Transcript Document

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
• Housing
2. Ecological
• Schools
3. Ethnographic
• Neighborhoods
4. Sociological
• Attitudes
5. Economic
How to study a community…
1. Qualitative
• Spatial distribution
2. Ecological
– Groups of people
3. Ethnographic
– Activities
4. Sociological
– Interactions
5. Economic
How to study a community…
1. Qualitative
2. Ecological
3. Ethnographic
4. Sociological
5. Economic
• Communities as a way of
life
• Cultural Dimensions
– Food
– Music
– Language
How to study a community…
1. Qualitative
• Social relationships
2. Ecological
• How and Why
3. Ethnographic
4. Sociological
5. Economic
– 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.
2.
3.
4.
Land
Labor
Capital
Management
Class…
What are the returns
to the 4 factors of
production?
What are the returns to the four
factors of production?
1.
2.
3.
4.
Land
Labor
Capital
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.
• Types of existing jobs/skills
• Income
•
•
•
•
Source
Distribution
Temporal
Resources
Discovering what is in the barrel, how it flows in, and why it leaks out…
ECONOMIC INDICATORS
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. 2004.
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………………………………… $1.75
Oktibbeha County
• 1995-2004
– Comparisons with region and state.
– Population
– Employment
– Income
– Sales
– Commuting
Population
44,500
44,000
43,500
43,000
42,500
42,000
41,500
41,000
40,500
40,000
39,500
39,000
43,769
40,623
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Population Growth
Oktibbeha
Lowndes
Mississippi
1995-2004
7.74%
-0.01%
7.15%
2004-2010
2.21%
7.25%
4.81%
Population Growth
2.50%
2.00%
1.13%
1.50%
1.00%
0.50%
0.00%
-0.50%
1995
1996
1997
1998
1999
2000
2001
2002
-1.00%
Lowndes
Oktibbeha
MS
2003
2004
Civilian Labor Force
CLF = Employed + Unemployed
UER = 100* (Unemployed / (Employed + Unemployed))
or
100* UER/CLF
Unemployment Rate
12.00
10.00
7.09
8.00
6.00
5.65
4.00
3.48
2.00
0.00
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Oktibbeha
Lowndes
MS
Civilian Labor Force
29,000
27,000
25,000
23,000
21,000
19,000
17,000
15,000
1995
1996
1997
1998
1999
Oktibbeha
2000
2001
2002
Lowndes
2003
2004
Where Do We Work?
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
-
1995
AGRI
1996
MINE
1997
CONST
1998
1999
MFG
2000
TRADE
2001
SVC
2002
2003
TCPU
2004
FIRE
Jobs in the Top Three Sectors
5,500
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
MFG
SVC
TRADE
Job Growth by Sector
1995-2004
120%
100%
80.4%
80%
65.1%
60%
48.0%
32.9%
40%
20%
-2.1%
0%
-20%
AGRI
MINE
CONST
MFG
TRADE
SVC
TCPU
FIRE
Earning Trends by Sector ($M 2000)
$100
$90
$80
$70
$60
$50
$40
$30
$20
$10
$1995
MINE
1996
1997
CONST
1998
MFG
1999
2000
TRADE
2001
SVC
2002
2003
TCPU
2004
FIRE
Earnings Growth, 1995-2004
180.0%
278.3%
160.0%
140.0%
120.0%
105.5%
100.0%
71.5%
80.0%
53.8%
60.0%
37.0%
40.0%
9.1%
14.4%
20.0%
0.0%
MINE
CONST
MFG
TRADE
SVC
TCPU
FIRE
Components of Income
Transfer
Paym ents
17%
Dividens,
Interest & Rent
19%
Earnings
64%
Total Personal Income
$1,000.0
$800.0
$600.0
$400.0
$200.0
$1995
1996
1997
1998
1999
DIR
TP
2000
2001
EARN
2002
2003
2004
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 = 1/10th 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-commuters
3,330
MS: 3,134
AL: 73
TN: 17
LA: 26
Other: 80
In-Commuters
Mississippi
Alabama
Tennessee
Louisiana
Other
Total*
IN
3,557
92
26
16
42
3,733
OUT
3,134
73
17
26
80
3,330
NET
423
19
9
(10)
(38)
403
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
Thank you !
Understanding
Your Local Economy
Garen Evans
Department of Agricultural Economics
Mississippi State University
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)