Wal-Mart's lengthy struggle to open in New York City has hit fresh problems -- a controversial report that said America's biggest discounter does not just sell cheap, it makes neighborhoods poorer.

The report concludes that Wal-Mart, the biggest U.S. private employer, kills jobs rather than creates them, drives down wages and is a tax burden because it does not give health and other benefits to many part-time employees, leaving a burden on Medicaid and other public programs.

The New York City Council will hold a public hearing on Thursday on the impact a Wal-Mart would have but the retailer has declined to attend.

Wal-Mart dismisses the critical report -- released in January by City University of New York's Hunter College Center for Community Planning -- as "randomly selected statements from ... flawed studies."

The report is based on 50 studies of Wal-Mart openings and comes as the company tries to gain a foothold in some of New York's poorest neighborhoods.

"The overwhelming weight of the independent research on the impact of Wal-Mart stores ... shows that Wal-Mart depresses area wages and labor benefits ... pushes out more retail jobs than it creates, and results in more retail vacancies," the report concluded.

Wal-Mart spokesman Steven Restivo said a store would bring good jobs and good shopping for fresh food to locals. To push its case, Wal-Mart launched a public relations blitz in mid-January with radio and newspaper ads and a website, www.WalMartNYC.com, which features positive coverage of the company.

New York City Public Advocate Bill de Blasio calls a possible Wal-Mart store in New York "a Trojan horse."

"It looks appealing to a lot of families who are hurting but it turns into a big problem in the long term because of the net elimination of jobs," de Blasio said.

Wal-Mart has been trying to open in New York since 2005 but various plans floundered on objections from the community and union activists. Now the company is reported to be looking at locations including East New York and Brownsville -- Brooklyn neighborhoods known for high unemployment, crime and drugs.

Dilapidated buildings and empty lots are common and many residents live in public housing in these neighborhoods. The U.S. Census data for 2007-2009 show the median family income in the East New York neighborhood is $33,485; in Brownsville it is $26,802. The median family income in all of New York City is $55,562.

Planned Wal-Mart stores have long met opposition in places such as Chicago, where last year Wal-Mart secured approval to build two new stores after agreeing to use union labor.

Despite the poverty in East New York and Brownsville, many residents are against the stores setting up here.

"It would be a disaster," said Mark Tanis, owner of an East New York shopping market about three miles from a proposed sites. "It would have a detrimental impact on our area."

Tanis said he fears a product he sells for $20 could sell for as little as $12 at Wal-Mart and drive him out of business.

East New York resident Darryl Williams, 43, echoed the view of many, saying, "Cheap things would be nice but if it's true that we'll end up with even fewer jobs, that's not good."

Courtney Laidlaw, 22, who lives near the two possible locations said, "We have become a society of bargain shoppers and having a Wal-Mart locally will definitely be beneficial.

"The small businesses that can adapt to the socioeconomic times that we live in will find a way to survive. Wal-Mart is just an alternative destination, not the only destination."

In Brooklyn, one of the loudest anti-Wal-Mart voices has been City Councilman Charles Barron from East New York, who has been leading demonstrations.

"We don't need Wal-Mart (which) has a history of destroying the local economy and hurting it, not helping it," he said.

(Reporting by Bernd Debusmann Jr.; Editing by Mark Egan and Bill Trott)