Monday, February 16, 2015

Costco and the myth of job creation.

During last week's "State of the City" announcement, Rochester mayor Lovely Warren made much of her alliance with Republican County Executive Maggie Brooks to get Costco to Rochester.
Negotiations to get Costco to Rochester began before Warren was elected mayor.
Costco's coming to Rochester has been hailed as something that will help save Rochester, almost like the Second Coming of Christ.
It will create new retail jobs.
They will be high paying; Costco is known to pay its employees more than double what K-Mart, Gold Circle, Best Buy, McDonalds, Walmart or any other national chain pays.
It will dress up the southern gateway to our city.
Unfortunately, it is true and it isn't.
Costco will not really be creating "new" jobs.
It will only seem like it when Costco does its initial hiring.
Neither Mesdames Maggie and Lovely seem to be aware of the fact the population of Monroe County and Rochester is stagnant.
No huge population growth is predicted. Having a Costco in Rochester will not entice anyone into moving here.
So Costco will have to draw that same stagnant pool of shoppers away from other retailers currently in the area.
Furthermore, Costco will carry the same merchandise as the other retailers, though perhaps at a slightly cheaper price.
There will be nothing really "new" about what Costco will be offering shoppers.
How many different stores do we need to buy toilet paper, paper towels and soap?
The long term prognosis is not good.
As Costco draws shoppers away from other retail stores, those stores affected by the loss of revenue will either have to lay off employees or close entirely.
Costco will not be able to absorb those unemployed retail employees.
There is worse yet to come.
Rochester and Monroe County depend more heavily on sales tax revenue than they do in property taxes.
While Costco might prosper ( at least at the outset ) and pay a great deal in sales tax, those other hard pressed retailers that have lost business to Costco will be paying less.
This means that there will be no appreciable growth in the revenues raised by sales tax.
We will probably not be any better off than we are now.
The slums and ghettos will continue to exist.
Poverty will continue to be concentrated in our city.
A few hundred jobs will be created by Costco; a few hundred jobs will be lost by retailers retrenching to compete with Costco or going out of business.
Plenty of national retail stores have left the Rochester area in the last few decades, leaving employees stranded in their wake.
There will be no real growth, no real jobs created.
It is a shell game.
But Rochester will have Costco.
Big deal.
There's always telemarketing.

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