Recently the Diary checked in on the 10 to 20 program website that promotes buying locally. I confess I hadn’t paid much attention in the past. After all, buying locally is the right thing and what I think most of us try to do. I admit to making trips to Bridgewater and Halifax to buy things I can’t get here but think I really need and the trip justifiable. So, the Diary supports buying locally. However, while I wondered at the figures I never bothered to check them out. So I read the web site carefully and some questions came to mind. Yes, I know, the Diary often gets it knickers in a knot over trivialities but in this case the site slips over over the line of triviality into the realm of questionable credibility.
Here is what the web site says (in red):
“Okay – so it sounds pretty incredible. How can it be that spending 10% more of your total income here in Queens will result in $20 million going into the economy? Well, here’s the scoop.
There are 4,715 households in Queens County. Each household earns on average $47,478 per year.
4,715 x $47,478 = $223,858,770 per year earned in Queens
$223,858,770 x 10% = $22.3 million!
(Okay, so we rounded down to 20, only because it is so much easier to say. What’s $2 million between friends anyway
So – are we actually keeping count?
Well, no, not really. All we are saying is that a small change can have a huge impact. And spending 10 cents more per dollar is a change we can all manage. So join us. Help us grow Queens 10 cents at a time. The power is in our hands.”
It sounds a bit too good to be true. So the Diary did some checking. In 2011, the folks at FPMarkets using Statistics Canada data showed that the average discretionary income of people living in Queens was $12,919 (they also said the average income was $55,449 which is the number we will use here since it sounds a whole lot better than $47,478. (Besides, what’s $7971 among family members). Discretionary income is what you have after you have paid for basic necessities and compulsories such as housing, food, taxes etc.
The problem is that what you earn is not what you get to spend and while $223,858,770 (average income x 4715) is a nice big chunk of money it is a far cry from $60,913,085 (average discretionary income x 4715). ) Of course 10% of that is $6,091,308 which is a really far cry from 22.3 million.
It gets more complicated as we look closer. Ten percent of gross income is not small change. It’s $5544. This is 43% of the average household’s discretionary income. Keep in mind the 10 to 20 program is asking you to spend 10% MORE of your gross income. This is significantly different from just diverting 10% of your spending to businesses in Queens. Let’s assume people in Queens spend half their discretionary income ( $6,459) outside of Queens (probably way to high but this is just an exercise). That means even if everyone spent all their discretionary income in Queens it would add $3,045,642 to the Queens economy not 20 million as 10 to 20 suggests.
Now 3.05 million would certainly benefit the region but it is almost impossible to spend everything in Queens. Nevertheless, I suspect most residents of Queens spend a whole lot more than 50% of the discretionary income here anyway.
We doubt if anyone else is going to check 10 to 20′s figures and most of us can’t really grasp what 3 million is versus 20 million. Nevertheless, I wonder if the 10 to 20 really thought this trough. One’s credibility is based is a fragile thing.
Of course, we haven’t even thought about what it would be like if surrounding regions embraced the same plan. Would Queens benefit or lose if everyone bought only in their own region? It just keeps getting more complicated the closer you look at it.
The Diary applauds the 10 – 20 effort because buying locally, if and when possible, is good for local businesses. We stop applauding when we feel the tugging of being jerked around. Of course, we could be all wrong. High finance is not our strong suit. Maybe the 10 to 20 people will check our figures and show us where we missed something.