Money Stays Local

Money Spent Locally Stays Local

Several studies have shown that money spent at a locally owned business stays in the local economy and continues to strengthen the economic base of the community. A 2002 case study in Austin, Texas, showed that for every $100 in consumer spending at a national bookstore in Austin, the local economic impact was only $13. The same amount spent at locally based bookstores yielded $45, or more than three times the local economic impact (Civic Economics, Austin Unchained, October 2003).

A 2003 case study of Midcoast Maine covering several lines of goods and services validated these findings. The study surveyed eight locally owned Maine businesses, and found that the businesses spent 44.6 percent of their revenue within the surrounding two counties. They spent another 8.7 percent elsewhere in the state of Maine. The four largest components of this local spending were wages and benefits paid to local employees, goods and services purchased from other local businesses, profits that accrued to local owners, and taxes paid to local and state government. All eight businesses banked locally, used local accountants, advertised in local businesses publications, purchased inventory from local manufacturers, and used local Internet service providers and repair people. The study estimated that a big-box retailer returns just 14.1 percent of its revenue to the local economy, mostly in the form of payroll. The rest leaves the state, flowing to out-of-state suppliers and back to corporate headquarters (The Economic Impact of Locally Owned Business vs. Chains: A Case Study in Midcoast Maine, New Rules Project, September 2003).