Understanding Your Local Economy

Alan Barefield

Outline

– Anatomy of a local economy– Data

• Demographics• Economics• Fiscal

– Issues• Commuting• Health

Local Economy

So what?

The Local Economy

• Why?– We live here.– We work here.– Leaders are expected to make informed

decisions.• Citizens, commuters, businesses, tourists• Potential entrepreneurs• Fiscal Governance

• Resources

• Consumers

• Producers

Local Economy• Resources:

– Air, water, land, minerals– People: labor force, children, students, retirees, tourists– Factors of production

• Producers:– Raw, processed, finished

• Consumers:– Intermediate– Final goods and services

Factors of Production

LAND

LABOR

CAPITAL

MANAGEMENT

Returns to Production

Land «« rent

Labor «« wages

Capital «« interest

Management «« profits

What Flows In?

Dollars from non-local purchases of locally produced goods and services.

• Manufactured goods and services• Agricultural commodities• Transfer payments• Tourism dollars

What Leaks Out?

Non-local spending

• Consumer goods and services• Non-locally purchased business inputs

– Recall the four factors of production

Measuring the Economy

• Composition– BLS: 12 industry super

sectors

• Indicators– Demographic

• Population, income

– Economic• Industry sales, jobs

– Fiscal• Revenues and

expenditures

BLS Industry Super Sectors

• Construction• Education and Health• Financial Activities• Government• Information• Leisure and Hospitality• Trade

• Manufacturing• Natural Resources

and Mining• Professional and

Business Services• Transportation and

Utilities• Other Services

Economic Indicators

Demographics

• Population– School-aged

• infrastructure

– Elderly• transfer payments: social security, Medicare, Medicaid

• Households– Owner-occupied– Important goal for low income communities

• Wealth accumulation

• Income:

Income

• Total Personal Income• Earnings

– Less contributions to social insurance

• Dividends, interest, and rent– Investment income– Capital income– Property income

• Transfer payments

Economics

• Industry Sales (output)

• Employment

• Labor IncomeWages and salaries + proprietors incomes

• Total Value Added (GDP)

Economics

• Industry Sales– Total Industrial Output

• All transactions

Farmer sells cow to butcher $0.50

Butcher sells meat to McDonalds $0.75

McDonalds sells hamburger $1.75

Total Sales………………………………… $3.00

Economics

• Total Value Added– Value of firms output less cost of intermediate

goods that the firm purchases.

Farmer$0.50

Butcher ($0.75-0.50)$0.25

McDonalds ($1.75-$0.75) $1.00

Total Value Added………………………. $1.75

Economics

• Employment: People & Jobs– Civilian Labor Force (CLF)

• Employed Persons• Unemployed Persons• Unemployment Rate = unemployed / CLF

– Place of Work Employment• Jobs

Oktibbeha County

• 1995-2004– Comparisons with region and state.– Population– Employment– Income– Sales– Commuting

Population

40,623

43,769

39,00039,50040,00040,50041,00041,50042,00042,50043,00043,50044,00044,500

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Population Growth

 1995-2004 2004-2010O ktibbeha 7.74% 2.21%Lowndes -0.01% 7.25%M ississippi 7.15% 4.81%

Population Growth

1.13%

-1.00%

-0.50%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Lowndes Oktibbeha MS

Civilian Labor Force

Employed+

Unemployed

UNEMPLOYMENT RATEUnemployed / (Employed + Unemployed)

orUnemployed / Civilian Labor Force

Unemployment Rate

3.48

7.09

5.65

0.00

2.00

4.00

6.00

8.00

10.00

12.00

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Oktibbeha Lowndes MS

Civilian Labor Force

15,000

17,000

19,000

21,000

23,000

25,000

27,000

29,000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Oktibbeha Lowndes

Where Do We Work?

-2,0004,000

6,0008,000

10,00012,000

14,00016,00018,000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

AGRI MINE CONST MFG TRADE SVC TCPU FIRE

Jobs in the Top Three Sectors

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

MFG SVC TRADE

Job Growth by Sector1995-2004

80.4%

32.9%

48.0%

65.1%

-2.1%

-20%

0%

20%

40%

60%

80%

100%

120%

AGRI MINE CONST MFG TRADE SVC TCPU FIRE

Earning Trends by Sector ($M 2000)

$-$10$20$30$40$50$60$70$80$90

$100

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

MINE CONST MFG TRADE SVC TCPU FIRE

Earnings Growth1995-2004

105.5%

14.4%

37.0%

53.8%

71.5%

9.1%

278.3%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

140.0%

160.0%

180.0%

MINE CONST MFG TRADE SVC TCPU FIRE

Income Components

Earnings64%

Dividens, Interest & Rent

19%

Transfer Payments

17%

Total Personal Income

$-

$200.0

$400.0

$600.0

$800.0

$1,000.0

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

DIR TP EARN

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 = 1/10th of One Cent(0.001)

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

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-commuters3,330

MS: 3,134AL: 73TN: 17LA: 26

Other: 80

In-Commuters

IN O UT NETM ississippi 3,557 3,134 423 Alabam a 92 73 19 Tennessee 26 17 9 Louisiana 16 26 (10) O ther 42 80 (38) Total* 3,733 3,330 403

Other Issues

1. Local infrastructure– Capacity

2. Health Care– Impact of poor health – a case study

1. Capacity Issues

Capacity5.76 Mgal/day

Average3.6 MGal/day

Peak4.4 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 = Health = Wealth …

• “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 respondents8.1% of workers

Health $$$

$32.9 Million

Of LOST INCOME

$144 Million in present value losses accumulate over 30 years