QUESTION 3.

READING: Maine Center for Economic Policy (MECEP), Report, Buying Local.

Buying Locally Pays Big Dividends for Maine's Economy MECEP Maine Center for A recent MECEP survey of 28 locally owned businesses in the Greater Portland Economic area revealed that every $100 spent at a local business contributes an additional Policy $58 to the local economy. By comparison, $too spent at a representative national chain store yields just $33 in local economic impact. Money spent at locally owned businesses generates 76% more economic activity in Greater Portland than money spent at national chains.' The analysis finds that changes in consumer spending choices can add up to size- $58 able economic benefits for the region. Based on 2007 retail sales figures, shifting Additional economic impact for every just 10% of consumer spending from national chains to locally owned businesses 3:00 spent at a locally owned busi- would result in an additional $127 million in economic activity with 874 new jobs ness in Greater Portland. generating over $35 million in wages. $33 LOCALLY OWNED BUSINESSES PUT THEIR MONEY TO WORK LOCALLY.. Additional economic impact for The key components of business economic impact are wages, profits, cost of every $.oo spent at a representative national chain in Portland. goods and services, and charitable contributions. These 28 locally owned busi- nesses account for over $57 million in revenues in Greater Portland, with 65% of $127 million their expenses paid to producers of local goods and local service providers.* Additional economic activity in Business Expenditures by Locally Owned Businesses in Greate. Portland Cumberland County associated with a 10% shift in consumer retail spending from national chains to locally owned Paid to individual or business located in_. businesses. Expense Greater Portland Lisewa.cre in Main Ou of Stat 874 Good 27.6% 13-7% 58.8% Saiary and Wages 69.6% Number of jobs associated with addi- 27-3% 3.1% tional economic activity created by a Repairs and Maintenance 88.9% 7.,6 3-4% 10% shift in consumer retail spending Advertising 60.1% 0.1% from national chains to locally owned Vehicle Costs 9.9% businesses in Curnberland County. 77.0% 20.0% Equipment and Supplies 3.0% 41.6% $35.5 million Professional Services 33-9% 24-5% 81.1% Charitable Contributions 16.5% 2.5% 48.0% Wages associated with additional 57.5% 0.6% economic activity created by a 10% Source: MECEP analysis of business surveys. Note percentages may not equal rod% due to rounding. shift in consumer retail spending rom national chains to locally owned businesses in Cumberland County. by contrast, the typical national chain remits its profits out-of-state and relies more heavily on professional services from out-of-state producers, thus keeping fewer dollars working in Maine's economy, compared to locally owned businesses.findings. Their 2004 study of retail economics in Ander- ... AND THEIR MONEY PROMOTES THE GROWTH sonville, Illinois, examined the economic impacts of ten OF OTHER LOCAL BUSINESSES local firms, compared to ten competing national chains, on a neighborhood's economy.' Their analysis of revenue and Because locally owned businesses keep their profits in the expense information provided by the ten firms concluded that local community and are more likely to purchase goods spending $10o at locally owned businesses generates an addi- and services from local sources, their local spending has a ional $68 in local economic activity. By comparison, spend- multiplier effect on the local economy. MECEP relied on ing Stoo at national chains generates an additional $43- survey data and information obtained from corporate filings for a representative national chain to model local economic A similar 2008 study in Grand Rapids, Michigan, exam- impact in Greater Portland. MECEP then used IMPLAN ined revenue and expense data from four lines of goods and software to model the three core components of economic services: pharmacies, grocery stores, full-service restaurants, impact - direct effects, indirect effects, and induced effects. and banks. On average, there was a local economic advan- tage of 50% from consumer spending at locally owned busi- Additional Impact on Portland's Economy per Sloo nesses versus national chains.' Although slightly less than in Consumer Spending by Business Ownership the advantage in Andersonville, the two reports offer similar conclusions: buying from local firms provides significant benefits for a local economy. Local advantage 76% CONSUMER SPENDING AT LOCALLY OWNED BUSINESSES FUELS THE LOCAL ECONOMY Portland area consumers can choose to spend their money online, at national chains or at locally owned businesses. While consumers will likely continue to purchase goods $58 $33 and services from a variety of places for a variety of reasons, increasing their spending at locally owned businesses can create greater local economic activity. In the case of Greater Local Chain Portland, every $10o a consumer spends at locally owned ZOTO. Source: MECEP analysis of business surveys, IMPLAN, Dollar Tree 10-K for businesses can generate as much as $58 in additional local economic impact, $25 more than comparable spending at MECEP's analysis indicates that on a dollar-for-dollar basis a national chain. Based on 2007 retail sales figures, shift- the local economic impact of national chain retailers is sig- nificantly less than that of locally owned businesses. ing 10% of consumer spending to locally owned businesses would result in an additional $127 million in economic activ- Previous studies of the economic impacts of local businesses ity in Greater Portland with 874 new jobs generating over in other locales by Civic Economics have produced similar $35 million in wages. Buying locally is a good deal for local consumers, local businesses, and local economies. Sources: 'Unless otherwise noted, all figures are from MECEP analysis of vusiness surveys and Dollar Tree IC K for 2cic using :MPLuv software. A more detailed review of sun ey methodology is a ailable in the study "Going Loc il: Quantifying the Economic impacts of Buying from Locally Owned Business- es in Portland, Maine" available on MECEP's website. 'Based on. 2007 retail sales figures from U.S. Census and MECEP analysis using IMP AN software See "The Andersonville Study of Retail Economics" available at http://www.civiceconomics.com/AndersonvilleStudy.pdf. .See "Local Works! Examining the Impact of Local Business on the West Michigan Economy" available at http://www.civiceconomics.com/localworks/GR Local_Works Summary.pdf