Understanding Your Local Economy Garen Evans Department of Agricultural Economics Mississippi State University

Why should I care about this? We live here We work here Leaders are expected to make informed decisions –Citizens, commuters, businesses, tourists –Potential entrepreneurs (new business) –Fiscal governance

Outline How to study a community Anatomy of a local economy Economic indicators Comparative Summary – Oktibbeha County Fiscal Issues Capacity Issues

How to study a community… 1.Qualitative 2.Ecological 3.Ethnographic 4.Sociological 5.Economic

How to study a community… 1.Qualitative 2.Ecological 3.Ethnographic 4.Sociological 5.Economic HousingHousing SchoolsSchools NeighborhoodsNeighborhoods AttitudesAttitudes

How to study a community… 1.Qualitative 2.Ecological 3.Ethnographic 4.Sociological 5.Economic Spatial distributionSpatial distribution –Groups of people –Activities –Interactions

How to study a community… 1.Qualitative 2.Ecological 3.Ethnographic 4.Sociological 5.Economic Communities as a way of lifeCommunities as a way of life Cultural DimensionsCultural Dimensions –Food –Music –Language

How to study a community… 1.Qualitative 2.Ecological 3.Ethnographic 4.Sociological 5.Economic Social relationshipsSocial relationships How and WhyHow and Why –organizations of people in society

How to study a community… 1.Qualitative 2.Ecological 3.Ethnographic 4.Sociological 5.Economic But first a little background…

ANATOMY OF A LOCAL ECONOMY

Class… –What’s in the barrel?

Natural Resources –Air, water, land, minerals Producers –Good and services Raw, intermediate, finished Consumers: –Labor force, children, students, retirees and tourists

The 4 Factors of Production 1.Land 2.Labor 3.Capital 4.Management

What are the returns to the four factors of production? 1.Land 2.Labor 3.Capital 4.Management Class… What are the returns to the 4 factors of production?

What are the returns to the four factors of production? 1.Land 2.Labor 3.Capital 4.Management RENT WAGES INTEREST PROFIT

The Barrel Gets Bigger… Dollar$ from non-local purchases of locally produced goods and services –Commodities: Agricultural, mining –Manufactured goods, services –Transfer payments –Tourism $

The Barrel shrinks! Non-local spending –Consumer goods and services –Producer inputs purchased elsewhere

How to study a community… 1.Qualitative 2.Ecological 3.Ethnographic 4.Sociological 5.Economic Linkages between economic sectors.Linkages between economic sectors. Types of existing jobs/skillsTypes of existing jobs/skills IncomeIncome SourceSource DistributionDistribution TemporalTemporal ResourcesResources

ECONOMIC INDICATORS Discovering what is in the barrel, how it flows in, and why it leaks out…

Lots of metrics! Demographics –Pop., Income Economics –Jobs, Output, TVA –Distributional Fiscal –Rev. & Exp.

Population Metrics School-aged –Infrastructure Elderly –transfer payments social security Medicare Medicaid

Households Owner-occupied –Important goal for low income communities –Important means for wealth accumulation “In terms of lower income households, non-housing wealth accumulation is at best minor and, for minority families, often negative” (1) Source: Wealth Accumulation and Homeownership: Evidence for Low-Income Households. U.S. Department of Housing and Urban Development, Dec

Income Total Personal Income –Earnings –Dividends, interest, and rent Investment income Capital income Property income –Transfer payments

Types of Employment Civilian Labor Force (CLF) –Employed Persons –Unemployed Persons –Unemployment Rate = unemployed / CLF Place of Work Employment –Jobs

Economic Sectors Goods-Producing Nat. res. & mining Construction Manufacturing Services-Producing Trade, Transportation, & Utilities Information Financial Activities Prof. & Bus. Svcs. Education and Health Leisure & Hospitality Source: Bureau of Labor Statistics

Economic Metrics Industry Sales or Output (cf., GNP) Employment Labor Income –Wages and salaries + proprietors incomes Total Value Added (cf., GDP)

Industry Sales – an example Farmer sells cow to butcher$0.50 Butcher sells meat to McDonalds $0.75 [+0.25] McDonalds sells hamburger$1.75 [+1.00] Total Sales…………………………………$3.00

Total Value Added – an example Farmer sells cow to butcher$0.50 Butcher sells meat to McDonalds +$0.25 McDonalds sells hamburger+$1.00 Total Sales…………………………………$1.75

Oktibbeha County –Comparisons with region and state. –Population –Employment –Income –Sales –Commuting

Population

Population Growth

Civilian Labor Force CLF = Employed + Unemployed UER = 100* (Unemployed / (Employed + Unemployed)) or 100* UER/CLF

Unemployment Rate

Civilian Labor Force

Where Do We Work?

Jobs in the Top Three Sectors

Job Growth by Sector

Earning Trends by Sector ($M 2000)

Earnings Growth,

Components of Income

Total Personal Income

FISCAL ANALYSIS

Revenues and Expenditures Revenues –Taxes, charges, fees, transfers, bonds Expenditures –Health, hospitals, education, public welfare, highways, public safety: police and fire protection

Tax Revenues Ad Valorem “according to the value” Property Taxes Retail Sales State Tax Levies State Transfers

Property Taxes Assessed Value Taxable Value –10% Residential Property –15% Commercial Property –30% Motor Vehicles, et al. Tax Rate: Millage

Millage Rate Millage Rate is the tax rate per $1000 of value. One Mill = 1/10 th of One Cent (0.001)

Example – Class 1 Property Assessed Value: $120,000 Taxable Value: $12,000 (120000/10) Millage Rate: Tax Levy: 12 * = $1,333.08

Retail Taxes Mississippi collects 7% sales tax on many retail products. Eligible municipalities receive part of sales taxes collected in their jurisdiction 18.75% City (ie., incorporated municipalities)

Retail Sales in 2000 Oktibbeha County: $408 million $302 million in eligible municipalities: City Diversions: –Maben: $86,899 –Starkville: $3,687,185 –Sturgis: $40,838

Commuting Oktibbeha County –18,401 total –15,071 own-commute –3,330 out-commute

Out-commuters 3,330 MS: 3,134 AL: 73 TN: 17 LA: 26 Other: 80

In-Commuters

Other Issues 1. Local infrastructure –Capacity 2. Health Care –Impact of poor health – a case study

1. Capacity Issues Capacity 5.76 Mgal/day Average 3.6 MGal/day Peak 4.4 Mgal/day

Daily per-capita usage: 84 gallons (avg) Population growth: 2% –Exceed system cap by 2027 –Exceed system peak by 2017

2. Health Issues Mississippi ranks highest for –Obesity –Heart Disease –Diabetes –Infant Mortality Employers –Educated workforce –Access to healthcare

Health = Wealth (or vice versa?) “During the past 30 days, how many days did poor physical or mental health keep you from doing your usual activities?” 20.4% of all respondents 8.1% of workers

Health  $$$ $32.9 Million Of LOST INCOME $144 Million in present value losses accumulate over 30 years

Understanding Your Local Economy Garen Evans Department of Agricultural Economics Mississippi State University Thank you !

Community Economic Analysis Technical and structural analysis of community decisions. For example: –Boundaries: geographic, political, social, economic –Infrastructure: –Capacity –Potential Improve decision making associated with community economic development

Community Development Increase capacity of local population to collectively pursue its own interests. –Local leadership –Citizen participation –Collective decision making –Community organization

Community Economic Development –Community: A group of people in a physical setting with geographic, political, social, and economic boundaries, and with discernable communication linkages Shaffer, Deller, and Marcouillier (2004)

Community Economic Development –Community Group of people who know each other and plan together for long-term improvements –Economic Monetized returns, Measurable results –Development Structural change (not just growth)