WAL-MART SUBSIDY WATCH METHODOLOGY

It must be admitted from the start that it is impossible to calculate the total value of the subsidies that Wal-Mart has received over the course of its history, or even in a given year. That’s because there is no central source of information on economic development subsidies that are awarded at the state or local level. Public disclosure requirements are minimal. A small number of states release some collated information, but in most of them the disclosure provisions do not cover all forms of subsidies, and there is no consistency in how the information is published.

This is not to say that all subsidy deals are closely held secrets. While most companies (including Wal-Mart) do not publicly discuss these deals, government officials sometimes do so, in the course of bragging about their success in luring new investment to their jurisdiction. Some subsidy packages become topics of debate when they are being considered by local officials and thus are reported by local newspapers. Local economic development officials, when contacted, are usually willing to describe their use of incentive packages, though in some cases it may require persistent queries or a formal freedom of information request.

In other words, once the existence of a subsidy deal is known, it is usually possible to determine many of the details. The trick is figuring out where the deals have been negotiated. This is especially challenging in the case of a company such as Wal-Mart, which has opened stores in more than 3,000 communities and continues to expand at a feverish pace. It was not feasible for us to contact local officials in every one of these communities, so we took a different approach.

We assembled our list of subsidy deals by searching electronic newspaper archives available on leading commercial database services such as Nexis and Factiva. We knew this would not provide a comprehensive list, given that: not every subsidy deal gets written about in the newspaper; not every newspaper has an electronic archive; not every electronic archive is available on the commercial databases; and few of the available archives extend back more than a decade. However, we felt this was the only practical way to begin identifying Wal-Mart subsidy deals and thereby determine whether the company has been a frequent recipient of public assistance.

When we found a “hit” in the database searching, we contacted state and local economic development officials to confirm the newspaper account and to obtain additional details and documents. Those details are summarized in the deal pages of this website. Because some of the deals were more than a decade old, it was often not possible to get precise amounts for the value of the subsidies. Where possible, we obtained documentation, but in many cases we needed to rely on the recollection and estimates of local officials. Using a database of bond prospectuses, we found an additional 69 cases in which Wal-Mart stores received industrial revenue bond financing.

In doing our online searches, we came across many references to subsidy deals involving Wal-Mart’s rapidly growing network of distribution centers. Because the number of distribution centers (around 100) is much more manageable than the number of retail stores, we decided to take a different approach for them. We contacted local economic development officials in every community in which a distribution center has been built or is being constructed, whether or not our online search turned up references to subsidies.

We did not examine Sam's Club warehouse stores, which are owned by Wal-Mart, except those cases in which the Sam’s Club was part of a project that also included a Wal-Mart discount store or Supercenter. We also excluded subsidies to distribution centers serving Sam’s Club stores. Most of these are leased from other private parties rather than owned, and thus Wal-Mart would be unlikely to be the recipient of any subsidies related to their construction.

In numerous retail store projects, a complication was created by the fact that the subsidy was paid not to Wal-Mart or its subsidiaries/affiliates but instead to a developer. We included these cases as part of the overall compilation of subsidies to Wal-Mart, since the developers were usually acting in conjunction with the giant retailer. Wal-Mart benefited from the subsidies at least indirectly, such as in the form of lower rents made possible by the reduced costs for land acquisition and site preparation brought about by the government assistance. In those projects that involved anchor stores in addition to Wal-Mart, we apportioned a share of the subsidies to Wal-Mart.

Even if one argues that we overestimate Wal-Mart’s subsidies in projects that involved developers, the result was certainly much smaller than the unavoidable underestimation of retail subsidies due to the absence of centralized data, meaning that we probably missed many deals that were not publicly debated. Moreover, our tallies on many of the deals we did find are in all likelihood understated, since detailed information on subsidies such as state corporate income tax credits is largely unavailable, given that corporate income tax returns are confidential documents.

Finally, we are confident that the true total of Wal-Mart’s retail subsidies is much higher based on the company’s own words. An article in the March 30, 2001 edition of the Dubuque (Iowa) Telegraph Herald quoted Wal-Mart executive B. John Bisio as saying “it is common” for the company to request subsidies “in about one-third of all [retail] projects.” That would suggest that more than 1,000 Wal-Mart stores may have been subsidized, far more than the number we found from public sources. The subsidy deals documented on this website may very well be the tip of the iceberg.


2007 Good Jobs First. This site is in no way connected with Wal-Mart Stores, Inc. or any affiliate of Wal-Mart Stores, Inc.