Editor’s note: To wrap up the year, The News began with our history and we’re moving into a piece about the benefits of local business by our community specialist, Drew Walker. As we move into 2019, readers will see stories like this one occupy this space as we further embrace our community and build out all The News has to offer.
We hear it every election cycle. From local races to the national contests that dominate headlines, job creation and economic development always comes up. We saw it in the recent state and local contests.
We’re going to hear even more about it over the next two years as we gear up for a gubernatorial race in 2019 and in the run up to the 2020 presidential election.
What never truly gets discussed, though, is the greatest driver of economic and community development in places such as Livingston Parish – small and locally-owned businesses.
Sure, small businesses get paid lip service as the “backbone” of our economy, but when it comes down to passing legislation, it’s often the big, national and multinational corporations that benefit while local entrepreneurs are left with the table scraps.
According to the American Independent Business Alliance (AMIBA), businesses owned by local entrepreneurs provide a greater return to their community than businesses owned by people outside the community in which they do business or even local chain outlets.
The alliance highlights research that showed nearly 50 percent of each dollar spent at a locally-owned business is recirculated within the local economy while other businesses recirculate only 14 percent after the corporate offices take their cut and other expenses are accounted for. The impact of eating at local restaurants is even greater with the recirculation impact approaching 70 percent.
These numbers are evidence of what’s called the economic multiplier effect and highlights the role independent business can play in creating a rising tide that lifts all boats in their community.
Through direct, indirect and induced impacts, local businesses provide three times the return to their surrounding areas.
Even with this impact, though, small and local business is often viewed with an “enter at your own risk” mentality.
When Amazon announced its plans to locate a second headquarters in the eastern half of North America, states fell over themselves offering multibillion-dollar incentive packages in an attempt to entice the online giant to their area.
Louisiana’s own – admittedly longshot – offer was more than $6.5 billion.
This is often the way economic development is handled across the country.
Cities and states offer tax considerations, workforce development, spending on things such as education and infrastructure, and even cash in an effort to lure large businesses.
It makes for good headlines and is often a boon for the communities that successfully land these whales, but at what cost?
As an alternative, consider the verdant state of Vermont.
In June, the state announced a program that would pay people up to $10,000 to move there and work remotely.
The innovative idea created a media buzz when it was revealed and showed the state’s commitment to find new ways of attracting residents as the economy shifts from traditional jobs to new modes of work made possible by advances in technology. It’s an investment, not in large companies, but in the workers who end up calling Vermont home.
The success of the program has not proven itself yet as it is not set to begin until January, but the idea could serve as an inspiration for communities to be proactive in their efforts to encourage outside-the-box thinking to attract and retain entrepreneurial types.
Livingston Parish would benefit from this sort of planning as we move beyond recovering from the flood of 2016 toward a more resilient and vibrant community.
Beyond the economic impact, towns and cities with a strong culture of support for local businesses benefit in other ways as well.
Local business builds community wealth through the economic multiplier effect, but it also helps to build community more generally. Many local establishments serve as public gathering spaces where people meet and interact.
The owners and employees are our neighbors and are often more involved in local activities.
They are more responsive to the needs of their customers because they are more aware of those needs simply by living among their customers. These businesses become a source of pride and identity for the communities they serve and provide the kind of personal service that enhances the customer experience.
They help keep taxes lower by putting less stress on roads, sewers and other municipal services while also contributing more in the form of tax revenue.
Local business provides jobs for people in the community including students who may not otherwise have the opportunity to gain work experience other than at fast-food chains.
The benefits of locally-owned businesses are profound and varied, but so, too, are the challenges they face.
It is up to each of us to choose whether or not we value these benefits enough to support our local shopkeepers and service providers.