Big Box Retailers Don't Pay their Way, Study Says

If you buy from a big box retailer, you may pay more for those low-cost jeans and backyard grills than you think. Low prices may lead to higher taxes, as big boxes increase traffic congestion, require more street and drainage improvements, burden local police and the public health care system, and hurt local businesses.

Those are the findings of a new study of big box retail sponsored by local nonprofits and unions. The study was conducted by a team of local economic development experts, including two University of Texas professors, and takes direct issue with an earlier study sponsored by the City of Austin. .

"There is no free lunch," said Michael Oden, a professor of Community and Regional Planning at the University of Texas and a co-author of the new study. "It's estimated that every Wal-Mart store costs taxpayers over $400,000 per year in subsidies for poorly paid, uninsured workers. These workers need health and child care, affordable housing, even food. Taxpayers are also footing the bill for traffic congestion costs, infrastructure improvements and higher public safety costs."

The earlier City study claimed that big boxes do not compete with local business, and that most big box problems could be addressed through design standards. "Design standards just don't go far enough," said Oden. "The big problems with big box retail aren't design, they're economic. We need economic solutions."

"The best solution is to require a conditional use permit," said Bill Spelman, a professor at UT's LBJ School of Public Affairs and another co-author of the new study. "Developers who propose big box developments should be made to demonstrate that their developments will not demand more in city services than they contribute in taxes. If they cannot do that, they need to pay their fair share," Spelman said.

Robin Rather, chair of the board of Liveable City, a study sponsor, put the policy implications in context. "We're not suggesting a ban on big box, we are not saying don't shop at big boxes. We are simply asked these national big box employers to carry their own weight and to stop passing their costs on to local taxpayers," Rather said.

The study also examines the effect of big box retailers on local wage rates, commercial property vacancy rates, and the drain of sales tax revenues to the suburbs. It also presents some "best practices" of big box regulations developed by other jurisdictions nationwide and makes specific policy recommendations to City Council.

Study sponsors say Austin is at a critical juncture for big box development, noting that Wal-Mart representatives have discussed future plans to build 11 new supercenters in Austin. The sponsors also point to a new poll by Opinion Analysts, Inc., which found that 59 percent of Austin residents are concerned about increased big box development and 71 percent think City Council should do more to promote the interests of local independent businesses over those of national chains.

The full text of the study is available from study sponsor Austin Full Circle, on their website: Other sponsors include the Austin Independent Business Alliance and AFSCME Local 1624.

Contact: Susan Moffat