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Are big boxes better career builders than small stores?

Written by RetailWire Staff

It's never been easy figuring out whether big box and chain retailers have been good or bad for the economy as a whole. On the one hand, they offer consumers tons of SKUs at good prices, offer "one-stop shop" simplicity, and due to their ubiquity are typically in convenient locations. On the other hand, they have put lots of small retailers out of business, reduced the diversity of retailers consumers have to choose from, and are rumored to pay sub-standard wages.

Yet, according to a new study from NBER and reported by the American Enterprise Institute (AEI), "large chains and large establishments pay considerably more than small mom-and-pop establishments."

"We show that wage rates in the retail sector rise markedly with firm size and with establishment size," the study's researchers from Stanford University and the University of Michigan wrote in a summary of their findings. "These increases are halved when we control for worker fixed effects, suggesting that there is sorting of better workers into larger firms."

The study also found that large chains offer more management level jobs, which pay about 20 percent more than regular workers earn. The researchers wrote, "We conclude that the growth in modern retail, characterized by larger chains of larger establishments with more levels of hierarchy, is raising wage rates relative to traditional mom-and-pop retail stores."

Noting that retail jobs pay less than manufacturing jobs, the AEI story posits that with manufacturing jobs declining, workers are doing better than they otherwise would, because they gain jobs with large retailers who pay better than small ones. And they say that manufacturing jobs are unlikely to return anyway due to automation, so the best bet for workers is to try for retail management positions.

On the other hand, an advocacy group called Good Jobs First (GJF) blames big box retail for everything from undermining small businesses and entrepreneurialism, to harming the environment, homogenizing the world of retail and depressing retail wages. On the wage issue, they cite a Civic Economics study purporting to show that national retail chains generally pay lower wages and benefits than local businesses. And GJF says that low chain wages cause workers to seek out government assistance, harming the overall economy.

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