By John Amundsen of Portland, Oregon who describes himself as "a native Oregonian who wants to improve it's livability, economy, and communities."
Buy local. We all want to do it, but do we really know why? It's good for our local economy. Well, that's right. If we can buy at a national chain at what we think is a lower price, isn't that better for our personal or our company's economy? Well, that's wrong. What happens to a dollar spent locally versus at a national chain or formula restaurant?
Tim Mitchell in Northwest Earth Institute's Choices for Sustainable Living states, 'A dollar spent at a locally owned store is usually spent 6 to 15 times before it leaves the community. From $1, you create $5 to $14 in value within that community.' That's good news! He also states, 'Spend $1 at a national chain store, and 80% leaves town immediately.' That's bad news. Let's recap. Dollars circulating locally -- good. Dollars leaving community -- bad. Next question.
Is that enough for everyone to start buying local? Apparently not. What about that personal and professional economy being more important than the community? Why does the federal government require that government agencies only buy from the lowest bidder, which is very often outside of the local economy or a national chain? These are good questions.
Let's take that personal economy question first. The purchaser says, 'I save money by purchasing at the lower price!' That's an obvious statement, but is the national chain always cheaper? Sometimes, it is just the opposite. Many times local suppliers and retailers are part of co-op groups and buying groups that collectively have the buying power of the national chains.
GOPD is a market research and technology company specializing in the office products industry. GOPD has been monitoring chain store pricing practices since 1999 and is the un-disputed leader in the field. A study on the national chains of office suppliers and independent office suppliers concluded this:
'Our research has shown, time and time again, that most local independent office supply companies are substantially lower in overall cost to the consumer.'
'The pricing gap between the independent and the chains is so wide, and the consumer perceptions are so engrained that the chains have the lowest prices, that some independents have chosen to match the chain store prices using our services.'
Yes, you read that right. Some independent suppliers raised their prices by matching the national chains. National chains have successfully changed the perception of the consumer that they are the lowest price through advertising and price juggling. Clearly, local is better here.
Let's just say that they are lower priced. How can they do that? Here an excerpt from a Eugene study of 'Big Box Stores' (pdf):
'Big Box stores undermine existing responsible business
According to the public research group Good Jobs First, '...new retail stores do little more than take revenues away from existing merchants and may put them out of business and leave their workers unemployed. It's quite possible that a new Wal-Mart store will destroy as many (or more) jobs than it creates, and the Wal-Mart jobs pay less, meaning that they do less to stimulate the local economy.' This from its new report Shopping for Subsidies: How Wal-Mart uses Taxpayer Money to Finance Its Never-Ending Growth, which reveals that Wal-Mart reaps hundreds of millions of dollars in tax subsidies. Imagine the increased ability of Wal-Mart to rake in large profits while keeping salaries low, because of the infrastructure assistance, reduced-price land, enterprise zone, property tax breaks, and other incentives it regularly receives! It's easy to see how subsides like this give Wal-Mart a definitive advantage over existing responsible businesses.'
Let me recap that: How do they offer lower prices?
* They don't pay well
* They are subsidized through our tax dollars
Now, here's another question. Is it really cheaper for the purchaser? Well, maybe. Since our tax dollars are already paying Wal-Mart to exist in any community, we may as well shop there and get some return on our investment that the government invested for us. However, if we are one of the lucky ones to have one of these types of stores in our neighborhoods, we can look forward to responsible businesses that pay a higher wage closing their doors, lower wages within the community, more foreclosures within the community, more low skill people living within the community (maybe even the ones that are not citizens yet), much less money passing hands within the community, more people moving from the community, and eventually, a big empty building where our local gangs can meet. This is what the studies tell us. At least we were able to buy milk for two bucks. This is suicide by inches for a community. It's short-sited to shop at those stores. It's ironic that these stores create their clientele. People shop there to save money (or take advantage of their investment). As time goes on they shop there because they have to. By then, the prices may not be so low.
The next question is why is there a federal law requiring government agencies to buy only from the lowest bidder. This is probably an old law from before these studies were made available. Back then; the powers that be made there best guess on what was most economical. If we have learned anything by watching our government in action, they are not always very forward thinking, and they seldom make necessary changes very fast. Here's another excerpt from a study in Great Britain:
'Giving preference to local suppliers, even if it means spending a little more, can actually benefit a city's finances. Dollars spent locally generate additional economic activity even beyond the value of the initial contract as the local supplier in turn sources goods and services locally. Each additional dollar that circulates locally boosts local economic activity, employment, and ultimately, tax revenue.'
Other cities like Albuquerque, New Mexico, Columbus, Ohio, Ketchikan, Alaska and even states like Alaska, Montana, New Mexico, West Virginia, and Wyoming are bucking that federal law and giving local vendors preference.
Some Oregon lawmakers have said that Oregon would lose if Oregon adapted an Oregon company preference. The import/export balance would be upset because business other states would reciprocate by not buying Oregon. Let's see, Oregon's unemployment was 49th out of 51 states (District of Columbia was included) a few years ago. Oregon Economic Development spent bazillion dollars trying to attract businesses to Oregon. Oregon's unemployment today is 48 out of 51 states. A very modest improvement, but little enough to suspect the government's economic philosophy may be flawed. Maybe if Oregon invests in Oregon business, Oregon business might attract business into Oregon. Studies have proven that, so boys and girls in the government, the word is out. Those changes may be cheaper and more effective in addition to maintaining the character of our cities and towns.
Let's make it simple by concluding with a top 10 list for buying local:
Why Think Local First?
- Significantly more money re-circulates in Multnomah, Washington, Clackamas, and Clark Counties when purchases are made at locally owned, rather than nationally owned, businesses: More money is kept in the community because locally owned businesses often purchase from other local businesses, service providers and farms. Purchasing local helps grow other businesses as well as the Multnomah, Washington, Clackamas, Clark County tax base. (See this 10/04 study) showing that locally owned businesses generate a premium in enhanced economic impact).
Eugene, OR Study: http://www.jwj.org/community/ESSNBigBoxReport.pdf
- Non-profits receive greater support: Non-profit organizations receive an average three times greater support from smaller locally owned business owners than they do from large businesses.
- Our one-of-a-kind businesses are an integral part of our distinctive character. The unique character of our community is what brought us here and will keep us here. Our tourism businesses also benefit. 'When people go on vacation they generally seek out destinations that offer them the sense of being someplace, not just anyplace.' ~ Richard Moe, President, National Historic Preservation Trust
- Reduced environmental impact: Locally owned businesses can make more local purchases requiring less transportation and generally set up shop in town or city centers as opposed to developing on the fringe. This generally means contributing less to sprawl, congestion, habitat loss and pollution.
- Most new jobs are provided by local businesses: Small local businesses are the largest employer nationally and in our community, provide the most new jobs to residents.
- Customer service is better: Local businesses often hire people with more specific product expertise for better customer service.
- Local business owners invest in community: Local businesses are owned by people who live in this community, are less likely to leave, and are more invested in the community's future.
- Public benefits far outweigh public costs: Local businesses in town centers require comparatively little infrastructure investment and make more efficient use of public services as compared to nationally owned stores entering the community.
- Competition and diversity leads to more choices: A marketplace of tens of thousands of small businesses is the best way to ensure innovation and low prices over the long-term. A multitude of small businesses, each selecting products based not on a national sales plan but on their own interests and the needs of their local customers, guarantees a much broader range of product choices.
- Encourages local investment: A growing body of economic research shows that in an increasingly homogenized world, entrepreneurs and skilled workers are more likely to invest and settle in communities that preserve their one-of-a-kind businesses and distinctive character.
Think local first + Buy local when you can = Being a local!