Why Buying Local Will Save the Economy


Guest post by Tim Kovach, Energy Product Coordinator, COSE

The face of American business has changed significantly over the last two decades.   The largest companies have gotten larger and larger, the biggest 500 corporations in the U.S. grew more than 700% during this period.   One hundred million Americans — one out of every three — visit Wal-Mart each week. More than 15,000 independently-owned bookstores have closed across the country.   Almost 10,000 independent hardware stores have gone out of business.   As big businesses get bigger and the economy becomes more globalized, it has become more difficult for small businesses to compete.

Yet, despite this, small businesses are widely recognized as the job creating engines of the country.   While those 500 corporations grew seven-fold, they have actually fired more workers than they’ve hired.   As the National Small Business Association has pointed out, the 29.6 million small firms in the U.S. account for 99.7% of all employer firms.

Fortunately, people throughout the country have begun to recognize the important of their local small businesses, and the buy local trend has grown exponentially in recent years.   Some may wonder what the difference is in buying items from a local merchant as opposed to the local big box store.   After all, the store is located there and the people employed there live in the community.

However, when one actually pauses to consider the differences between the big box stores and local small businesses, it becomes clear that the buy local movement is beneficial for the community and the consumer.   For every dollar that is spent at a big box retailer, approximately $0.30-0.35 remains in the local economy.   For each dollar spent at a local, independently-owned business, however, $0.70-0.75 remains in the community.   These numbers are even more significant when one compares food purchased at a supermarket with food that one buys directly from a local farmer, whether at a farmers’ market or through a CSA (community supported agriculture).   Just $0.15-0.18 of each dollar spent at a supermarket returns to the farmers that produced that food; upwards of $0.85 goes to the farmer when you buy your food directly from its source.

Buying locally has an added economic benefit, as well.   When a chain opens a new store in a community, a lot of things must take place.   New infrastructure needs to be created to accommodate it; businesses may be purchased or forced out of business; homes or businesses may be moved or torn down for the new facility, and land that could be used for other purposes is utilized for the store instead.   As Jeff Milchen of the American Independent Business Alliance pointed out, when one takes this into account, local businesses actually have an economic multiplier effect that is 3 to 3.5 times greater than that of the big box chains.

Furthermore, there are significant environmental benefits of buying local.   Many products at big box retailers are created on the other side of the country or the other side of the globe and require intricate, long-distance transportation networks to deliver them to the consumer.   This produces of greenhouse gas (GHG) emissions and greatly increases the carbon footprint of the product.   Shipping long distance also requires businesses to make use of large quantities of shipping materials.   Many of these materials, including plastics and Styrofoam, are petroleum products.   These items generate large amounts of GHG emissions during their lifecycles, and most end up in landfills where they do not biodegrade.

Ultimately, there are considerable benefits to buying locally.   From reducing your carbon footprint and strengthening your local economy, to generating demand for high quality, locally grown food and supporting your friends and neighbors, buying local just makes sense.

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Tim Kovach is the Product Coordinator for Energy at the Council of Smaller Enterprises in Cleveland, Ohio. He works to help small businesses cut their energy costs, reduce their energy use through energy efficiency, and improve their sustainability efforts through COSE’s Energy Solutions. COSE, a small business support organization with over 16,000 members, provides cost-effective group purchasing programs, advocacy on legislative and regulatory issues, and networking and educational resources to help Northeast Ohio’s small businesses grow.

Image Credit: Niall Kennedy

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