Opinion: ‘Retail is not economic development’


The word on the street is that the county commissioners and the City Council are going to be asked to endorse an in incentive package for a retail development group. On this site Tom Hannon has even said there is a fire station in the deal.

Here is some advice from Greg LeRoy in his book “The Great American Jobs Scam Corporate Tax Dodging and the Myth of Job Creation.” This comes from the chapter titled “The Hidden Taxpayer Costs of Subsidizing Big-Box Retail.” We should ask all our elected officials to make a statement on where they stand on incentives. How about it, county commissioners, school board members, and City Council folks and those running for office? Who has the guts to respond to what LeRoy has to say:

“America is awash in excess retail space. The National Trust for Historic Preservation estimates we have 38 square fee of store space for every man, woman, and child. Measures vary, but other industrialized nations report between 1.5 and 8 square fee per capita. We are way out of whack with comparable economies – and with our own history. In 1960, we had about four square feet per capita, and by 1977, still only about eight.

“Despite the fact that retail is a truly lousy economic development investment, a lot of this excess retail space has been getting subsidized. The big dogs driving this trend are the ‘category killer,’ ‘power center’ players like Wal-Mart, Home Depot and Target. Of course, Wal-Mart is the alpha dog of department stores, since it is five times bigger than #2 Target. It’s also apparently the alpha hog at the public trough, as I’ll explain – benefiting from more than $1 billion in bricks-and-mortar subsidies for its stores and warehouses.

“Retail rarely deserves to be subsidized, because it packs such a lousy bang for the buck compared to manufacturing or almost any other activity. To measure the ripple effects of a new business, you look ‘up-stream’ to see how many supplier jobs the region would gain, and then you look ‘downstream’ to see how many jobs would be created by the buying power of the people who work at the business. The upstream of a big-box store does not create many jobs for the local economy (think of all those goods made in China), and the downstream ripple effects are terrible because retail jobs are overwhelmingly part-time and poverty-wage, with no healthcare. That means most retail workers have very small disposable incomes: after paying for bare necessities, they have nothing left with which to stimulate the local economy.

“In short, retail is not economic development; it’s what happens when people have disposable income. … You and I do not have more money in our pockets because we have more places to shop. Building new retail space just moves sales and lousy jobs around. It doesn’t grow the economy.”

In another place in the book, LeRoy writes: “There’s a direct collision between companies avoiding their property taxes and children having good schools.”

— Submitted by Pie in the Sky