By Haddon Libby
If you could help strengthen our local economy and create new, good paying jobs, would you?
By engaging in the simple act of shopping at locally-owned and operated businesses, you can.
Multiple studies show that locally-owned independent restaurants return twice as much per dollar of revenue to our local economy as chain restaurants. Independent retailers return more than three times as much money per dollar of sales than chain competitors (or online merchants). This phenomena is called the “local multiplier effect” – a term first coined by John Maynard Keynes in his 1936 book, “The General Theory of Employment, Interest and Money”.
Let’s assume that you want to spend $100 on clothes. You can go to a big box store or shop at a local retailer like, Resale Therapy. That $100 that you spent will in turn be spent by the big box store or Resale Therapy on the things it takes to run their respective businesses. The difference between the two businesses is that the better jobs at the big box store are not local. Most management, buyers, attorneys, accountants, marketers, etcetera all live somewhere else for the big box retailer. Looking at Resale Therapy, all jobs are local. By shopping at the local store, at least three times as much money is kept in the local economy.
The benefit to the local economy does not stop there. The money spent by Resale Therapy on their local attorney, accountant and employees recirculates again as each spend on their businesses and living costs.
What hurts our economy most is the purchase of foreign made products at a big box or online stores. What this does is ship your money offshore with some going to the headquarter town of the big box store. While you may have saved, the purchase did very little for our local economy or for that matter our national economy.
Multiple studies show that the economic recovery that has occurred happened at the expense of the middle class as well as seniors. Stated differently, jobs created have been lower paying with the erosion of good paying jobs. Seniors have been hurt by easy money policies that have kept savings rates at historic lows.
The recent strike by fast food workers points out the larger problem with the current recovery. Due to a dearth of higher paying jobs, many people are resorting to what used to be starter or transitional jobs in the workforce as their only option to support their families. In the past, these jobs were typically held by high schoolers, people who wanted schedule flexibility or seniors looking to subsidize their retirement.
The challenge presented by the growth in chain restaurants is that these jobs are essentially subsidized by you and me. Many of these workers rely on public subsidies for healthcare, food and eventually retirement. While we hear arguments that our costs would go up if these workers were paid a ‘living wage,’ we already pay these costs through public subsidies. For comparison, In-n-Out Burger pays living wages to all of their employees yet still has a competitively priced product. Some chain restaurant CEOs are paid nearly 1,000 times as much as their average worker.
When people like the chain CEO make so much, they save more. While savings provide capital and debt to business and the government, it does not create as much economic activity as the person who is spending money.
To improve our local economy, patronize locally-owned businesses whenever possible. By doing this, you are helping to break the current cycle that concentrates wealth in the hands of the few while strengthening our local and national economies.
