If you give most people money, they’re likely to spend it. That’s the sound economic theory that will be playing out over the next few months in the U.S., thanks to the impact of the COVID relief bill, now enacted into law.
This is relief and economic stimulus that will put money in the pockets of low and middle-income Americans, which means these dollars won’t go to an offshore account in the Caymans as part of some millionaire’s hoard. These are dollars that will be spent, for the most part, right away, and that’s why we should all be mindful of just how and where we spend our stimulus money.
Yes, this is another reminder that our dollars help our communities grow when we spend them here at home. Just consider the numbers. Between Ely, Tower, Cook, Orr, and Babbitt, local residents will be receiving close to $9 million in stimulus money over the next several weeks. Add in all the outlying townships and you double that.
Sure, we could all go online or to Walmart and go on a spending spree with our stimulus money. And all those dollars distributed to the North Country will be quickly vacuumed away to points unknown, leaving our local economy wondering what all the fuss was about. When it comes to “the economy,” what’s happening right here is what matters the most to the future of “our economy.”
How we spend our money makes a difference. Small town Main Streets have struggled for years as retail dollars that used to be spent in locally-owned shops, restaurants, and other businesses are increasingly ending up in the pockets of huge chain or online retailers— and that situation only grew worse during the pandemic. Some of our local businesses have closed permanently as a result. Others are hanging on by a thread. If we spend our stimulus money locally, it will provide a critical shot in the arm for many of them, and that makes a difference for the entire community.
While big box retailers do at least provide a few jobs locally, they don’t provide the same economic impact as retailers with local ownership. What’s more, numerous studies have shown that these big chain retailers often displace as many jobs as they create. They also bring with them new demands on community infrastructure and a variety of other public services, that local property owners must pay for.
Big chain retailers don’t spend that much in the local economy, so dollars spent there don’t really circulate throughout the local economy. When a big box builds a new store, they don’t hire the local architect or contractors because each store is essentially a clone, built in most cases by contractors brought in from elsewhere. They use national suppliers for building materials and for the products they eventually sell. They don’t use the local ad agency or the insurance broker down the street. They don’t hire a local accountant and they rarely, if ever, advertise in the local newspaper.
Locally-owned businesses do all of these things, and because they do, the money you spend with a local merchant or restaurant owner works its way throughout the area economy, creating a multiplier effect that benefits us all.
We know that most folks will use at least some of their stimulus funds for online purchases. But remember that the big online retailers essentially contribute nothing to our communities. At least a big box store has a building, hires a few local workers, and pays property taxes. You can’t say any of that when it comes to an Amazon, for example. They suck dollars out of our communities, never to be seen again.
Before looking at Amazon, see if you can’t buy it online locally. Many businesses in our area have attractive and efficient websites that sell what you’re looking for and are probably competitive on price as well. They need your dollars more than a gazillionaire like Jeff Bezos does, and when you spend it locally, it continues to circulate here at home.
That’s why the stimulus bill offers a real opportunity, one that has the potential to bring a sizable economic impact to our region. Let’s spend our dollars here and help make sure that it does.