Toil and trouble
Streets are crowded
Warehouse jobs are few
Sexy housing’s hard to find
Chains are killing Mom and Pop
Retail dollars leaving town
What are we to do?
Did we get your attention with that gloom and doom?
It’s not the happiest way to open our primer on the city consultant’s plan for creating a more vibrant local economy here.
We’re going to take this economic chapter in small doses. Today we’ll look at the witches’ brew of problems that the consultant has identified. Then we will examine one of the drags on the local economy: big chain stores that pump only part of their sales dollars back into the local economy.
Since we learned in journalism school that gloom and doom sells papers (and websites), let’s look at the problems the consultant hits us with right out of the box.
No pat formula for success
Every community is different, and officials who rely on formulas that are working elsewhere are likely to get mediocre results. Murfreesboro is starting from ground zero, the consultant claims. It doesn’t have a staff working to attract business and making the path easy for companies that might choose to locate here.
The Joe B. Jackson Warehouse area is not a big jobs creator
The city is relying too much on bringing in warehousing and logistics businesses, which consume a lot of valuable land without providing that many jobs. And the jobs they do provide aren’t the kind that most MTSU grads are looking for.
Streets are crowded now
Already traffic congestion is a problem here, and it is only going to get worse if the population doubles in 20 years. Crowded streets make the job of selling Murfreesboro to businesses that much harder. Last summer, Gov. Bill Haslam toured Tennessee cities to warn that the state can’t continue to grow unless it finds a funding mechanism to provide the necessary roads and bridges. The state’s portion of the gas tax hasn’t risen since 1989. Although labor and materials costs are rising, gas tax revenues are slowing, as cars have become more fuel efficient.
Not enough sexy housing
The rules of the game have changed. In the days when this was a manufacturing economy and most jobs were low-skilled, a city created local jobs by attracting businesses.Those businesses set up shop, and the job applicants showed up at their doors.
Now skilled urban professionals are the hot item, and the companies follow them-to where they choose to live. If Murfreesboro wants to be a part of that jobs revolution, it has to become a place where these sought-after professional choose to live.
Unfortunately, the town is developing in a way that runs counter to what these skilled professionals are seeking. Single family subdivisions on the outside or on the fringes of the city are not what this generation of workers (called millenials),wants.They are looking for denser development — townhouses and apartments in mixed use neighborhoods, with stores and after-work entertainment they can walk to.
A land shortage
If the city keeps building single-family subdivisions with large lots, the consultant claims, it will not have enough land to accommodate all the people who are coming here to live. What’s more, if the market is all that governs development, much land that is attractive for business development, like the I-240/840 interchange, will be chewed up in lower uses — like residential lots.
Not all business is equal
In most cities it isn’t unusual for local officials to take a bow and put out a press release whenever any big chain business chooses to locate there. On this issue, the consultant raises an interesting point: How many of these franchise businesses represent too much of a good thing?
Mom and Pop vs. the big boys
The consultant argues that supporting locally owned businesses isn’t just a nice thing to do. It’s a matter of self interest. Most retail dollars generated by a mom and pop stores here stay in the local economy. With the big chain stores and restaurants, much of the retail dollars earned here go back to corporate headquarters. That’s a loss because money that recirculates locally enjoys a multiplier effect. Its impact increases as it is spent again and again in the local market.
A lesson from Bourbon Street
“In simple terms,” the consultant argues, “local businesses create more local wealth than chain franchises. He cites a study on this phenomena by the Urban Conservancy, a New Orleans based group that seeks to promote a better urban life in the Crescent City.
The study, which was based on a survey, found that the average chain outlet generated about $282 per square foot in sales, compared to $587 per square foot for a comparable local business. Revenue for the chain store came to $50 million a year, while it was double that for the local merchant. Finally, the chain recirculated about $45 of the square foot revenues it earned, compared to $188 per square foot for the local business.
Of course these figures could vary with different surveys taken in other localities, but the consultant claims that other studies elsewhere have produced similar results.
Just a small shift in spending patterns brings big results
Approximately, 48% of locally earned revenue is returned to the local economy by independent retailers, as opposed to only 13.6% by chain retailer. the consultant reports. He cites a Salt Lake City study, which concluded that if consumers switched only 10% of their spending to local retailers, it would pump an added $362 million into the regional economy. If consumers just switched 10% of their dining out choices to local restaurants, it would give the economy a $125 million boost, the consultant adds. On a percentage basis, local restaurants recirculate an average 65.4% of the money they earn back into the surrounding economy, while chains only respend about 34.5% of what they earn locally.
Finally, local businesses take up much less land than the chain stores. The consultant’s report states that 100 independent businesses can be located on the same amount of land taken up by one Target store.
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Tomorrow, we look at the consultant’s guiding principles for turning Murfreesboro’s economy into one that provides good jobs locally for the people who live here.