Loyola University Chicago
Anne Brooks Ranallo
University of Illinois at Chicago
Associate Director, News Bureau
Study on Chicago's Wal-Mart Reveals Company's Lack of Impact on Retail Activity and Employment Opportunities in Community
Chicago Universities Loyola and UIC Team Up to Complete Informative Study
CHICAGO, January 7, 2010 - The opening of a Wal-Mart store in Chicago's Austin neighborhood in early 2006 has not enhanced retail activity in the community, nor has it enhanced employment opportunities, according to findings released today by Loyola University Chicago's Center for Urban Research and Learning (CURL), in collaboration with academics at the University of Illinois at Chicago (UIC). The comprehensive study, The Impact of an Urban Wal-Mart Store on Area Businesses: An Evaluation of One Chicago Neighborhood's Experience, also found that the probability of a local retailer going out of business during the study period was significantly higher for establishments close to Wal-Mart's location.
Based on the estimated relationship between the probability of store closings and their proximity to Wal-Mart, the research team estimates that Wal-Mart's opening has resulted in the loss of about 300 full-time equivalent jobs in its own and nearby zip codes. While there is considerable uncertainty attached to these calculations, they suggest a loss of jobs about equal to Wal-Mart's own addition to employment in the area. These estimates support the contention that urban Wal-Mart stores absorb retail sales from other city stores without significantly expanding the market.
"What we're seeing here is that placing a Wal-Mart in an urban setting is basically a "wash" in terms of sales revenue for the city and jobs for local residents," said study co-author David Merriman, head of UIC's economics department and professor of public administration. "This means that communities around the city should not see Wal-Mart, and other big-box retailers, as a panacea to local economic struggles."
In recent years, Wal-Mart Stores Inc. has begun to expand its franchise into larger cities across the country, including Chicago and Los Angeles. This urban expansion plan has stirred strong local political opposition and debates on Wal-Mart's possible negative impact on local jobs, wages, and consumer prices, but the company's impact in urban areas had never before been rigorously evaluated. Thus, in early 2006, before Wal-Mart's Chicago opening, faculty members from Loyola and UIC agreed to team up to study the impact of Chicago's Wal-Mart on the Austin community and its local businesses. Financial support for the study was also provided by the Woods Fund.
"This evaluation is important on a number of levels, and our hope is that it will aid policy makers, scholars, and community activists as they consider a full range of economic development strategies, and not just big-box developments, in their respective neighborhoods," said Phil Nyden, director of CURL.
About the Study
To study Wal-Mart's impact on economic activity in Austin, the researchers worked out a three-wave survey plan, collecting data pre-Wal-Mart, post-Wal-Mart, and post-Wal-Mart long-term. The first wave of data was collected from March 2006 to August 2006 via telephone surveys. These surveys enabled the researchers to obtain baseline information prior to Wal-Mart's opening regarding the number of hours worked by employees at local businesses, along with salary ranges and details of employee benefits. Businesses included in this portion of the study included discount stores, drug stores, apparel stores, toy stores, shoe stores, and hardware stores.
The second wave of data was collected six months after the Chicago Wal-Mart opened, from March 2007 through November 2007, and included another survey of the stores that had been contacted in 2006. This second round of surveying was conducted over the phone and concentrated on whether an immediate impact, such as going out of business or altered wages, employment, or prices, was felt due to the opening of Wal-Mart. The group was able to re-survey about 56 percent of the original stores.
The third, and final, wave of data collection began in March 2008 and wrapped up in November 2008. In all, 306 enterprises were tracked, and the research team found that 82 of them went out of business during the study period.
In addition to surveying area businesses, the group also assessed other sources of data, including sales tax data from the Illinois Department of Revenue and employment data from the Illinois Department of Employment Security.
The study's researchers included staff from Loyola's Center for Urban Research and Learning: Julie Davis, Lucia Samayoa, Brian Flanagan, and Ron Baiman, as well as UIC faculty members Joe Persky and David Merriman.
For an electronic version of the survey report, please visit LUC.edu/curl.
About the Center for Urban Research and Learning
Loyola University Chicago's Center for Urban Research and Learning is a non-traditional university research center. CURL promotes an innovative model of teaching and learning that reaches beyond Loyola's campuses and classrooms to develop equal partnerships between the University and city or suburban communities. CURL is guided by a mission that places a strong emphasis on research that addresses community needs and involves the community at all levels of research. By working closely with community leaders outside the University, the center combines the knowledge and experience of both University researchers and individuals or organizations in non-academic settings. This produces stronger research outcomes that are highly effective in addressing current and emerging community needs.
About Loyola University Chicago
Committed to preparing people to lead extraordinary lives, Loyola University Chicago, founded in 1870, is the nation's largest Jesuit, Catholic university. Enrollment is more than 15,800 students, which includes more than 10,000 undergraduates hailing from all 50 states and 82 countries. The University has four campuses: three in the greater Chicago area and one in Rome, Italy. Loyola also serves as the U.S. host university to The Beijing Center for Chinese Studies in Beijing, China. Loyola's ten schools and colleges include arts and sciences, business administration, communication, education, graduate studies, law, medicine, nursing, continuing and professional studies, and social work. Loyola offers 71 undergraduate majors, 71 undergraduate minors, 85 master's degrees, and 31 doctoral degrees. Loyola is consistently ranked among the "top national universities" by U.S.News & World Report, and the University was named a "best value" in their 2010 rankings. In addition, Loyola is among a select group of universities recognized for community service and engagement by prestigious national organizations like the Carnegie Foundation and the Corporation for National and Community Service. For more information about Loyola, please visit LUC.edu.
About University of Illinois at Chicago
The University of Illinois at Chicago is a major research university located in the heart of one of the world's greatest cities. UIC provides a first-rate education for its students and is committed to creating and disseminating new knowledge as a university of growing national and international stature. The largest university in the Chicago area, UIC has 25,000 students, 15 colleges, including the nation's largest medical school, and annual research expenditures exceeding $332 million. For more information, visit www.uic.edu.
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