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

2. 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

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

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

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

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

7. 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

8. 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

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

10. ANATOMY OF A LOCAL ECONOMY

12. Class… –What’s in the barrel?

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

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

16. 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?

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

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

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

24. 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

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

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

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

28. 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. 2004.

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

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

31. 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

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

34. 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

35. 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

36. Oktibbeha County 1995-2004 –Comparisons with region and state. –Population –Employment –Income –Sales –Commuting

37. Population

38. Population Growth

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

41. Unemployment Rate

42. Civilian Labor Force

43. Where Do We Work?

44. Jobs in the Top Three Sectors

45. Job Growth by Sector 1995-2004

46. Earning Trends by Sector ($M 2000)

47. Earnings Growth, 1995-2004

48. Components of Income

49. Total Personal Income

50. FISCAL ANALYSIS

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

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

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

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

55. Example – Class 1 Property Assessed Value: $120,000 Taxable Value: $12,000 (120000/10) Millage Rate: 111.09 Tax Levy: 12 * 111.09 = $1,333.08

56. 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)

57. 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

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

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

60. In-Commuters

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

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

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

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

65. 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

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

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

68. 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

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

70. 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)

71. 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)