Big Box, Big Mistake

At the Deerfield Community meeting on August 14, 2013, Colorado Springs Mayor Steve Bach and city employees attempted to explain his upcoming budget and proposed Economic Revitalization Plan (if you’d like to read a brief summary of the budget, click here). The city’s efforts to simplify the message certainly showed some inspiration. For instance, they broke down expenditure percentages using the $100 spending model. The plan touts big-box store attraction and capital building projects as mainstays for our economy’s growth. Still, while some consider Bach’s strategy tenable, in reality, the Economic Revitalization Plan doesn’t really support a policy of long-term economic sustainability.

Toward the end of the meeting, Mayor Bach’s team leader Bob Cope, a Broker Associate at Front Range Commercial, discussed the Economic Opportunity Zone Program. This plan would revitalize Colorado Springs in specific target areas, focusing on three main areas: Downtown, the North Nevada Corridor, and Southeast Colorado Springs. As part of the program, Colorado Springs would build a new Sky Sox Stadium and United States Olympic Committee (USOC) Museum downtown, expand parts of the University of Colorado at Colorado Springs campus / surrounding area, and attract new developers into the region.

Cope discussed the addition of several new big box retail stores, such as the new Lowes at Citadel Crossings and the Neighborhood Market at Chelton and Academy (Wal-Mart grocery stores), touting these installations as successes in economic revitalization. While these stores do provide economic stimulus and create jobs, studies regarding the economic sustainability and impact of national retail chains on communities have found that large retailers do not contribute as much money to local economies as locally owned and operated businesses. According to a 2005 study, Wal-Mart retail workers earned an estimated 12.4% less than retail workers as a whole, and 14.5% less than workers in large retain in general. In their findings, Dube & Werthheim stated that “Wal-Mart entry into an economy does not lead to net new jobs, and overall it reduces total take-home pay for retail workers” across the retail industry. These “successes” may create a certain breed of new jobs, but such jobs are not always quality ones and don’t spell long-term economic success.

Big-box stores alone cannot improve a community’s quality of life. In a 2013 study, researchers in British Columbia found that independent or locally owned retailers recirculated 45% of their revenue into the local economy. In stark and shocking contrast, chain retailers only recirculated 17% of their revenue into the local economy. Similarly, a 2011 study in Portland, Maine concluded that $100 spent in a local store would amount to $58 in local impact, whereas $100 spent at a national chain store would only generate $33 in local impact. This phenomenon redistributes local money into national and international corporations. In essence, these large companies can limit communities’ local economic viability every time we shop in them.

In addition to causing long-term local economic problems, Wal-Mart and similar businesses do not provide economic independence from the state, and this sub-standard earning potential strikes many economists as a sub-standard bargain. Survey data taken directly by the Wal-Mart company in 2005 reported that at least 24% of Wal-Mart workers and 46% of their dependent children were either uninsured or enrolled in public health programs. While Wal-Mart has worked hard to remedy this problem, they still do not offer quality, affordable health care to their part-time workers, which equates to at least one-third of their workforce. Unfortunately, as all too many Wal-Mart employees know from experience, surviving comfortably on a regular Wal-Mart associate’s salary is difficult to say the least, and taxpayers are picking up the slack for one of the World’s richest companies. One can only imagine surviving on such a salary with a family to feed and just one or two breadwinners.

Proof of the long-term effects of large, multinational retailers can be seen all over the country with one’s own eyes. Locally in Colorado Springs, simply visiting the Wal-Mart at 707 S. 8th St. provides serious food for thought. This store is located in one of the economic sinkholes of Colorado Springs. It was built in 1988, and the effect on the surrounding economy is obvious. This area is rife with strip malls, fast food joints, and other big box stores. Less than 30 years after being built, the place is a hotbed of criminal activity and poverty because we just planted a Wal-Mart seed, praying it would grow a magical beanstalk and fix the issue.

While large retailers can cause problems in local economies, several solutions come to mind, and some may be easier than we think to implement:

1. In order to balance local and non-local economies, business and community leaders can encourage local entrepreneurs to move into targeted areas by offering incentives.

2. As shoppers, we can distribute our money across the spectrum of local and non-local businesses by shopping at different stores. Supporting local business begins with locals, and we all need to be more conscious of our our spending impacts the local, national, and world economies.

3. As community members interested in our neighbors’ qualities of life, perhaps we can reach out to retail employees and help them discover how to leverage their own power base. Adequate salaries and acceptable standards of living will take a large burden off our government and place it upon the shoulders of the corporations.

4. Local eyesores, like our own Wal-Mart on 8th Street, could be the focus of nonprofit groups interested in revitalizing the area. Community commons areas and gardens are just one way we can create a more inviting space around large retail stores and foster small business at the same time.

5. We might want to stop pitting large and small businesses against each other as if they are enemies in an economic war. We can begin fostering partnerships between bigger and smaller businesses. Both multinational corporations and local technology start-ups are part of our economy, and they’re not going anywhere anytime soon unless they decide to move.

Whether we like these realities or not, we must face them. Community conversation and connection will play a key role in each of these areas.

The plans for big box stores aside, the revitalization project includes construction of a new stadium downtown, an Olympic Museum, and additions to the Air Force Academy and the University of Colorado at Colorado Springs. Bob Cope attested that this development would generate $30 million in additional sales tax revenues over 30 years. We would see $1 million a year in benefits from all this construction, the additional jobs, and tourism revenue. Whether net or gross, this is an extremely disappointing number. As is, the Medical Marijuana Industry alone grossed nearly the same amount of revenue ($989,351 in 2012). Though Cope was not clear about whether the $1 million per year would be net or gross sales tax increases, many citizens question whether we should spend $218 million on four projects for such a seemingly small amount of revenue.

Many citizens express disbelief and outrage when they realize officials aren’t taking every chance to bring in more revenues. Our city officials had the chance to generate considerable revenue for the Springs’ by enacting retail marijuana regulation and passing a special tax for the City of Colorado Springs, but politics once again stood in the way of revenue generation. Perhaps, for the good of our city, we should put politicking aside.

Instead of tackling both issues and turning all tax revenues to our advantage, leaders decided that insolvency could be cured through focused economic zone development and attracting young families to the area. Once again, the unfortunate truth interjects into the conversation. Young families are in short supply in America these days. Only 3% of women in the US chose to marry last year, and whether we like it or not, the reality of an average American family more often includes a single parent struggling to make it as a young professional and move up the corporate ladder. Such families may not elect to move to our city because we have a very conservative reputation.

Furthermore, the American population as a whole continues to decline. In 2011, rates dropped below the replacement rate, which is two children per woman. America rarely reaches the replacement rate in any ethnicity, so the youth will become increasingly outnumbered by an aging population. This is a reality we must face, and in order to do so, we need to have plans of sustainability in mind. As a young professional woman, I, too, have decided to forego having children because the choice is more economically feasible and conducive to my lifestyle. Access to birth control and other contraceptive devices have allowed women a choice regarding motherhood, and their resounding decision has caused a population decrease. Many argue that this may be better for the environment, but economically, this could cause challenges in America’s future. Because of population decreases, young professionals will continue to be a hard sought-after commodity, and they will be less willing to move into a town where they feel unwelcome. As the redefinition of American family continues, less families exist to relocate to Colorado Springs.

Unfortunately, birth rate decreases and an aging population will not bolster an economy based on a model of continual, unrepentant expansion. If our economies cannot sustain themselves without continual growth, then perhaps we should look at our economic system and figure out why it’s broken. Sustainable economies make much more sense than virus-like economies. Balanced economic growth and reinvestment will allow us to move into a more responsible future while promoting environmental stewardship.

While we can applaud Springs officials’ enthusiasm when reaching out to those larger businesses and leading such complex and time-sensitive projects, as citizens, we have a duty to request harmonious and inclusive economic policies from our leaders. We need to tell them what we want, discuss, and work on creating community compromises. We can, together, create systems for sustainable, healthy business sector growth in Colorado Springs. The Economic Development Plan has a few problems we need to discuss as a community, and we’ll all probably have to compromise on one topic or another. The assumption that large, multinational retailers create quality jobs isn’t always true, so encouraging this kind of economic development without encouraging other sectors is not a viable solution.

The picture presented by city officials seems one-sided, and our citizens deserve to be part of this conversation. As the resident population, we’ve invested in our lives here. We want to attract innovative, talented businessmen and -women while creating economic and environmental sustainability. Perhaps the larger structure of the economic development plan would be feasible if, in addition to inviting big businesses into our town, we encourage local business owners and entrepreneurs to expand and start new businesses. Maybe viable and successful larger businesses could offer mentorship to help new professionals create sustainable, well-researched business plans.

To date, the largest issue that stands in our way is communication. Businesses, nonprofits, community leaders, government officials, and citizens must agree to come together under common cause to have this conversation before we take actions causing contention. Our economy can be revived, but we have to make smart, forward-thinking decisions together. We have to think beyond the next 30 years and plan for a future beyond our own lifetimes.