mart workers to help employees change the company. It also launched a Web site called www.WalMartWorkersofAmerica.com, which with information about workplace rights
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