Typical of shopping centers built
decades ago, Alameda Square in Denver is a cheap, single-story
strip of stores. It’s ugly and rundown. But that does not
deter shoppers. Mostly Asian Americans, shoppers come from miles
around to patronize more than a dozen Asian-owned businesses,
including two grocery stores, two restaurants, a hair salon, a
clothing shop, a jeweler and a bakery.
On a weekday
afternoon, the parking lot buzzes with activity. Inside Pacific
Ocean International Supermarket, the dingy exterior gives way to
bright lights, shelves stocked with canned bamboo shoots and dried
fish and aisles of shoppers.
Most of Alameda
Square’s businesses are profitable. Together they generate
about $125,000 a year in sales tax revenue. But if the city of
Denver has its way, these small businesses will be evicted to make
way for a Wal-Mart super-center. The city’s Urban Renewal
Authority has threatened condemnation if the property owners refuse
to sell and has offered Wal-Mart $10 million in public subsidies.
That’s right: Tax dollars would go to one of the
country’s most profitable and powerful corporations.
Because they lease their spaces, the storekeepers will receive
little compensation. The city has offered to help them find new
locations, but it is unlikely they will end up together, which has
been key to their success as a regional destination for Asian
shoppers. Some, like Kings Land Chinese restaurant, which books
weddings months in advance, are already losing business.
As big chains like Wal-Mart have grown and multiplied over the last
decade, tens of thousands of independent businesses have closed.
Most people assume that local retailers are being beaten
fair-and-square by companies that offer consumers a better
deal.
But as Alameda Square vividly illustrates, consumer
choices are not all that’s driving the growth of corporate
chains. Public policy plays a major role.
Wal-Mart leads
the pack in attracting subsidies, this year collecting $10 million
in Denver; $500,000 in Dallas; $36.7 million in Scottsdale, Ariz.,
(as part of a shopping center that includes Lowe’s); $9
million in Bartlesville, Okla.; and $17 million in Lewiston,
Maine.
Local officials argue these big stores warrant
subsidies because of the jobs and tax revenue they generate. But in
most cases the big boxes do more harm than good.
Chris
Nevitt, director of the Front Range Economic Strategy Center, one
of several groups in Colorado fighting Denver’s plan for
Alameda Square, points out that nearby grocery stores and competing
businesses will lose sales to Wal-Mart.
“As these
businesses shrink or close, hundreds of jobs will be lost, many of
which provide higher wages and better benefits than Wal-Mart,” he
argues. Moreover, under the terms of the subsidy, Denver will not
see a dime of new revenue until 2016.
Rarely are tax
dollars given to local retaiiers. For them, it’s sink or swim
in a sea of giant, subsidized competitors. When asked how
Scottsdale’s small businesses were to survive the arrival of
Wal-Mart and Lowe’s — slated to receive the second largest
corporate subsidy in Arizona history — city councilor Ned
O’Hearn declared, “That’s urban dynamics. This is
private enterprise. This is competition.”
Yet taxpayers
pick up the tab for corporate chains by bridging the difference
between what their workers earn and what they need to survive. Half
of Wal-Mart’s employees qualify for food stamps. Many rely on
other forms of public assistance. Washington state reports that
Wal-Mart workers are the single largest group of users in its
low-income health care program.
Some cities have gone so
far as to condemn property owned by small businesses in order to
turn it over to chain store developers. Last month, Wheat Ridge,
Colo., designated property owned by three independent businesses as
blighted. The three enterprises—a multi-generation, family-owned
automotive repair shop, a billiards hall, and a kitchen cabinet
business—will be booted for a Walgreens drugstore. The developer
has also been given $500,000 in public subsidies.
Tax
policy, too, is riddled with loopholes that benefit chain stores.
As the Center on Budget and Policy Priorities has documented, about
half the states allow national chains to avoid state income taxes
by transferring profits earned locally to tax-free states such as
Delaware. Small businesses, meanwhile, pay state income taxes on
every penny of their earnings.
All of this adds up to a
startlingly tilted playing field, a rigged system that can hardly
be characterized as free enterprise. Our hometown businesses
deserve better.
Stacy Mitchell is a contributor
to Writers on the Range, service of High Country News (hcn.org).
She is a researcher with the Institute for Local Self-Reliance in
Minneapolis, Minnesota, and author of The Home Town Advantage: How
to Defend Your Main Street and Why It Really
Matters.
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