Sun, Nov 06, 2005 - Page 11 News List

Wal-Mart bad for wages, economists warn

RESULTS A conference to examine the retailer's impact on the US economy showed that wages tend to drop by almost 5 percent wherever Wal-Mart stores are located

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Hicks found that government aid to needy families decreased by 3.3 percent with every 1 percent increase in Wal-Mart's market share.

Emek Basker and Pham Hoang Van, economists at the University of Missouri, studied the relationship between Wal-Mart's growth and the growth of US imports, examining Consumer Price Index data in 23 markets between 1984 and 2003 along with apparel import prices and market share information. The pair found that Wal-Mart's strategy of importing goods lowered wages for unskilled workers.

Some presented findings more agreeable to Wal-Mart.

In a paper examining the company's impact on prices, Jerry Hausman, a professor at the Massachusetts Institute of Technology, and Ephraim Leibtag, an economist with the Agriculture Department's Economic Research Service, found that Wal-Mart's entrance into a market lowers food prices about 25 percent, including savings from rivals' price cuts.

A second paper in which Basker studied American Chamber of Commerce Research Association price data in 165 cities between 1982 and 2002 found that Wal-Mart reduced long-term prices of some staples such as laundry detergent and toothpaste by up to 13 percent.

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