Orcas Research Group

http://orcasresearch.org/

Is Our Economy in Trouble?

• Mother-in-law Statistics– Where are all the children?

• Better Question: Where are the Parents?– 25-44 year age group (US census)

1990-30% 2000-22%– Low Wages, High Cost of Living

$22,464--35th out of 39 counties in WA

How Sick is our Economy?• A Measure of Our Health: Multiplier Effect

– For a dollar spent locally, how much additional economic activity is produced?

– Example: You spend a dollar at Island Market. Some goes to the mainland to buy stock and some remains on the island in the form of wages. Employees, in turn, spend part of their wages locally. Etc. etc. etc.

– The multiplier effect is the sum of all remnants of the original dollar as it is spent over and over again.

• Bottom Line: We Live in a Very Leaky Bucket

Multiplier Effect

Chart 1: Multiplier Effect

0

5

10

15

20

5% 15%

25%

35%

45%

55%

65%

75%

85%

95%

Percentage Recirculated (P)

Mu

ltip

lier

(M)

M = P + P2 + P3 + P4 + … or M = Pn (n = 1, infinity

How Do We Determine P?

Chart 2. Consumer Spending

Clothing4%

Housing29%

Food & Beverages

14%

Federal Taxes15%

Health Care5%

Contributions2%

Transportation14%

Entertainment4%

Insurance & Pensions

8%

Other5%

P = B1P1 + B2P2 + … + BiPi + …

So, How Are We Doing?

Our Multiplier is less than .67 to .82!

What Does That Mean?• Where do our wages come from?(~$100M)

– Construction• $21M in wages, ave. $26,961

– Retail Trade• $15M in wages, ave. $21,701

– Accommodation & Food Service• $12M in wages, ave. $18,733

– Professional, Scientific, Technical Services• $7M in wages, ave. $37,154

• Investment/Retirement Income (~$300M)• $27M in Social Security alone

• $42M in other retirement income.

What Can We Do?

• Encourage our residents to shop locally?– Good idea, but it won’t help much.

• Encourage businesses that retain dollars locally?– Very difficult, a few possibilities perhaps.

• Encourage businesses that serve mainland markets?– Our best chance to provide adequate wages.