Sprawlnomics

November 3, 2023



I recall the argument in each and every town. Some older gentleman exhaustedly explaining to me how I just didn’t get it—frustratedly laying out the argument that Walmart was going to be good for their community. First, there was the construction, all that labor and materials. Then there were the real estate taxes, the sales tax, the income tax, and of course all of the jobs that would come along with it. In essence, Walmart was going to be a real boon to the community. When all those arguments were fended off, the last resort was always, “Well if we don’t land them here, they will just go to the neighboring county and we will lose all that money.”

I do, in fact, get it. Which is to say, I understand the reasoning behind the argument, but the facts just don’t support it. So let’s talk about why sprawl is an investment in decline. I am going to use lots of Walmart examples and data here because as the world’s largest employer, they tend to attract a lot of research, but make no mistake about it, all national chains are in the community wealth extraction business, some are just nicer about it than others.

  • New retail does not create new demand. An increase in the supply of consumer products typically does not lead to an increase in demand. When a new retailer opens and there are more socks for sale or batting helmets or sunglasses, the local population does not instantly demand more socks or batting helmets or sunglasses. Consumer shopping patterns simply change. If they were currently getting those things from a local business, they can now get them from a national chain. Retail sales don’t increase, instead, they shift.
  • The vast majority of jobs for national chains are low-paying and often require public subsidies. “Walmart and McDonald’s are among the top employers of beneficiaries of federal aid programs like Medicaid and food stamps, according to a study by the nonpartisan Government Accountability Office.” Walmart’s net income in 2022 was over $13 billion and McDonald’s was nearly $10 billion, yet taxpayers subsidize their employees because they refuse to pay a living wage.
  • In a study titled The Effects of Walmart on Local Labor Markets, the researchers found that within five years after a Walmart opened, the county in which it was located lost approximately 150 jobs, and realized a retail reduction in sales of $1.4 million. So not only does Walmart not improve the local economy, it actually makes it worse.
  • Walmart increases crime. In a study conducted by the British Journal of Criminology, it was found that “If the Walmart corporation built a new store, there were 17 additional property crimes and 2 additional violent crimes for every 10,000 persons in a county.”

Just a few examples of why allowing sprawl in your community is a bad idea. As stated above, none of these problems are unique to Walmart. Every bit of sprawl drags down the local tax base while increasing crime and also draining public assistance resources. It requires ever more costly infrastructure, while not bringing in enough tax revenue to maintain it, all while depressing the hell out of everyone who lives near it and dampening residents’ sense of civic self-esteem and civic pride.

National chains and sprawl developers promise heaven and they get everyone all fired up about the jobs and new investment, but what they end up delivering is hell. Any community can look back and see that things were better before the edges of town filled up with vinyl wealth extraction cubes.

The simple fact of the matter is, they take out more than they put it. How else could they possibly exist otherwise? Any business that is not locally owned must extract more than they invest, it’s just math.

The sad fact is, national chains just have all the resources available to sell themselves and to present a pretty package to local officials. They need your city’s money so they have to pretend to be a benefit. Local entrepreneurs never collectively pitch their impact to government officials. They aren’t organized in a manner to show off how much they benefit the community and how vital they really are. This is not their fault, this is the nature of small and organic systems. It’s policymakers and community leaders who should understand this and provide them with the resources they need to thrive.

It’s because national chains promise a big impact from the outset, but drain the community dry in the long run that they are able to get away with it, Local businesses don’t cause any big splash when they open, but they end up building up the fiscal and emotional health of the town longterm which is why no one pays attention.

In essence, a sprawl corporation comes to town and offers up the city a shiny $100 bill in year one, then for the next 20 years, they take back a $20 and send it home to HQ. For a small investment up front, they are provided the opportunity to drain the community of money for a decade or two.

Local businesses might need a hand-up. They might need a little assistance. Maybe they ask the city for $20 in year one for help with renovations or buying equipment, but for decades to come, they will be giving the city $5 back. Multiply this by a hundred small businesses and it’s a recipe for prosperity and fiscal sustainability. It comes down to math and long-term versus short-term. Sure, a new investment on the edge is exciting, it makes the newspaper and might get people some attention, but ultimately, it’s an investment in decline.

A city has options as to how it grows. It can sprawl out, weaken, and cheapen itself for some short-term cash or it can invest in itself and its people. It can grow incrementally and meaningfully and more importantly, sustainably, while simultaneously becoming the type of place that builds local wealth and fosters a strong emotional attachment from residents. It should not be a difficult choice.




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