Balance, primary jobs grow an economy

Your household “economy” is analogous to your community’s economy. When you bring in more money than you expend, you’re fine. If you don’t, you’re not. Same with Anytown U.S.A.

Community economic prosperity comes from having a base of economic activities that brings in more money than leaks out to other places. Civic leaders in most communities figured that out long ago and have focused on the retention, expansion, and attraction of primary companies.

Primary companies create products or services of which most are sold outside the local market. One misperception is that primary employers are big manufacturers. That is a narrow definition. They may be a major educational institution, a specialized professional service, and they can be quite small.

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Communities benefit when the income from those sales come back into the local economy. On the whole, primary jobs pay significantly better than the average job. The wages from those jobs create disposable income, much of which is spent locally in restaurants, for insurance, homes and home décor, and so on.

Consequently, a significant number of so-called secondary jobs are created to serve the primary sector.

In essence, primary companies are wealth creators, and secondary companies are wealth circulators.

A study by Citizens for a Sustainable Economy in Fort Collins demonstrates the value of primary jobs. The study found that 100 primary jobs:

• create 150 additional support jobs with average annual pay of $58,421
• generate $331,431 in city sales, use and property tax revenue,
• and produce $269,295 in property taxes for the school district

The average annual wage for these primary jobs is $76,258.

The downside of losing primary companies is devastating: loss of jobs for residents and a diminished standard of life, loss of tax base for the community and the attendant quality of life amenities those taxes buy, and damaged civic pride and reputation.

Once communities start a negative economic spiral, it’s hard to break the downward momentum. 

Instinctively residents understand the importance of attracting and keeping primary jobs. In a poll last December, likely Fort Collins voters ranked “creating more quality jobs in Fort Collins” as a top five most important issue. 

Competition is fierce for these kinds of companies with over 25,000 economic development organizations in the U.S. trying to snag the expansions or relocations of primary companies. It’s important to remember your community’s primary companies are other cities’ top prospects.

One of the things that can encourage companies to decamp is a bad business climate. Business climate is defined as the extent to which the political and policy environments of a locale, compared with other jurisdictions, are seen to be supportive or burdensome to businesses.

Factors impacting business climate include labor, land, taxes, regulation, quality of life, and the attitudes of government officials toward business.

Surprisingly, some public officials don’t understand the importance of primary jobs, or worse, they have a no-population-growth agenda and think killing the economy is the means to that end.

Case in point is a conversation that took place recently in Fort Collins where a prominent public official went on a 15-minute tear at a meeting about why primary employers are undesirable.

But ironically a key theme of his talk was about the importance of focusing on economic resiliency. He even shared that the U.S. Economic Development Administration says resiliency has three primary attributes: the ability to recover quickly from an economic shock, the ability to withstand an economic shock and the ability to avoid the shock all together. 

Resiliency is exactly what primary employers bring to a community. A diverse base of primary employers helps communities cope with downturns in the economic cycle.

Clearly, those of us in the community building business need to step up our game when it comes to educating public officials about how to keep from un-growing the local economy.

Let’s just start with this: primary jobs mean a strong and resilient local economy.

David May is the president and CEO of the Fort Collins Area Chamber of Commerce. Reach him at dmay@fcchamber.org.