An economic leakage analysis shows what consumers are acquiring non-locally. It shows how much money is "leaking" out of the community. This is important in building an economy because of the "multiplier" effect of a dollar spent locally. Here is a good explanation of the connection between the two economic concepts of the "multiplier effect" and "leakage" from the 2007 Shuman & Hoffer Leakage Analysis of the Martha's Vineyard Economy:
Every purchase triggers purchases by others within a community. For instance, a dollar spent on rentSubstitute DVD rental, ticket to Arts Council event for "movie ticket." You get the idea.might be spent again by the property owners at the local grocer, who in turn pays an employee, who then buys a movie ticket. This phenomenon is what economists call “the multiplier.” The more times a dollar circulates within a defined geographic area and the faster it circulates without leaving that area, the more income, wealth, and jobs it creates. This basic concept in community economics highlights the importance might be spent again by the property owners at the local grocer, who in turn pays an employee, who then buys a movie ticket. This phenomenon is what economists call "the multiplier." The more times a dollar circulates within a defined geographic area and the faster it circulates without leaving that area, the more income, wealth, and jobs it creates. This basic concept in community economics highlights the importance of maximizing the numbers of dollars being spent locally and minimizing their "leakage."of maximizing the numbers of dollars being spent locally and minimizing their “leakage.”
Haines resident and consumer Emily Seward is as concerned about leakage as I. To this end, she crafted a "flier" on the benefits of shopping locally. She wanted to leaflet the cars parked at the Senior Center today. Presumably, the drivers were exploring the wares offered by Home Depot. But she found out that the Borough prohibits "leafletting." I'm posting her message below. Look for it too on public bulletin boards around town. Thanks Emily!
Sustain Haines – Go Local!
The Benefits of Doing Business Locally
Haines, Skagway and Klukwan - when you buy from any one of our independent, locally owned business, significantly more of your money recirculates in the community.You strengthen our economic base. When you buy from a nationally owned business, you export our wealth.
Here are Five easy ways to 'Get Local'
1. Realize the benefits of shopping locally. Independent locally-owned businesses are essential to a vital local economy and community character. They use the goods and services of other local businesses, serve as community hubs, and are vital components of healthy neighborhoods and strong city centers. They're where the locals go. They're owned by our friends and neighbors, or maybe even by you.
2. Be aware of the impact of your dollars.
A locally owned independent business returns approximately 80% of each dollar spent back to the community. Local, independent businesses assist the community through a "multiplier effect": one dollar spent at a locally owned business will return five times that amount within the community through city taxes, employees' wages, and purchase of materials and supplies at other independent businesses. In addition, these businesses will turn that dollar back into the community through school funding, social services, and contributions to local non-profit organizations.
3. Talk to Local Retailers/Plan Ahead. Make special orders for products not readily available through local retailers. Many of our local businesses will even give you a discount for special, bulk orders.
4. Grow it! (or pay somebody else to) Community gardens and farmers markets are the new trend. Local produce will save you in the long term and most products are healthier for your family.
5. Keep the Jobs at home. Locally owned businesses create more jobs locally and, in some sectors, provide better wages and benefits than chains do.
The threat to our communities is real. The trend of increasing recruitment of and dependence on absentee-owned chains -- with formulas dictating everything from the look of the building to who does the printing to where the money gets deposited -- has unhealthy consequences. It's not just local businesses who suffer -- our communities are losing social, cultural and economic strength, a place for entrepreneurship, and the ability to choose our own futures.