Chicago independent businesses challenged by rent and internet competition; desire supportive small-business policies.
What is the climate for local businesses in Chicago?
Each year, the Institute for Local Self-Reliance conducts its Independent Business Survey about the climate for businesses in Local First communities. In January, 2016, over 100 Chicago businesses participated in the study, answering questions about challenges they face, public policy for local businesses, and benefits of publicity and marketing through Local First Chicago.Read more
The city of Flint, Michigan, is now in the early stages of recovery from one of the worst man-made disasters in United States history. Ten thousand children have been exposed to high levels of lead in drinking water due to switching the water supply from Lake Huron to the Flint River, all in the name of saving money. The decision was made by Flint’s Emergency Manager, who was installed by Governor Rick Snyder to “fix” the ailing economy of Flint. This decision will cost taxpayers hundreds of millions of dollars in lawsuits, insurance claims, medical expenses, property losses, and emergency infrastructure spending over the next twenty years. And since lead poisoning causes irreversible brain damage, hundreds or thousands of children will suffer for the rest of their lives.
For most of the 20th century the economy of Flint was dominated by one company: General Motors. Then something happened: General Motors began to collapse. In 1978, the company employed 80,000 people in Flint --- roughly half the population. By 2006, the number of people employed at General Motors in Flint had dropped to 8,000.
As the jobs disappeared, the city’s infrastructure decayed, poverty increased, and people moved out. Today, Flint has just over 100,000 people, roughly half as many as in 1970. Flint has one of the highest child poverty rates in the country, and one of the highest crime rates. The city appeared to be making a comeback recently, but the damage from the lead poisoning crisis is likely to last for decades. Who wants to buy a house in a high poverty, high crime area with poor schools, decaying infrastructure, unsafe water and untrustworthy local government?Read more
Local beer. Local coffee. Local honey for your tea. There’s a lot of talk about ‘drinking local’ these days but few consider what they’re drinking out of. Chicago potter Ryanne Maldonado hopes to change this. Three months ago, the 30-year old Michigan native quit her corporate paycheck to pursue her passion: making mugs and other forms of functional, artisanal pottery. And at this stage, every mug and tumbler sold brings her closer to achieving the small business dream.Read more
Probably more so than any other country, Americans love big business. Big businesses help drive our economy and provide millions of jobs. But they are also a major factor behind the rising inequality we now see around the world. As a percentage of revenue, big companies pay less in taxes pay their top executives far more, and pay many of their workers less, than most small businesses.
From 1945 to 1975, income grew at about the same rate across all groups in the United States, roughly doubling over 30 years. Then things started to change, and top earners began to pull away from everybody else. Inequality began to grow, and grow and grow. Today, the top 3% own over half the wealth of the United States. We are now at the point where even conservative economists are beginning to realize we have a problem with inequality in the United States.
In 2013, average CEO compensation at Starbucks, McDonald’s and other major fast-food companies was $23.8 million, more than 1,000 times what the average worker made, according to Demos, a New York public policy group. Perhaps even more disturbing is the fact that the industries with the greatest pay inequities are precisely the ones that are driving most of the job growth in the United States. Inequality is getting worse as the economy “improves”.
On average, corporate executives now make over 300 times median worker pay at large corporations. This is now a worldwide phenomenon. Furthermore, the actual CEO-to-worker pay ratio far exceeds what most people think the “ideal” ratio should be. Despite enormous differences in culture, income, wealth, and social status, people throughout the world think corporate executives are overpaid. In the United States, CEO pay is more than 50 times higher than the “ideal” CEO level.
Peter Drucker, the famous management guru, warned that a CEO-to-worker pay ratio above 20:1 would “increase employee resentment and decrease morale.” Yet every country on the list above has a pay ratio above this level, and the United States is the highest of all.
While many factors contribute to inequality, the biggest factor is tax policy. The game has been rigged in favor of the giant corporations. On average, small businesses have much lower CEO-to-worker pay ratios than large businesses. One reason, of course, is that smaller businesses can’t afford to pay anyone such outrageous compensations. Simple economics forces small businesses to operate more fairly; there just isn’t enough money to pay such inflated executive wages.
But other factors also come into play. Small business owners are closer to their employees. Rather than treating employees as fungible revenue production units, they value them as human beings, so they tend to pay them better, at least when compared to management.
Small business owners also have closer ties to their local communities. They depend on local vendors and suppliers, send their kids to local schools, and give more to local charities. Between 1981 and 2013 CEO pay increased by 140 percent, compared to a DECREASE of 5% for employees at companies with at least 10,000 employees. Over the same period, smaller company CEO pay rose by 49%, compared to a median pay increase of 30%.
As Arthur Bloom, a professor of economics at Stanford, says, “There used to be a premium for working at a big company, even in a lower level job. That’s not true anymore. The people who have really suffered are lower-level employees at big companies.”
There are literally hundreds of things one can do at the local, regional and federal level to tilt the playing field back in favor of small business. Increasing transparency, perhaps by requiring large companies to disclose compensation ratios, might lead to better behavior. Lowering taxes on small businesses, while increasing them on large businesses, would also help.
While big businesses talk about corporate social responsibility, small businesses often get more done with much less talk. Just one more reason to support Local First Chicago.
Happy New Year! We hope your holidays were spectacular and that the year is off to a good start. We also hope that you or someone you know may be interested in joining our Board of Directors this year.
Our Board is comprised of a small group of hardworking Chicago business owners who are committed to seeing locally owned businesses thrive in our city. We want to see new businesses open and older businesses doing better and better every year. What we don’t want to see are vacant storefronts or big box and chain stores overtaking every retail district.
We are passionate about encouraging our neighbors to think local first because we know that independent small businesses keep more money in our local economy, are better for the environment, are great partners for charities and schools and keep our city unique for locals and tourists alike.
Our Board of Directors is great but in order to reach more people and incorporate new outreach ideas in 2016, we’d like to add to our ranks.
Retailers, restaurateurs, service providers, tech entrepreneurs, marketers, educators, urban planners, policymakers and anyone who shares our vision for small business in Chicago could be a good fit for our Board of Directors.
Depending on your skills and interests, there are a few potential areas of focus:
- Strategic Planning
- Social Media, Marketing & Communications
- Business Directory
- Data and Resource Center
- Technology Selection & Implementation
- Events and Outreach
- Public Policy Recommendations
Most of us meet once a month and collaborate via e-mail and occasional working group meetings. All of us donate to the organization individually or through our businesses. This is not the sort of Board that asks for a huge financial contribution. Members are asked to give a couple hundred dollars a year or whatever makes sense to them.
If you’re interested in learning more, please send me an e-mail and I can arrange for you to have coffee with one of our Board members. We would then invite you to a meeting and if you want to join, and the Board agrees you are a good fit, we'll send you an official invitation.
There are a lot of reasons to join our Board including giving back, helping others, meeting people and networking, learning new things and having a new professional experience. Local First Chicago has been around for about ten years and we want to be an even stronger and more effective organization from here forward. Your skills could help this organization to do great things.
For more information please e-mail me at Lesley@roscoevillagebikes.com
Thanks and Happy New Year!
Happy Holidays from Local First Chicago! This time of year we visit our favorite local shops for unique gifts, we sip hot drinks from cozy neighborhood cafes and we dine with friends at restaurants that can only be found here in Chicago. This is also a time to reflect on the year.
Through events, posters, social media and our new website we reached thousands of Chicagoans with information about the benefits of supporting locally owned businesses. Vibrant business districts of independent shops are important because:
- More of the money spent at independent small businesses stays in the local economy than money spent online or at big box stores.
- Local stores have a lower carbon footprint and contribute less to urban sprawl and climate change.
- Neighborhood shops give back to local charities and schools at a higher rate than big box shops and online retailers.
There are many other reasons you can learn about and studies you can reference on our website. We don’t expect anyone to exclusively shop at independently owned stores but the choice that many Chicagoans have made to deliberately shift a portion of spending towards them has an important impact and helps keep our city from being like any other place in the world.
2016 we plan to go even further by improving our website and local business directory, sharing more news and information, participating in more events and connecting with more people about how and why their support of small businesses matters to all of us.
Best wishes from your friends at Local First Chicago.
LFC Board Member
Co-Owner of Roscoe Village Bikes
On March 25, 2014, the oil company BP reported a malfunction at its refinery in Whiting, Ind., only a few miles away from the city of Chicago. For as much as four and a half hours, crude oil spilled into Lake Michigan, the source of drinking water for seven million people in the greater Chicago area.
Luckily, that story had a happy ending — no oil was spotted moving toward a water intake crib for the city, located about 8 miles away from the spill's location, and cleanup efforts were concluded about a week and a half later with no believed additional effects on wildlife.
Still, more than 1,600 gallons of oil were ultimately believed to have leaked out of the refinery and into Lake Michigan. What if things had been worse?
So when I hear people say that the EPA's new Clean Water Rule is a burden on the economy, I can't help but wonder what they're talking about. Water is more than something we all rely on for life — it's something our businesses rely on too.
Now Congress is considering a bill, the Federal Water Quality Protection Act, which would not only fail to protect water quality but actually put economic growth at risk. Sen. Durbin has been a consistent advocate for clean water. We need Sen. Kirk to join him and help vote this bill down.
One thing most everyone can agree on is that our clean water rules need to be clarified. Since a pair of Supreme Court rulings in the last 15 years threw the EPA's jurisdiction into question, industrial and agricultural businesses, members of Congress, state and local officials, and environmental groups have been asking for clarification. What the EPA's rule would do is clarify, not expand, the waterways they can protect — specifically, seasonal or rain-dependent streams. Some have claimed that agriculture would be burdened; in fact, the rule would not only protect agricultural exemptions, it would actually expand them.
Still, it might seem odd to have businesses going to the mat for government regulation — until you think about how important water is to us. Businesses need clean water to operate, whether for irrigation, production, tourism or so many other sectors. For sectors like agriculture, tourism or even high-tech manufacturing, water is a basic input into their products. As with any other input, if its quality is diminished, the end product will be too. That's assuming, as with the Elk River spill in West Virginia last year, that a spill doesn't essentially shut down the entire local economy for days — to the tune of $19 million in losses a day. Just imagine the losses if that happened in a metropolis like Chicago.
There's another side to this: Dirty water represents an added cost to everyone who has to pay for cleaning it up. Many times, that can mean more taxes, and no business wants to have to pay a higher bill if they can avoid it. So why wouldn't they support something that would help protect this important resource?
It turns out they do. Polling commissioned last year by the American Sustainable Business Council found that 80 percent of small-business owners supported the rule, including majorities of Democrats, Republicans, and independents. And when asked whether they thought clean water protections were good or bad for the economy, 71 percent said they were crucial for economic growth. How many said they were bad for the economy? Six percent.
We got lucky with BP's spill. But businesses can't be asked to simply rely on luck. They need strong protections to ensure that this resource is protected and available for them to use. The EPA's Clean Water Rule will help do that. We need senators Durbin and Kirk to let the agency work, not tie their hands.
Note: On November 3, 2015, the Federal Water Quality Protection Act legislation was put on hold, but these things are like zombies -- it could come back from the dead.
New Marketing Ideas Help Locals Discover and Support Their Favorite Indie Cafes
We caught up recently with local coffee enthusiast Dori Rubin, who is about to launch the 2nd edition of the Indie Coffee Passport, a curated guide to 22 locally-owned cafes. Rubin, a resident of Wicker Park, created the offering last year after visiting Toronto and seeing a similar effort there. Although she holds down a full-time job in marketing, the project has grown to a life of its own. This week, Rubin will kick off ICP's 2nd season with a launch party on Friday, December 4th at Locallective in Wicker Park. This year's offering will feature 10 new cafes replacing ones from last year, so previous participants will have new places to explore.
Local coffeehouses have been on our minds lately, and not just because the weather is turning crisper as winter arrives. Many people seek out independently owned cafes because of their distinct character, connection to community, and their support of neighborhood organizations. The Institute for Local Self-Reliance has written a great article about why choosing local matters. Local First Chicago has also created its own directory, including coffee shops as a category within Food & Drink.
One other offering worth watching is BrewPass. This smartphone app (currently available only for Apple devices), offers coffee and tea lovers one free beverage each day for a set monthly subscription price (currently $30/month). If you need your daily caffeine fix, just show the app to the barista at your neighborhood cafe. Currently only four cafes are participating: BrewBrew (Avondale), Bowtruss and Township (Logan Square), and Bru (Wicker Park). This app could be a great way to drive repeat customers to these small businesses and increase loyalty, as long as the costs to offer these promotions is offset by more orders. In an era where many independent shops have to compete with large chains that offer app-based loyalty and pre-order features, having one that caters to locally-owned shops is a good thing overall.
Halloween is this Saturday, and if you're still trying to pull together a fabulous costume idea or going to a friends' party, consider these local resources as you shop. We've also put together a handy Twitter list of these places so you can follow them for the latest sales and specials. Here's our list:
Last week Chicago celebrated World Fair Trade Day with a two-day marketplace in Daley Plaza, featuring a dozen fair trade vendors from around Chicagoland. WBEZ’s Worldview show broadcast live from the marketplace, hosting Chicago Fair Trade and other related groups as guests – including Local First Chicago. (You can check out the show here.)
The fair trade movement is needed by the power imbalance in our economy. Giant corporations have shaped our economy such that some people end up working for nearly nothing in sweatshops, because they no longer have family land to farm, or family shops to run, or a family trade to carry on. The money generated by their labor goes to make executives and stockholders rich, while the factory workers live at a subsistence level.
The fair trade movement educates consumers about how this system works, so they can make the conscious choice to purchase products from organizations and companies that pay the makers of products a fair wage for their work. Often this means they are selling handcrafts or the products of cooperatives – in both cases, situations in which the workers have ownership of their own enterprise.
The localist movement applies the understandings of fair trade to our local situation. We’re all about independent small business – where ownership and control are again local, which is also good for the local economy. A small business owner chooses what to do for a living; creates their own working conditions; and receives the benefit of their own work. These are the same goals held by the fair trade movement. We encourage people to buy from locally owned independent business because it helps ensure economic self-determination, just as buying from fair-trade vendors does.
We are partners in the fair-trade movement partly because we share the same goals, but also because we share the same approach: consumer education. If people have an idea where their food, or hat, or handbag, or coffee is coming from, they’re going to care more about the people producing and selling it. That can mean the weaver in Guatemala, the farmer in Tanzania, the bookstore owner in Hyde Park, the grocer in Bronzeville. And if they care about the people who make and sell their stuff, they’ll pay a little attention to whether in their shopping they are buying from companies that are locally-owned or not, and sourcing fair-trade or not.
Creating consumer awareness requires partnerships: we need an economic system of fair-trade makers, wholesalers, and retailers; we need small businesses at all those levels too. We need media partners – radio, TV, print, Internet – to help get the message out about the need to shift our economy back toward one in which people have economic self-determination. We need graphic designers, nonprofit fundraisers, foundation grantmakers, thoughtful public policymakers, event planners, printers, writers, photographers, web designers, economists, clergy, ethicists, teachers, volunteer coordinators – all kinds of people and organizations, to help with this giant project of education to help the public understand who gets exploited by our economy - and the ways in which we can make it more fair for everyone.
Whoever might be reading this: you’ve got a role to play in localism, in choosing to spend your money with locally owned businesses – and if you’ve got a little time and energy, in building the movement for economic self-determination. Contact us if you want to get more involved!