The Case for Shopping Locally
By Jon Whiten • Jun 19th, 2009 • Category: Featured, News
Illustration: Amanda Assadi-Rullow, based on a concept by Local First West Michigan and data from Civic Economics. For a larger version of the chart, click here.
Your alarm didn’t register in your brain this morning, and you somehow slept way too late. You’re running late for work, and you’re starving. You didn’t even have time to make coffee at home today, much less feed yourself some breakfast. As you head to the PATH station, you have choices: Dunkin’ Donuts, Starbucks, the local bodega, the local upscale cafe. Maybe you’ll pick one based on its position on your route, or how crowded you expect it to be.
But many advocates say that another factor should play a role in your decision: Is this business locally owned?
Let’s say you spend $5 on breakfast and coffee this hypothetical morning. Using figures from studies done in other cities, if you shop at the locally-owned business, $3.40 of that $5 will stay in the community. But if you shop at the non-locally owned chain business, the figure falls to $2.15. And that’s just on your $5 purchase: once you start thinking about how much money changes hands each day at Jersey City’s retail establishments, the individual choices we make start to mean something.
Exact dollar figures for retail transactions in Jersey City are not available, but state data show that so far in 2009, Urban Enterprise Zone (UEZ) certified businesses sold an average of $42.8 million of taxable items each month in the city. The UEZs are areas in urban areas where businesses receive extra incentives to encourage growth. While this $42.8 million barely cracks the surface of retail business in the city; it does make clear that we’re talking about a lot of money here.
A groundbreaking 2004 study done in Chicago’s Andersonville neighborhood showed that “local merchants generate substantially greater economic impact than chain firms.” The study, done by the firm Civic Economics, found that for every $100 spent at a locally-owned business, $68 stayed in the local economy, and that for the same amount spent at a non-local business, only $43 remained in the local economy.
Just using the UEZ figure plugged into the Andersonville study findings, each month there is at least $10 million for the local economy on the line when it comes to personal spending choices.
Local economic impacts for businesses that serve a local market are primarily made up of four components, the Chicago study found: wages and benefits, profits to local owners, local procurement and charitable contributions. In all four of these categories, Civic Economics found that locally-owned businesses contributed more to the local economy. They paid higher wages, gave more to local charities and were more likely to purchase items needed from other locally-owned businesses. (And, of course, they had higher profits to local owners.)
And that’s only the first level of sustainable local economies. Keeping more money in the local sphere is a compounding economic action: as a consumer spends more at a locally-owned store, wages and benefits increase not only at that particular store, but at other businesses that store works with or at local charities that business owner gives to.
“Most businesses — local and nonlocal — hire local people and pay taxes,” explains Michael Shuman, the director of research and public policy for the Business Alliance for Local Living Economies (BALLE). “But locally owned businesses contribute significantly greater levels of income, wealth, jobs, taxes and charity to a community.”
Schuman says that local businesses are also “better positioned to respond to the special needs of the community, and more tied to the community’s future.”
Jersey City supports the shop local movement, according to city spokeswoman Jennifer Morrill. She says the city uses the Economic Development Corporation and the UEZ to promote local shopping, and markets the UEZ zones with advertisements in an array of media, from print to checkout TV at supermarkets.
The city also hosted the first annual “Made in Jersey City” day this spring, in an effort to draw attention to the wide array of businesses that are based here.
“While larger companies often capture the headlines,” Mayor Healy said at the time, “we all know of the many — and significant — contributions innovative, smaller businesses make to our ongoing growth and success every day.”
Another local-first business group, the American Independent Business Alliance (AMIBA) sponsors the upcoming Independents Week, from July 1-7. As part of the festivities, AMIBA encourages everyone to take the “Indie Challenge.” Use the week to explore your local independent businesses and see how much of your purchasing for that week you can do with them.
This story is a joint effort between the Jersey City Independent and NEW magazine.
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Jon Whiten is the editor and co-publisher of the Jersey City Independent and NEW magazine.
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Before I comment, I would just like to give you a heads up that the diagram above is not very legible.
There is a strong case for not trying to buy locally. First, if you want Dunkies and you guilt yourself into buying higher-priced or slower-service local coffee, you have just wasted money and/or time. This clearly hurts a member of the local economy: you.
Second, we all benefit from the non-local economy. Especially in a place like Jersey City, many if not most of us work non-locally, work for a company that is not locally owned, or may even think of ourselves as somewhat non-local. Should we really throw rocks from this glass house?
Third, it’s not necessary. JC is creating some great culinary, cultural and commercial innovation. Let’s embrace that and not snub our noses if some of it is put up by a dude from Philly, Boston or Swaziland.
Thanks for the comment on the chart, we’ve added a much-larger version that you can check out for the details.
Certainly there are some shades of gray in the buy-local movement — what about franchisees, for example? The points you raise are legitimate, but the thing that a buy-local advocate would point out is that buying locally is indeed an economic multiplier. The more money you put into the local economy, the more will continue to circulate within that economy, via taxes, donations, wages, etc. as mentioned in the story. Over time, that by far and away erases any cost differential — real or perceived — that an individual might benefit from by buying non-locally. (The advocates I spoke with also pointed out a bigger issue, which is the idea of “cost” as being more than just the purchase point of an object — there is a large environmental cost, for instance, of trucking and flying in produce and supplies from all over the world; just as there is a large social cost of relying on slave labor in a third-world country, etc.)
Certainly, many of us may work for a non-local company, buy goods that are non-local, and the like, but the folks in the movement make the argument — which I believe is a compelling one — that buying locally *when you can* is a boon to the local economy.
There’s no question we should want to support local business. But unfortunately much of JC has not developed to the degree that areas like downtown and the waterfront have. I live off West Side Ave near Lincoln Park. Luckily I prepare most of my meals at home, ’cause my local restaurant options, frankly, suck: there’s the fried chicken place, the Chinese fast food place, the Dunkin Donuts, the other Chinese fast food place, the Dairy Queen (love it, but hey, it’s ice cream), a few pizza places, and further away the diner, McDonald’s and Checkers. Being vegetarian and health-conscious, it all amounts to a Hobson’s choice for me.
As for groceries, the two closest markets – Met Foods and a veggie market, have been shut down repeatedly for health inspection violations. I still buy stuff at both, but working in Manhattan means I can buy a pepper that isn’t half-rotted, or things I can’t get around the corner, like fennel, soy products, or meat formy husband that isn’t pumped full of chemicals. It costs more and I’m not buying in my neighborhood which I really would prefer, but that’s the trade off. Now that the farmers market is back in JSQ, I’m psyched. But even that doesn’t mean I’m buying from JC businesses.
So, while I think Jon’s argument is a good one (and to me, the economic reasons are secondary), for many of us here in JC, it’s just not feasible.
Kate-
You bring up a very good point about the way an idea like shopping locally is obviously intertwined with larger issues of development and disparity in any city. It can make a task like shopping locally — or, for another example, not using a car — a very difficult one.
But I’m not sure I’d go so far to say it’s “not feasible.” It might be massively inconvenient, I’ll give you that, but one could still try and shop locally in the more developed parts of the city even when living elsewhere. Each neighborhood is not an island (well, with the exception of “The Island” at JSQ). I don’t want to give the impression that I’m getting all holier-than-though on you here, because I’m not. (When I lived in the Heights, I faced a similar dilemma, and convenience — more often than not — won out.) I just wanted to point out that there still are choices (while understanding that some of those choices are literally extremely difficult for people to make because of a lack of services, disparity in development, etc. ).
One thing is certain: The idea of buying locally — and its practice — can be a complicated one, as the comments on this story thus far clearly illustrate.