Tucson Sentinel, June 24, 2013
Local independent businesses are the cornerstone of the economy and connectors of the community. Because they are rooted in the cities and towns they operate in, living and raising families there, local business owners impact their local economy and community quite purposefully.
According to Stacy Mitchell of the Institute for Local Self-Reliance, locally owned businesses support a much larger number of jobs: they typically employ more people per unit of sales and all of their staff is on site. For example, a small locally owned retailer employs on average nine people per $1 million in sales, while a big box store employs five and Amazon employs one.
Local business owners are leaders in the community creating a living for themselves and their employees while providing goods and services they are passionate about. They also live in the community, perhaps coaching kids sports and donating to local school and charities.
Often what we don’t think about when considering the impact of supporting local businesses is the second- and third-tier jobs they provide. The independent coffee shops and retailers hire local graphic designers, attorneys and repair technicians. They may also bank at a community bank or credit union. So in addition to often paying higher wages to their employees, local businesses keep money recirculating in the local economy via local sourcing for goods and services. These second-tier jobs then create third-tier jobs in the form of outsourced janitorial services, for example. Local businesses help create an economic ecosystem that creates more prosperity on Main Street.
A 2002 economic study on the impact of local businesses showed that for every $100 spent at a locally owned bookstore, $45 stays in the local economy versus only $13 spent at a national chain. The dollar impact of local vs. non-local spending can vary from community to community and across industries but, many economic studies conducted in the past 10 years have shown that about three times the revenue recirculates in the local economy when spent at a locally owned business.
In November 2007 Local First Arizona commissioned a study of the state’s procurement policy and it’s affect on the local economy. The state awarded a $5 million office supply contract to a national chain. Here’s what was found: just 11.6 percent of the $5 million stayed in the local economy. If the same contract had been awarded a local family-owned office supply company – in this case, Wist – 33.4 percent would have stayed. That is over $1/2 million that leaked from the Arizona economy in just one contract. Additionally, the chain store provides nearly 62 percent part-time employment with no benefits whereas the local supplier has 100 percent full-time, benefits-earning employees.
Arizona state law requires state contracts go to the lowest bidder without regard for the quality of the service being provided. We are one of three remaining states that does not have a local purchasing preference. Arizona is one of three remaining states that does not acknowledge that a local business outperforms a national one when the measurement includes such things as job quality and benefits. When a workforce has no benefits, they end up on state healthcare program, which costs the state much more in the long run. This is a perfect example of how cheap is costing us a fortune.
For a list of participating Independents Week businesses in Tucson and across Arizona and to download the 20-percent-off Golden Coupon, go to www.localfirstaz.com