|May 24, 2004/New York TIMES
Wal-Mart's Expansion Aided by Many Taxpayer Subsidies
By BARNABY J. FEDER
Wal-Mart Stores collected well over $1 billion in state and local
government subsidies during its decades-long expansion from a regional
discount chain to the world's largest retailer, according to a report
scheduled to be released today by a group that monitors job-subsidy
"We're not accusing them of doing anything illegal or unusual in the
corporate world," said Philip Mattera, research director of Good Jobs
First, a group based in Washington that compiled the report with
financing from the United Food and Commercial Workers International
But, Mr. Mattera said, the report argues that the low wages paid by
Wal-Mart and the downward effect that has on wages at other retail
operations, its negative effect on small businesses in the communities
where it locates and its contribution to urban sprawl and traffic raise
serious questions about the value of giving it sizable financial
incentives to expand.
Similar complaints have been leveled against other "big box" retailers
like Target and Kmart. But Wal-Mart's size, profitability and capacity
to force other retailers to react to its practices make subsidizing its
growth especially questionable, Mr. Mattera said.
Greg LeRoy, founder of Good Jobs, said the report bolstered the group's
argument that taxpayer-financed subsidies to giant retailers should be
restricted to those expanding into poor neighborhoods where shoppers are
Good Jobs also lobbies states and communities to require companies to
pay what it calls a "living wage" to all workers as a condition for
getting subsidies and urges that subsidy agreements include strong
"clawback" provisions. Such restrictions require companies to repay
subsidies if they fail to deliver on jobs or other benefits they project
in their applications.
A Wal-Mart spokeswoman, Mona Williams, said the retailer, which was not
provided with a copy of the report, did not know the correct subsidy
But, she said, if $1 billion is correct, Wal-Mart could make good use of
the figure in its advertising. In the last 10 years, she said, Wal-Mart
has collected more than $52 billion in sales taxes, paid $4 billion in
local property taxes, and paid $192 million in income and unemployment
taxes to local governments.
"It looks like offering tax incentives to Wal-Mart is a jackpot
investment for local governments," she said.
Wal-Mart, based in Bentonville, Ark., has more than 2,900 Wal-Mart
stores and 91 distribution centers in the United States. It also has
more than 530 Sam's Club stores and nearly 70 Neighborhood Markets,
which were not covered in the report issued today. The company had net
income of nearly $9.1 billion on revenues of $256.3 billion last year.
Good Jobs said it found published reports of 91 Wal-Mart stores having
received tax refunds or credits, job training funds, community
investment in roads and other subsidies ranging from $1 million to $12
million. The total was $245 million.
In interviews with Good Jobs, local officials provided data indicating
that 84 of Wal-Mart's distribution centers received subsidies averaging
$7.4 million, for a total of $624 million. And searches of databases for
tax-exempt bonds issued by state and local authorities to provide
low-interest financing found that such benefits to Wal-Mart cut $138
million off the cost of developing 69 stores.
"The actual total is certainly far higher but the records are scattered
in thousands of places and many subsidies are undisclosed," the report
The report focused strictly on development subsidies. Critics of
Wal-Mart say that wages in its stores are so low that many employees are
eligible for food stamps and that lack of medical benefits leaves them
dependent on taxpayer-financed medical services, which amounts to a
large hidden subsidy. In an e-mailed statement, Wal-Mart said its wages
were "usually greater than those paid to other nonunion retail workers
and virtually identical to those of unionized grocery workers." It said
it also offered a range of fringe benefits.