Promoting economic growth from within

Drew Finke

“Keep Austin Weird” is a phrase anyone who has lived in the city long enough is familiar with. Over the years, it’s been used as a rallying cry whenever people feel that one of Austin’s cultural eccentricities is threatened. Although the phrase has grown to encapsulate multiple aspects of the city’s identity, it started as a campaign by the Austin Independent Business Alliance to promote local businesses back in the early 2000s.

The phrase gained popularity in 2002, when the alliance and other pro-local groups generated enough public support to defeat a proposal that would have put a Borders bookstore where Whole Foods’ flagship store is today. This location would have been directly across the street from the locally owned bookstore BookPeople, which is one of the largest independent book retailers in the country.

Since that 2002 battle, Borders has gone out of business, BookPeople continues to thrive at its single downtown location and Whole Foods has grown into the largest natural and organic grocer in the world. The Austin Independent Business Alliance has also grown to represent more than 300 local businesses.

It’s easy to see how the argument for shopping and investing locally might affect the cultural eclecticism that makes Austin an attractive place for students who crave unique places to shop, eat and live. On a practical level, though, the argument also has the potential to impact whether students can find jobs after they graduate and what kind of jobs those will be.

Despite the continued growth of local businesses in Austin, members of the alliance have expressed concern that the city is not doing enough to support local businesses. The complaint comes on the heels of an $8.6-million incentive package meant to encourage Apple Inc. — the world’s most valuable company based on market capitalization — to build a new facility in north Austin. By accepting the incentives, Apple agrees to create 3,600 new jobs in Austin over the next 10 years.

Granting incentives to encourage economic development isn’t unusual. The city also granted tax and fee waivers in the amount of $37.5 million to the developers of The Domain shopping center, as well as a $4.5-million waiver to the developers of a new Marriot hotel downtown. Supporters of the Apple deal said that the incentives serve as a useful tool to attract new jobs in a tough economy. However, a document released by the alliance suggests that more economic growth could be achieved by investing that money in local businesses instead.

In its “Local Business Manifesto,” the alliance provides data that show how the multiplier effect of local businesses — the amount of money reinvested in a community after it is spent at a store or business — is greater than that of larger chain stores and corporations. The manifesto also explains that 81 percent of business growth in Austin over the last decade occurred at businesses that employ 20 or fewer employees, according to census data.

In a struggling economy, any job growth is seen as a sign of a city’s good economic health. And for a city council committed to keeping Austin’s economy vibrant, it is much easier to generate 3,600 new jobs by working with one company to secure all of those jobs in a single negotiation than it is to work with hundreds of smaller companies to slowly add only a couple of jobs at a time.

When thinking of the jobs created by local businesses, service sector retail positions are usually what come to mind. This ignores many of the office jobs generated by local service and design firms and corporate positions in the city’s larger homegrown companies. While not every local business aspires to the scale of Whole Foods’ operations, the company stands as an example of a local business that started out with 19 employees and will soon employ more than 1,500 white-collar employees after expanding its corporate headquarters downtown.

While attracting established companies to relocate or expand in Austin will likely be an important means of encouraging job growth in Austin, the attention and incentives given to the companies by the city should be more equally applied to local businesses as well. Generating a diversity of job types and salaries will help to keep Austin vibrant and will provide students with a greater choice of jobs if they choose to stay in Austin after graduating.

Finke is an architecture and urban studies senior.