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Gauging the Multiplier Effect

Creating “Buy Local” awareness is about a whole lot more than just a few dollars here or there. The following table, based on money flows identified by Civic Economics’ Andersonville Study, shows just what’s at stake in a community’s buying decisions. And it’s not chump change!

Times the money circulates locally
(68% stays)
(43% stays)
$  91,940
$  98,867
$  62,519
$  67,230
$  42,513


Studies on the Internet

Why your local government shouldn’t buy from Amazon. (2017)

Procurement Matters: The Economic Impact of Local Suppliers (2007)
A study that analyzes the impact on the local economy in the state of Arizona when commercial and institutional buyers purchase their office products from local supplier Wist Office Products versus from the contract division of OfficeMax.

The San Francisco Retail Diversity Study (2007)
A study of San Francisco and neighboring communities that provides a detailed analysis of market shares held by independent retailers, the economic impacts of those firms, and the tremendous impact in employment, wages, and economic activity to be gained by a modest increase in the market share of independents.

The Andersonville Study of Retail Economics (2004)
One of the key studies of the impact of big box retailing that compares 10 independent businesses and 10 chains and provides compelling evidence of the local economic benefit of independent businesses, demonstrating that independents generate about three times the local economic activity as chains.

The Economic Impact of Locally Owned Businesses vs. Chains: A Case Study in Midcoast Maine (2003)
A study that tracked revenues and expenditures of locally-owned businesses in Midcoast Maine and found that three times as much money stays in the local economy when you buy goods and services from locally owned businesses instead of from chains.

Economic Impact Analysis: A Case Study (2002)
A report on economic activity in Austin, Texas that showed locally owned merchants generate more than three times the local economic activity of their competitor chain stores on equal revenue.

Assessment of the Direct, Indirect, and Induced Economic Effects of Chain Stores on the Regional Economy of Cape Cod (2005)
A report by FXM Associates of Mattapoisett, Massachusetts showing that if chain stores captured 50% of forecast growth in retail demand by 2014, the Cape Cod region would lose over 9,000 jobs, $600 million per year in business output, over $200 million per year in household income, and over $10 million per year in local taxes.

Wal-Mart and County-Wide Poverty (2004)
A study by researchers at Pennsylvania State University that indicates counties with one or more Wal-Mart stores experience smaller decreases in family poverty than counties without.

Shopping for Subsidies: How Wal-Mart Uses Taxpayer Money to Finance Its Never-Ending Growth (2004)
A report that documents over $1 billion in public subsidies and other forms of handouts received by Wal-Mart for locating in communities.

Everyday Low Wages: The Hidden Price We All Pay for Wal-Mart (2004)
A report by the Democratic staff of the Committee on Education and the Workforce, U.S. House of Representatives, that explores Wal-Mart’s labor practices and the company’s history of using taxpayers to subsidize labor costs.

Impact of the Wal-Mart Phenomenon on Rural Communities (1997)
A landmark study by Dr. Kenneth Stone of Iowa State University that explores Wal-Mart's effect on Iowa's rural communities and the way it displaces locally owned independent businesses.

Job Creation or Destruction? Labor-Market Effects of Wal-Mart Expansion (2004)
A study by Emek Basker of the University of Missouri that found Wal-Mart generated just 30 net new jobs in the five years after opening in the community studied.

The Effects of Wal-Mart on Local Labor Markets (2006)
A study by David Neumark, Professor of Economics at the University of California at Irvine and Senior Fellow at the Public Policy Institute of California (PPIC), and others that concluded Wal-Mart stores reduce employment in the markets where they open by two to four percent and presented evidence that payrolls per worker also decline, by about 3.5 percent.

Fiscal Impact Analysis for the Town of Barnstable of New Residential And Nonresidential Development.
A study that compared tax revenue and public services costs associated with various types of development projects that found big-box retail developments cost more than the revenues they generated, producing an annual net loss of $468 per 1,000 square ft.

The Economic Impact of Wal-Mart Supercenters on Existing Businesses in Mississippi (2002)
A study by Dr. Kenneth Stone of Iowa State University and others that found introduction of a Wal-Mart supercenter into a county in a relatively rural state has major repercussions for existing stores and for local jurisdictions that are dependent on sales and property taxes.

Wal-Mart’s Holiday Sales Create a $20 Billion Loss for Local Economies (2006)
A report by the Institute for America’s Future on the impact of Wal-Mart’s 2005 holiday season sales.

The Hidden Cost of Wal-Mart Jobs: Use of Safety Net Programs by Wal-Mart Workers in California (2004)
A study by researchers at the University of California at Berkeley that found reliance by Wal-Mart workers on public assistance programs in California costs taxpayers an estimated $86 million annually. The study further found that the families of Wal-Mart employees in California utilize an estimated 40 percent more in taxpayer-funded health care than the average for families of all large retail employees.

NFIB Small Business Policy Guide (2003)
A chapter on small business contributions reports on an Oregon study comparing charitable contributions from small, medium, and large businesses. The study showed small firms give an average of more than two and a half times the amount per employee than do medium or large firms (Small firms give $789 per employee, medium-sized firms $172, and large firms $334).

Santa Fe Independent Business Report (2003)
A study that found dollars spent at independent businesses deliver twice the economic impact of those spent at national chains.