The Importance of Supporting Small Businesses; Why Shopping Local This Holiday Season Strengthens Your Wallet, Your Community, and Your Future.

For many of us, the holiday season involves shopping, including both presents for gifts, as well as food for holiday meals. Within this, we are left with two options - should be buy from local businesses or larger corporate chains? While local goods and produce are often the clear winner in terms of quality, it also may seem like the heftier choice when it comes to price point. This, however, is not as simple as it may seem, in fact, when you take a close look at things, you may be surprised to find out that shopping local actually benefits not just those businesses directly, but your income as well!

One of the clearest findings from economic research is that local independent businesses keep significantly more money circulating in the local economy. One study, for example, found that local businesses return about 68 percent of revenue to their communities, while corporate chains return just 43 percent. This means that every dollar you spend at a local business serve as an investment that flows back into the community.

This fact illustrates why supporting local is so important, while it can be easy to think you are saving money by choosing the cheapest option, when money leaves your community, it affects your future wages, job opportunities, and the well being of the community as a whole. Less local reinvestment means fewer jobs and weaker wage growth. Communities dominated by chains tend to have slower wage increases because there is less competition for workers and fewer small businesses hiring. Local businesses also contribute to the tax base, charitable donations, and community support. When they close, public services and local infrastructure weaken, which impacts everyone living there.

Furthermore, research points to higher amounts of profits going to employee wages from local businesses compared to larger corporations, when local wages are higher, individuals are able to spend more locally, creating a circular effect which benefits everyone. Furthermore, better wages and opportunity lead to other benefits such as more money received in local taxes for community services and better investment returns on things such as housing.

Using economic data from various studies, we can compare two imaginary families in two different community economies. One family lives in a local-spending community, while the other lives in a corporate-spending community, both starting with an income of $60,000 per year.

In the local-spending community, wage growth averages about 2 percent per year. In the corporate-spending community, wage growth averages about 0.5 percent per year. After 10 years, the family in the local-spending community earns roughly $73,140 per year, while the family in the corporate-spending community earns just $63,070 per year. Over the decade, that adds up to more than $55,000 in extra income due to the local economy retaining more wealth and supporting stronger wages. This shows how paying  more now at local businesses can actually lead to higher personal income over time. Cheap corporate prices may feel like savings, but they actually reduce your earning potential in the long term.

This holiday season, keep in mind the effect your money has, not just on the businesses themselves, but the community as a whole. By shopping local, you help build a stronger, more prosperous future for everyone.