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Thursday, August 25, 2016


The Adventures of the Tom Sawyer Economy

by Tom Sullivan

Tom Sawyer's Fence marker, Hannibal, Missouri.
Photo by Jimmy Emerson, DVM via Flickr/Creative Commons 2.0.

Leaving environmental damage for taxpayers to clean up is not the only way large companies externalize costs Forbes reported in 2014:

Walmart’s low-wage workers cost U.S. taxpayers an estimated $6.2 billion in public assistance including food stamps, Medicaid and subsidized housing, according to a report published to coincide with Tax Day, April 15.

Americans for Tax Fairness, a coalition of 400 national and state-level progressive groups, made this estimate using data from a 2013 study by Democratic Staff of the U.S. Committee on Education and the Workforce.

“The study estimated the cost to Wisconsin’s taxpayers of Walmart’s low wages and benefits, which often force workers to rely on various public assistance programs,” reads the report, available in full here.

“It found that a single Walmart Supercenter cost taxpayers between $904,542 and $1.75 million per year, or between $3,015 and $5,815 on average for each of 300 workers.”
But you knew that.

Now the company has found another way to keep profits up: by externalizing the cost of theft prevention. As a result, in Tulsa, Oklahoma and other Walmarts across the country stores are experiencing a crime wave. Shannon Pettypiece and David Voreacos write at Bloomberg Businessweek: Walmart’s Out-of-Control Crime Problem Is Driving Police Crazy. Tulsa PD's Darrell Ross spends so much time there he's known as Officer Walmart:
It’s not unusual for the department to send a van to transport all the criminals Ross arrests at this Walmart. The call log on the store stretches 126 pages, documenting more than 5,000 trips over the past five years. Last year police were called to the store and three other Tulsa Walmarts just under 2,000 times. By comparison, they were called to the city’s four Target stores about 300 times. Most of the calls to the northeast Supercenter were for shoplifting, but there’s no shortage of more serious crimes, including five armed robberies so far this year, a murder suspect who killed himself with a gunshot to the head in the parking lot last year, and, in 2014, a group of men who got into a parking lot shootout that killed one and seriously injured two others.
Pettypiece explained the situation last night to NPR All Things Considered host Robert Siegel:
SIEGEL: Why? Why is this happening now?

PETTYPIECE: Part of it is just the very nature of Wal-Mart. It's big. It's everywhere. It has millions of customers go in there every day. But another element of it is decisions that the company has made to cut costs over the past decade or more.

They've trimmed the number of employees they have in their stores. They've taken more of a reactive rather than a preventative approach to shoplifting and stopping crime. And to criminals, that all sends a message. No one's watching. No one cares, and no one's likely to catch you. And it's sort of become, like, the wild, wild West for criminals in their stores.

SIEGEL: For your article in Bloomberg Businessweek, you did a comparison between Wal-Marts and Target stores in Tulsa. And there's a real difference you found.

PETTYPIECE: The Targets get a fraction. In Tulsa, the four Wal-Mart stores last year got just under 2,000 calls. Target - their four stores got 300 calls. And it's difficult to explain that. I mean I talked to some shoplifters while I was there. They only steal from Wal-Mart.

I remember asking one young woman, well, why'd you steal from Wal-Mart? Why not the mall? Why not Target? It was like it never crossed her mind to steal from anywhere other than Wal-Mart. She just felt like it was easy to get away with there.
Police Pettypiece and Voreacos spoke with are sick of it:
“The constant calls from Walmart are just draining,” says Bill Ferguson, a police captain in Port Richey, Fla. “They recognize the problem and refuse to do anything about it.”
Pettypiece told NPR:
PETTYPIECE: Wal-Mart says they're trying to do things like put more employees at the door. They've been trying to invest in theft prevention technology, devices they can put on merchandise or more, you know, visible security monitors. The police complaint is that they're not moving fast enough, and they're not moving far enough.

And I talked to one retail analyst who thinks Wal-Mart needs to add an extra quarter million part-time employees in its stores to really have the employee presence out on the floor that would deter theft. And for Wal-Mart, that's going to cost them billions of dollars to fix this problem like some people would like to see.
But it's better for their bottom line to externalize the cost of store security and let taxpayers pay it. It's a Tom Sawyer economy. We pay for them to conduct their business.