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Photo: Cleveland City Hall.
Featured Article filed under Independent Business | Written by Olivia LaVecchia | No Comments | Updated on Aug 27, 2015

Procurement Can Be a Powerful Tool for Local Economies, but Takes More Than a Policy Change to Work

The content that follows was originally published on the Institute for Local Self-Reliance website at http://ilsr.org/procurement-more-than-a-policy-change/

When Bill de Blasio took office as New York City’s mayor in 2014, his administration began to tackle a less-than-flashy issue: How to change who was winning city contracts.

De Blasio had swept the election with a campaign promise of reducing income inequality, and re-directing NYC’s vast purchasing power was one of the wonky cornerstones of his plan to do it. So his administration started looking for ways to strengthen the city’s Minority and Women-Owned Business Enterprise program, designed to help businesses owned by people of color and women bid on, and win, city contracts. It appointed committed staff, integrated the program into housing policies and Hurricane Sandy recovery projects, and launched new online tools for business owners.

The program became “a core part of the mayor’s strategy on inequality,” one of de Blasio’s top aides said, and the administration identified it as a “top priority.”

It worked. That year, New York City awarded $690 million in contracts to businesses majority-owned by minorities or women, a 57 percent increase from the year before — though still only about 4 percent of the city’s overall $17.7 billion in spending. Since then, de Blasio’s administration hasn’t let up. It’s commissioned an in-depth study of the program, sought changes to state laws that would strengthen it, and set a goal of increasing city awards to minority- and women-owned firms by $16 billion over 10 years.

New York City’s new emphasis on who it does business with is just one of the recent events that’s bringing the often-overlooked power of procurement into the spotlight.

The decision of which firm will get the food service contract at the City Hall cafeteria doesn’t always make it into the news, but local governments spend a lot of money. In towns, counties, and states everywhere, there are roads to be paved, lawyers to be hired, and office supplies to be purchased, and the rules set up to govern those contracts—procurement policies—can be important mechanisms for advancing other public aims.

At least 45 states, plus the District of Columbia, have procurement policies designed to give a preference to businesses that meet certain characteristics, such as those that are owned by veterans, pay certain wages, use environmentally sustainable practices, or manufacture within the state. Of these, about half have adopted an explicit preference for businesses that are small and/or local. These policies vary considerably. Some apply only in narrow circumstances; others are broader. In addition, more than thirty states have policies aimed at steering purchasing to minority- and women-owned businesses. Looking beyond state governments, large numbers of counties, cities, and towns have procurement policies of their own.

In these policies lies the potential for governments to grow their local economies. When dollars are spent at locally owned firms, those firms in turn rely on local supply chains, creating an “economic multiplier” effect. Numerous economic impact studies have quantified this effect on dollars, jobs, and wages. A 2009 study from California State University at Sacramento, for example, found that the State of California generated approximately $4.2 billion in additional economic activity and 26,000 new jobs between 2006 and 2007 by contracting with disabled veteran-owned businesses and local small businesses instead of larger companies.

But while many states and cities have local procurement policies on the books, in a far smaller number of them are these policies delivering on their potential. Continue reading

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Featured Article filed under Independent Business | Written by Stacy Mitchell | No Comments | Updated on Jul 27, 2015

Coalition of Authors Calls for an Investigation into Amazon’s Monopoly

The content that follows was originally published on the Institute for Local Self-Reliance website at http://ilsr.org/authors-call-for-investigation-of-amazon-monopoly/

Amazon’s predatory monopoly is still unchecked, but a coalition of authors is calling on the U.S. Department of Justice to investigate it. In a 24-page letter, the coalition contends that Amazon is abusing its market power in ways that undermine competition and compromise liberty, free speech, and democracy.
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Illustration: Seesaw
Featured Article, ILSR Press Room filed under Independent Business | Written by Stacy Mitchell | No Comments | Updated on May 8, 2015

How Washington Punishes Small Business

The content that follows was originally published on the Institute for Local Self-Reliance website at http://ilsr.org/how-washington-punishes-small-business/

Small business looms large in American political rhetoric. From the campaign trail to the floor of the U.S. House and Senate, members of Congress love to evoke the diner and dry cleaner, the neighborhood grocer and local hardware store. Ensuring the well-being of Main Street, we might easily assume, is one of their central policy aims. The legislative track record tells another story. It is one in which the interests of big corporations are dominant, and many laws and regulations seem designed to bend the marketplace in their favor and put small, independent businesses at a competitive disadvantage. Continue reading

Photo: Lowe's store.
Featured Article filed under Independent Business, The Public Good | Written by Olivia LaVecchia | 15 Comments | Updated on Jun 16, 2015

For Cities, Big-Box Stores Are Becoming Even More of a Terrible Deal

The content that follows was originally published on the Institute for Local Self-Reliance website at http://ilsr.org/dark-store-tax-tactic-makes-big-box-stores-terrible-deal-for-cities/

Under what has become known as the “dark store” method, big-box retailers are declaring their busy stores to be functionally obsolescent and therefore nearly worthless for tax purposes —and they’re winning big judgments for back taxes. It’s the latest example of the way that, even as local governments continue to bend over backwards to attract big-box development, these stores are consistently a terrible deal. Continue reading

Photo: Community Bank Borrowers
Featured Article filed under Banking, Independent Business | Written by Stacy Mitchell | No Comments | Updated on May 5, 2015

One in Four Local Banks Has Vanished since 2008. Here’s What’s Causing the Decline and Why We Should Treat It as a National Crisis.

The content that follows was originally published on the Institute for Local Self-Reliance website at http://ilsr.org/vanishing-community-banks-national-crisis/

The precipitous decline in the number of community banks in recent years is a national crisis, and there’s a fierce debate underway right now about what’s to blame. Continue reading