In recent decades, policy across the country has favored the biggest corporations. Yet a growing body of research is proving something that many people already know: small-scale, locally owned businesses create communities that are more prosperous, entrepreneurial, connected, and generally better off across a wide range of measurable metrics.
Here’s a roundup of the important findings that are putting numbers to the harms of bigness and the benefits of local ownership, and that policymakers can use to craft better laws, business owners can use to rally support, and people can use to organize their communities.
These studies find that as the economy has become dominated by fewer and larger companies, there’s been a sharp decline in the formation of new businesses. Do we really want our choices to be limited to the large corporate box stores?
These studies show that locally owned businesses employ more people per unit of sales, and retain more employees during economic downturns, while big-box retailers decrease the number of retail jobs in a community and surrounding areas.
These studies find that the increasing size of corporations is driving inequality, while local and dispersed business ownership strengthens the middle class in the communities we live in.
These studies find that local businesses recirculate a greater share of every dollar in the local economy, as they create locally owned supply chains and invest in their employees. Local small business owners often support local sports teams, help fund after-school programs, provide scholarships, and offer special benefits to students in their community’s schools.
These studies show that locally owned businesses are linked to higher income growth and lower levels of poverty, while big-box retailers, particularly Walmart, depress wages and benefits for retail employees. Studies in this section also quantify the costs of these big companies’ low wages to state healthcare programs and other forms of public assistance.
These studies find that a community’s level of social capital, civic engagement, and well-being is positively related to the share of its economy held by local businesses, while the presence of mega-retailers like Walmart undermines social capital and civic participation.
These studies document the massive public subsidies that overwhelmingly favor big businesses and have financed their expansion, and how this subsidized development has failed to produce real long-term economic benefits for communities.
Building on the studies included in the previous category, “Public Subsidies,” these studies examine the differing impacts of locally owned businesses and big-box retailers on public finances. They find that large retailers systemically tilt the playing field in their favor by skirting their tax obligations, as well as that locally owned enterprises generate more tax revenue for cities, with less cost (financial and environmental) than sprawling big-box shopping centers.
These studies demonstrate how big-box retailers have significant negative effects on the number and vitality of nearby local businesses, in that they both lead to a loss of existing businesses, and contrary to the claims big-box retailers themselves often make, do not serve as a catalyst for new growth.
Study findings from the Institute for Local Self-Reliance.
I try, as much as possible, to purchase products and services locally from a local, independent owner. I have the belief that building a relationship with the local owner is a “paying it forward” opportunity for I time I may need that owner’s help … desperately. I want to provide two examples of this paying off.
Gas Station With a Repair Garage
Before I retired, I typically drove just under 65,000 miles (ca. 104,607 km) a year in my business. I left home early in the morning a didn’t return home until late at night.
One night at around 10PM, just before I made it home, I realized that my left front tire was loosing air. I needed to get it repaired or replaced because I needed to leave home the next morning by 6AM. I pulled into the gas station where I fill my gas tank every morning. The owner was there closing the station. I knocked on the door and since he knew me, opened the door and asked if I wanted a cup of hot coffee. I thanked him and proceeded to tell him about the nearly flat tire.
Even though the garage had been closed for two hours, he told me to drive the car in the repair garage to let him take a look at it. It turned out that I had a piece of metal in it. He repaired the tire for $12. He didn’t try to sell me a new tire … he fixed it for a measly $12.
This is exactly why I pay him an extra 5-cents per gallon of gasoline every morning when I fill the tank.
Local Mini Grocery
A bout a month ago I stopped at my neighborhood mini mercado (small grocery) for some fresh fruit, vegetables, and ice cream. When I went to pay, I discovered that I had left my wallet at home. The owner, from an isle away, heard my conversation with the cashier. He come over to me and told me to take everything home and to pay him for the merchandise the next time I was in the store.
I didn’t have to sign anything. All I had to do was stop back in and pay him on my next visit. Get your local Wal-Mart, Target or Kroger to do that!
While I don’t do my weekly grocery shopping at this little store, I typically spend $10 – $20 a week there to help assure its presence in my neighborhood. Having it handily available is well worth the extra buck or two for the week. Besides, they always have quality produce and eggs from free-range chickens.
We need to keep in mind that frugality isn’t always about dollars and cents.