City Speak: The Multiplier

by Craig McFarland, Mayor of Casa Grande

I want to thank Mayor Jackson and current and past City Council members for their vision, direction and dedication to our city! They did an amazing job guiding the City of Casa Grande through some difficult times. THANK YOU!

In the last edition I talked about “THE PLAN.” I thought that over the next several months we should expand on the plan – a road map for success and growth for Casa Grande. But before we can expand on the plan we need to have a discussion regarding how money flows through a community – how where we spend our $1 can impact our overall community. It’s an economic term called the multiplier effect.

Here is the definition from Wikipedia.org: “The local multiplier effect (sometimes called the local premium) refers to additional economic benefit accrued to an area from money being spent in the local economy.” It continues, “One perspective of the local multiplier effect focuses on the greater local economic return generated by money spent at locally-owned independent businesses, compared to corporate chains or other absentee-owned businesses. Localization advocates cite the multiplier effect as one reason, of many, for consumers to do more of their business locally.”

The common thought is that for every $1 spent in local businesses, it will circulate/be spent eight times. It is also commonly felt that if the $1 is spent online, it is $1 with no multiplier effect. The same can be said if that $1 is spent at a national chain, the multiplier effect is one-to-two times, so that $1 might be $2 (more than online, because it does generate local sales tax).

Let’s take the effect of something like Lucid Motors, which just announced that they will be building their Electric Car manufacturing plant here in Casa Grande. Just on the surface, 2,000 jobs with an average salary of $50,000 is a payroll of $100,000,000. Using the multiplier effect, If that payroll is spent all online, it is still $100,000,000 (a big number). Now use the Local multiplier effect and it is spent in local businesses times eight and that would be $800,000,000. What effect would that have on our Casa Grande’s economy and our community?

OK, so I’m not suggesting that everyone stop buying online or going up to Phoenix to make your purchases. I am suggesting that you think next time, “Can I buy what I need here in Casa Grande?” “Can I go to dinner here in Casa Grande?” “And, can I buy what I need from a local business?” Think about it . . .$1 versus $8 . . . $100,000,000 versus $800,000,000?

As I stated in last month’s City Speak, “THE PLAN” is a list of projects to work on, goals that if we can get them implemented, will make Casa Grande even a better place to live, play and raise a family. How we invest/spend our $1 is something we can all work on.

CitySpeak