Sustainability Videos & Lecture Series

George Brooks: It is my honor and pleasure to introduce a young lady that I’ve grown to become a friend of hers over time, and when I was speaking about this lecture to my children this morning, they even agreed—two of them agreed to come. One child and one who should be a child.

She is the founder and executive director of—I’m reading all of this. I had no idea I was gonna do this until just now. She is the founder and executive director of Local First Arizona, a non-profit that raises the public awareness of the positive economic and environmental impacts supporting locally owned businesses. In other words, buy local. We are much better off.

She is an entrepreneur par excellence, an economic specialist who works—hey, I can ad lib—who works to cultivate vibrant, sustainable communities and inspire a higher quality of life throughout Arizona. Cultural diversity, economic self-reliance, regional planning, and responsible growth in greater Phoenix is her life works. So much so that she is now part of the plan Phoenix committee that is helping to rewrite the entire general plan for all 520 square miles of Phoenix. It is my honor and pleasure to introduce Kimber Lanning.

Kimber Lanning: Thank you. Great. So thank you so much for having me here today. Just so that I know who I’m—oh, I need to turn this up. So complicated. How about now? You can hear me now? Just so that I kinda get a feel for who’s in the room, how many of you have lived in Arizona more than 10 years? Wow. How about more than 20 years? That is great. That is fantastic. I’ve never actually had that high of a ratio.

How many of you feel really connected to this place and you want to stay here and make it better? Great. Okay. That is wonderful. I’m so excited. This never happens. Usually there’s a total mixed bag in the room. So, how many of you are familiar with Local First Arizona? Okay. That’s fantastic.

I’m going to give you just a really brief background on me so that you know how I got here, then we’re gonna dive into some ideas around economic sustainability and some concepts about what you can do, what your role is within a healthy economy. The short story on me, I was born on Okinawa. My father was in the Vietnam War, and at the end of his third tour of duty, he was transferred to Luke Airforce Base where he retired shortly thereafter.

I grew up in Glendale. We decided to stay in Arizona, and even today, this many years later, my entire family is in Arizona. I am the only one who’s left in the Phoenix area, but we have Jerome, Sedona, Cornville, and Tucson covered. We all stayed. We love this state, and in our own ways, we’ll all working to make it better. I grew up at 59th Avenue and Northern. I graduated from high school early and came out to ASU to study architecture.

My father, when he wasn’t in the military, he was a jazz musician, and my mother owns art galleries. She owns them still today up in Sedona. So art was a very big critical piece of how we were raised. My parents never said what do you mean, you’re not taking calculus, but they did say, you have to take at least two art credits every year.” They did that with all three of us.

So all three of us kids are self-employed, and we’re all in the arts. I tell you that by way of context. When I came home from school at ASU and I said I’m going to throw away my scholarship, mom and dad, to open up a record store called Stinkweeds, my parents both went, honey, that is a great idea. True story. So I was 19 years old when I opened my first store, and that store survived and is going to be 26 years old on May 1st.

It’s located at Central and Camelback. It is truly my—the first love of my life. Even today, I can walk into that store this many years later and it still puts a smile on my face. I like to tell people I’m actually a social worker cleverly disguised as a record store owner because I tend to get involved in my kid’s lives. I know where they are even today. The ones that grew up in my store that I made a connection with and they have gone on to do brilliant things.

Maybe they were a little bit ostracized when they were in high school. They were a little bit misfits. They felt sheltered and rooted and connected to my store as a place where they wouldn’t be judged, and they could listen to the kind of music that they wanted. Unfortunately, they didn’t stay in Arizona.

I would say 90 percent of them that really are achievers are doing great things in other cities. They are rock stars. They are band managers. They are sound engineers. They are the managers and directors of large companies that have amazing marketing schemes. I see their things from here and there.

They come back and they visit me every year, but one of the reasons I started Local First Arizona was because I thought how can I play a role in keeping more of our bright young people here? People who are achievers, people who are striving to do great things. What is it that they’re missing here in Arizona that isn’t making them want to stay?

So this is—I opened my store in ’87 and I really felt this way all the way up until about five years ago. We’re starting to see a distinct shift I think over the last five years. So I ran the store. I’ve moved it four times. I’ve enlarged it. I bought the building at Central and Camelback. Then in the late 90s, I opened up a place called Modified Arts on Roosevelt Row.

Anybody remember what 4th Street and Roosevelt looked like in the late 90s? It was a very, very rough neighborhood. There was a hubcap shop and a liquor store on that street. The liquor store was technically a drive-thru, only no one had a car so it was more of a walk up. Everything else in that neighborhood was boarded up blighted.

When I opened up an art gallery on that street, at that point, my mother got down on one knee and begged me not to do that, but it worked. I mean we couldn’t get pizza delivered to that building. We would try to order pizza and as soon as we said our address, they would—you know, hello? Hello? They would just hang up on me. There were giant bonfires in the dirt lots and you really couldn’t get the attraction of police or fire, anybody else. It was very forgotten.

I tell you this because in 10 years, 12 years, Roosevelt Row is now 12 art galleries, five restaurants, three wine bars, four retailers, and a light rail stop that says Arts District. It is home to the largest art walk in the country with an average of 12,000 people coming out every first Friday for the last eight years. That’s not about me.

I’m a piece of that store, but that is the power of what small and local business can do when it works together. Transforming neighborhoods. We reduced crime by 62 percent. We created over 200 jobs. We didn’t need a single subsidy to do it, okay? Nobody paid us to do that. We did that because we believed in our community and we believed that we could make a difference, and we did. So, that kind of gives you the context.

A lot of people sometimes go how did you go from record story lady to director of this? You were talking about music and now you’re talking about the economy? Those are the exact stepping stones. There were two distinct reasons I started Local First Arizona. One was I wanted to retain more of our bright young talent, keep them here in this community. Two, I wanted to level the playing field between the small businesses and the large companies that get so many subsidies, okay?

If I walked around to the general public and said, why are big box stores cheaper? Why are big box stores cheaper? Most people would respond because they can buy in bulk. That’s not the whole story, okay? Largely they pay their wages below a living wage, and I’ll talk to you a little bit more about that, and largely they get big government subsidies to do what they do.

Yes, I am talking about restaurants and retail. I’m not just talking about base industry sector jobs, which is a whole other story. If we’re going to create high wage tech jobs is a different story than creating clerk jobs in a retail store. I’m going to talk to you a little bit more about that, but those are my main two motives when I started Local First Arizona.

This study came out about the time I started, and this study came out of Austin, Texas. Some of you already may be familiar with it, but the long and short of it is when you spend $100 at a national chain store only $13 stays and recirculates in the community. When you take that same money and spend it in a locally owned business, three times more of that money stays and recirculates in the local economy.

So, I actually got on a plane and flew to Austin to meet the folks who did this study to learn more about the economics behind it, to meet the economists who were starting to talk about this. This was a birth of a movement happening. I wanted to see that and understand it very, very well. This happened in Austin, Texas.

They compared a record store and a bookstore that were locally owned, Waterloo and Book People. They compared it to the Borders, which was just across the street, which was heavily subsidized by the City of Austin. They proved that the local business was driving the economy and the big guy was not. This is what really got me involved. I started knocking on doors.

I knocked on the door of Changing Hands Bookstore, Monti’s La Casa Vieja, anybody that would listen. We were located in Tempe at that time, and I just wanted to meet other business owners, say “Hey, are you aware that this is going on cuz’ it’s being reported on page B-12 and you have to dig for it. It’s not on the news. We’re not really having an honest conversation about it.”

So, just a brief synopsis of how much we’ve grown and where we are today, we are 2,300 locally owned businesses of all sizes. I put of all sizes there, and I’ll talk to you in a minute about why that is. When I say local, most people think I mean small. Those two words are not synonymous. They are very different words and I’ll explain why.

We are the largest local business coalition in North America. Our online directory is searched 41,000 times a month. That’s not hits to our website. That’s people actually using our search box to find local alternatives to what they’re doing. You obviously heard about the Buy Local campaign. A lot of the foodies are leading the way in that.

On the technical side, if anybody’s curious, we are a 501(c)(6) and a (c)(3). A (c)(6) is a membership organization that has the ability to lobby, so we do a lot of work on government policies and how they impact local businesses. The (c)(3) is a foundation. It’s a non-profit charity organization that’s working on economic development. The way the IRS looks at it is the (c)(6) works to strengthen the local business economy.

The (c)(3) works to strengthen communities, okay? Everything the (c)(3) does impacts everyone. This is not a talk about how I can strengthen the mom and pop stores because I don’t think that’s a sufficient argument. As much as my heart goes out, I am a small business owner, I cannot say to you, you should go local because mom and pop deserve it. That’s not a good enough argument and I’ll explain to you why. I can give you 10 more arguments better than that one. Okay?

We are an advocacy group working on long-term economic development, and we’re focused on economic sustainability. It’s really important to underscore that. If I were to stand here in front of you and say we’re a non-profit working on sustainability, nine out of ten of you would think about the environment. Okay? We care deeply about the environment. All of us do.

The goal of my organization is to create economic sustainability. We overlap with a lot of the environmentally sustainable organizations, but we are entirely focused on economic sustainability, and I would argue that the economic crisis facing the globe today is of equal proportion as the environment crisis, okay? But it gets overlooked and we too often think that somebody far away is going to fix the economy for us, okay?

With the last presidential election, I really wanted to make a shirt that said presidents don’t create jobs, people do because that’s the truth. The good news that you’re going to leave here today is that you are the economy, you just don’t realize it yet. Okay? Some of you may, I just am generalizing. We’re focused on growing deep wealth in the region.

So, the big box stores and the national chains that you see, when you see them, I want you to think mentally in your mind that is short-term wealth. That is short-term gain. It’s only temporary. It’s sales tax returns. It is not growing deep wealth in this region. I’ll really help you understand the difference between the two. First, let’s explore what is small business, okay? Locally owned businesses cultivate a sense of community and foster walkable pedestrian friendly places.

We know them. We may have some that we love, and they make you feel good often times about the place where you live. It’s a place, if your friends are in town from New York, you’re gonna go there. No one is going to say—and I’m not trying to be offensive—but no one is gonna say, “Hey, my buddy is town from New York, I’m going to take him to Applebee’s. He probably never heard of it.” No one’s going to say that. I’m not even trying to be funny. That is a fact.

Local businesses are what you’re gonna take somebody to that says I’m proud of the place where I live, okay? So now let’s explore what small business is as we define it for Local First Arizona. The owners must live here at least nine months out of the year. The business has to be privately held, it cannot be publicly traded. It cannot be a part of the stock market because then you have shareholders and your owners live all over the globe.

So your money is leaving the community where you live. The majority of the business needs to be done here in Arizona, and the business needs to be unique to Arizona. Let’s think together some examples of some very large, locally owned businesses here in Arizona.

Audience: Pita Jungle.

Kimber Lanning: Pita Jungle. They are getting ready to start franchising, but today they are. How about Bashas? How about Hickman’s? Hickman’s Farms? The eggs? Shamrock.

Audience: What about Sprout’s? Is that a big box store?

Kimber Lanning: Actually Sprout’s does qualify for this local ownership. They are merging within other companies and pretty soon they won’t, but for right now they do. How about Go Daddy? They still qualify. 3,500 employees. Infusionsoft still qualifies. Harkins Theatres still qualifies. Hensley Beverage Distributing still qualifies. Sorry?

Audience: Does US Air?

Kimber Lanning: US Airways? No, they are a publically traded company. Right. So, that gives you an idea, but I do want to shout out that companies that are headquartered here do drive the economy more than those that are not, but by our standards, they are still not qualified as a locally owned business. This is not a black or white conversation. I really want to underscore that. It’s not good business versus bad business.

There’s a whole lot of different levels in there, and I’ll talk to you at the end about how you can start to prioritize which ones will do the most for the economy and which ones will do the least. Again, not stating one is good versus bad, but rather one does the most and one does the least. So, that gives you kind of an idea. Is anyone familiar with this term: economic gardening? Okay.

This is a new way of thinking about economic development. It was developed really about—it’s only about 12 years old. In the scope of economic development, it’s very, very young. It’s really repositioning the way we think about growing jobs and growing the economy in the community where we live. Local First Arizona is a huge proponent of economic gardening.

I’ll give you a couple of good examples as we go forward, but the first thing I want you to think about is that economic development is a five pointed star. Okay? It is incubators. It is startups. It’s business retention. It’s business attraction, and it’s business expansion. Of all those five different types of economic development, generally speaking, 90 to 92 percent of our budget is being spent on business attraction.

That means that we’ve got less than 10 percent or less than 10 percent of our budget being spent on those other four categories: incubators, startups, business retention, and business expansion. We’re saying that that is an unhealthy balance. It’s not as sexy to simply grow a homegrown company as it is to say, “Oh, we just landed 135 jobs from elsewhere.” But we can’t neglect.

We can’t expect to have a healthy system if we’re focused entirely on attraction if we don’t stop and make a solid economy locally, where our local business economy has what they need, they’re thriving, etcetera. We need to build a community here that is much more sustainable economically. This model here, it’s incredibly valuable. We’re just now beginning to have the conversation here in Arizona.

If you pick up any periodical, it doesn’t matter if you pick up The New York Times or The Wall Street Journal or anything in between, The Economist, doesn’t matter. They will tell you that job growth in America is happening in two distinct areas. It’s happening in small business startups and incubators, and it’s happening in small and midsized business expansions. That is where job growth is occurring.

So, if we want to grow jobs in America, you would think that those two areas we would be putting money into, but instead we’re putting money into the big guys. They’ll tell you over and over again they’re the job creators. Does anybody want to guess why they’re not on that list? They are not on the list of job creators? Because they are creating jobs in other countries.

It’s really important that you understand that when we talk about offering tax breaks for the job creators, we’re offering American tax breaks so that people can create jobs in other countries. You can take a company like GE for example. GE hasn’t created an American job in almost 30 years. They’ve invested nine billion in infrastructure in India, okay?

They just started reintroducing jobs in the American market, the hot water heater, and they’re hiring people at about $8.50 an hour. The same people that 30 years ago made more than that here in America, but it’s so bad here now people are just grateful for an $8.50 per hour job. I want you to just wrap your mind around all of that for a second.

Let’s think about La Grande Orange. You’re familiar with this. 40th Street and Campbell. This is a great example of economic gardening. I put this in front of the Phoenix city council. At the time I started Local First Arizona, there was a lot of misperception about local business and all of them would come and put their around me for the photo shoot.

They’d say, “Oh, those local businesses, those are cute. We like those local businesses.” They’d say, “Alright, let’s get back to work on some real business.” Totally disregarding what local business does because they’re not measuring the impact properly. But just in terms of hard numbers, these businesses—let’s just kinda recap for anybody that’s not familiar.

This was a local couple. There were three people who invested in buying up an old abandoned post office, blighted, on the corner. They invested in it, and they put in a wine bar called Postino. Then they acquired the building next door and put in a grocery store. Then they added a pizza place. Then they added a restaurant down the street, etcetera, etcetera, etcetera. They transformed a neighborhood, right?

When I grew up here, Arcadia was a high school, not a neighborhood. Now it is a neighborhood, and you can’t buy a house within five miles of this place without articles saying or the listing saying within walking distance of La Grande Orange. The neighborhood next door renamed themselves Arcadia Light. They increased property values. They transformed a neighborhood, okay?

So I put this in front of the Phoenix city council and said, “Hey, what does this mean to you guys?” First I got them all engaged. They all love La Grande Orange. They were like, yeah, we know what you mean. I said, “Okay, what does this mean to you guys?” It means $400,000 a year into city coppers. All it cost you was a parking variance. What I mean by that is we didn’t have to subsidize them. We didn’t say, “Hey, we’re begging you to take over that post office and open up a wine bar. What if we give you a tax abatement? What if we give you some free land?” Okay?

I am still on a statewide quest to find one local business owner that was subsidized in any way. I’ll give you ten bucks to open up that shop. Not gonna happen. Not gonna happen. So, these guys have—I just heard this number too. I want to say it’s just shy of 1,000 employees. They have nine different businesses around the valley now.

They have Postino Gilbert. They have Postino Central. They have the Windsor. They have Churn, etcetera, etcetera. They hire people straight out of the DECA programs in the high schools, right? They give back to our local charities. They are rooted to this community. They are rooted to this community.

Now let’s juxtapose that with Cabela’s. How many of you are familiar with Cabela’s? Okay. Most people mistakenly think that Cabela’s is in the business of outdoor wear. They’re in the business of tents, camping gear. They’re actually not. I would argue they are in the business of subsidies. Cabela’s averages $25 million per store before they even open their doors in subsidies. Average.

Anybody wanna guess what they got out of the City of Glendale? $68 million for one retail store. They got free land. They got cash incentive. They got a tax abatement. Anybody that doesn’t know what a tax abatement is, you can go into Cabela’s and buy something and pay your sales tax, and they get to keep it for 10 years. That was the deal they struck.

Anybody been here long enough to remember that when Cabela’s came to town they said they were going to be the state’s second largest tourist attraction after the Grand Canyon? They put that on the front page of The Arizona Republic. That’s an insult to our intelligence.

Now Glendale, of all the cities in the whole valley, is closest to going bankrupt. They are upside down on all these deals, and we can track it right back to when they did a number of these deals right around the time of the Superbowl. That was our money. Can you imagine? Can you imagine they took our money and they gambled on a retailer who promised sales tax returns? By the way, they are completely under delivering, and there’s no one to hold them accountable.

So they brought us cheap jobs, they are under delivering on lowering expectations on sales tax returns, and now we’re laying off firefighters and we’re closing libraries in Glendale. Where is the outrage, okay? Oh, you’ve got all the outrage, right? Don’t mess with her. This gives you an idea of what we’re up against. Let’s shift for one second and talk about place making.

I put this up here. How many of you know someone from Chicago that won’t stop telling you how great Chicago is? Okay? Right? I started Local First Arizona while I was standing in line next to a woman who was telling me how great Chicago was back home. I thought, I’m gonna give her the benefit of the doubt. Maybe she hasn’t lived here very long, right?

So, I asked her, how long have you lived here? She said, “Oh, I don’t know, I guess about 13 years.” Okay? She was still—her language was actually boy, you guys sure have made a mess out here. I’m thinking who’s you guys? You moved here 13 years ago. You are officially qualified as one of us.

I started thinking what on earth? Why does somebody feel so connected to that place where they used to live and they live here? More importantly, how does that impact us overall as a community? So, I started doing a survey of all the people I could find that wouldn’t stop telling me how great it was in the Midwest, but they lived here.

Guess what they told me? All of those things. The locally owned businesses. They said those restaurants, those neighborhoods, I like when people know my name when I go into a business. I like that my parents went there and my grandparents went there. I feel rooted to that community. Fair enough, but why then when that person then moves to Arizona do they throw that behavior out the window?

Why then does that same person move to Arizona and eat at big box restaurants and shop at big box stores and then they don’t feel connected to the place where they live? A million different reasons. I didn’t ask them question. A million reasons I’m sure, but my point is local business plays a key and pivotal role in connecting people to the place where they live. How does that—good to see you, George. How does that impact us economically?

That means we have lower than average voter turnout. Right? They’re thinking I didn’t create this problem. I just got here 17 years ago. Okay? We have lower than average volunteerism, lower than average contributions, charitable contributions, fewer butts in seats at a Diamondbacks game. The Cubs could lose for 40 years and not lose a single fan and they’re proving it. The Diamondbacks have a bad inning and we’re like, I don’t know about you guys. I’m not too sure.

This is all economics. This all impacts us in a number of ways. So, I set about trying to better connect people to place. When I started Local First Arizona, that’s what I thought I’m gonna do. I’m gonna better connect people to place, and out of that, people will have ownership of the community where they live and they will demand a better education system. They will demand more adequate representation at City Hall and at the legislature, right? I think we’re gonna get there. We’re gonna get there.

So, just a few statistics to tell you where we are. Ninety-five percent of the businesses in Arizona have fewer than 100 employees. They way they talk all the time, you would think that we were just a fraction of the importance of Arizona, right? We are driving Arizona’s economy. Twenty-one billion paid to the businesses in Arizona. Here’s one for you, if small business was laying off people at the same rate as big business, we’d have 950,000 fewer jobs in America today. Anybody want to guess why that is?

Well, yeah, but because the big guys are creating jobs in other countries, right? We’re okay with that. The American public’s like whatever, man, we don’t care. We’re gonna continue with our lifestyle. Ehh, doesn’t work that way. Okay? We have to make decisions about how we’re going to claim the economy. I’m gonna tell you a couple of quick examples of how you can start to talk about the economy when I talk about dollars recirculating.

Now I’m not picking on Starbucks, I just want to use them as an example of what happens when you spend money locally versus non-locally. This side of the screen represents 15 Starbucks locations, located all across the valley. This side of the screen represents 15 independent coffee shops located all over the valley.

So, there’s always a handful of people in the room that are just super skeptical naysayers that are like, I don’t know what that crazy lady is talking about. That doesn’t make any sense at all. Starbucks pays their taxes, and Starbucks brings us job, and they do. That’s not what I’m talking about. I think Starbucks actually does a pretty good job. They’re not in the business of subsidies. They’ll pay their own way. They actually provide healthcare for their employees, which is better than 90 percent of the big boxes out there. Okay?

All things being considered equal, these guys create jobs, these guys create jobs. These guys pay taxes, these guys pay taxes. Totally dead heat, neck and neck. Absolutely. Couldn’t agree with you more. But now let’s talk about when you’ve spent your money at Starbucks and you bought that latte in the morning, how many accountants are employed in Arizona because Starbucks does business here? How about graphic designers? None. How about web developers? None. Payroll service providers? How about attorneys? You get my point.

The number is zero across the board. Now over here, we’ve got 15 accountants have a gig. Fifteen graphic designers have a job. Fifteen web developers have a client, on and on and on. Those are called secondary jobs, and you’re never, ever, ever, ever gonna read about them in the paper. That’s what makes the world go round. Secondary jobs.

Now let’s talk about tertiary jobs. Those are also equally important. Let’s talk about the janitorial company that is in business that keeps the accounting firm clean over night. The accounting firm is only here because they have 26 local business clients. That’s another time those dollars are staying and recirculating in the community.

So in the bigger context, let’s talk about office supplies for a minute. In the mid-80s, there were 14,600 independent office supply companies in America today. Okay? Bain Capital came in, subsidized Staples, rolled it out, and we loved it. We just loved it. Today there are fewer than 1,200 independent office supply companies in America.

Now, I’m not gonna say to you oh, boo hoo for Pat and Betsy, they lost their office supply store. That’s not the story. The story is all the secondary jobs and the tertiary jobs that are eliminated with that. We mistakenly think we’re saving money. There’s always one guy in the back that says, “Oh, economy is scale, tough luck Lanning, right? Tough luck. That’s just how the economy works in free markets.”

Well, I got news for you, we’re as far away from free markets that we’ve ever been in the history of this country. Our food is subsidized. Our gas is subsidized. We’re subsidizing retail. It doesn’t even matter. How much do we pay? Okay? Secondly, I think it’s really important to acknowledge we could have 30,000 Starbucks locations in America, and they’re still only going to have one accounting firm. So, we think we’re saving money. Now that I’ve played this out, who’s saving money?

Last thing about economy in scale, it is not cheaper to buy a latte at Starbucks. It just isn’t, okay? Let’s continue thinking about our role within a really unhealthy economy because we don’t seem to care about this stuff. We are buying ourselves broke. We can prove, and we have through economic studies, that for every two jobs a big national chain brings to our community, three jobs will be lost, local jobs, as a direct result of a local business closing down.

I will say maybe that is just how capitalism works, right? Dog eat dog. Bigger is better. Maybe that’s how it works. That could be absolutely true, but let’s not pay them to do this to us. Let’s not take our cash and fool ourselves and think we’re actually saving money because we’re not. That’s what Local First Arizona is trying to do is to help folks understand what their role is.

We did our first economic study in 2007, and we looked at the State of Arizona’s $5 million office supply contract, okay? We wanted to give an example so that our elected officials and higher ups making purchasing departments could really understand what’s the best deal. How are we spending our money and how is that related to the end result to what kind of an atmosphere we’re creating here in Arizona.

The other reason we picked office supplies, it’s vanilla, and we have three distinctly different types of companies that are here in Arizona that are doing business, and we could just compare. Okay, $5 million spent with this company, this company, and this company. We had OfficeMax, which is a big national, but they have a regional distribution center here in Arizona. We added Staples, which is a big national. At the time we did the study, they had no regional distribution center here in Arizona. Today they do. We added Wist Office Products, which is a third generation Arizona company.

These pie charts represent where our money goes when we spend it. We spend $5 million with Wist, 33 percent of it stays in Arizona. We spend $5 million with OfficeMax and 11 percent of that money stays in Arizona. This represents a hard number of a half a million dollars a year leaving Arizona’s economy. We call that economic leakage. I’m going to explain to you the methodology.

The first thing we found in our study was that Wist has 100 percent full-time employees with benefits. That means they take care of their own. They employ people, and they pay their healthcare for them. Staples and OfficeMax both brought Arizona between 62 and 64 percent part-time employees with no healthcare benefit.

Wait a minute, wait a minute, what does that mean? No healthcare benefits. They end up on the state’s healthcare program, isn’t that right? Wait, who is paying for that? We are. So, you mean to tell me that they seem like their prices are lower, but we have to subsidize their healthcare, which is costing us more in the long run? It’s also putting an unfair burden on Arizona taxpayers. It’s also bringing us below living wage jobs.

The second thing we look at is charitable contributions. Wist gives $35,000 a year to Arizona companies and has done so every year for the last 10 years and can prove it. Staples and OfficeMax had never given anything in Arizona that they could point to. The third is the second tier jobs that I just spoke to you about. Wist does business with Arizona. They have local accountants, attorneys, graphic designers, web developers, payroll service providers, etcetera. All of those jobs are gone with Staples and OfficeMax.

When you look at the actual impact that Staples has on Arizona’s economy, it is nil. So we spend $5 million with Staples and that little sliver on Arizona’s economy represents clerks starting at $7.60 an hour and the taxes they pay. Arizona is one of only three remaining states in the union that mandates low bid wins. Low bid wins. That means if these guys are smart enough to lower their price and pass the buck on to the rest of us for their healthcare, they’re going to win the bid over and over and over again and they do.

The sad story to this tale is in 2009 when the OfficeMax contract expired, Staples came in and undercut them and won that contract. Okay? We have been working diligently to try to change the way we think about what is the best price. Changing the measuring stick. Measuring the entire package. Wait, is this company we’re spending tax payer dollars on going to bring us quality jobs? Do they provide healthcare for their employees?

These are all things that should be in question. Okay? Especially when we’re spending tax payer dollars and when we’re thinking about ourselves as all part of a healthy local economy. The economy is like your bloodstream, right? You can take an institution like ASU and put it right in the middle, and ASU might think it’s its own little bloodstream, but it isn’t. It’s part of the greater context of this entire valley.

If we want to invest in these kinds of jobs and think that we’re saving money, we can absolutely do that, but that’s not what’s going to create a healthy Arizona economy overall that has a ton of civic pride, that elects legislators who understand education and, in turn, will elect people who want to invest in the future of institutions like this one. It’s all part of the same cycle, okay?

We picked 15 randomly selected cities with a million plus residents. Ninety percent of them were all spending 90 percent of their budget on big non-local businesses. So, the old model is hey, we’re gonna invest in the global. We’re gonna pay big, big bucks to get these companies to move into our communities and guess what? You local guys, good luck. You can just hang on for dear life.

We’re not advocating to completely reverse that, but we are advocating that if we create jointly all as partners a healthy local economy where we’re doing business with one another, not 100 percent of the time, but a lot more than we’re doing it today. Doing business with one another where there’s a lot of civic pride, where local business policy is like of course we’re gonna do that. That makes perfect sense to drive Arizona’s economy.

Then guess what? You got your globals who are scratching and clawing to get in here because we’ve got the best place on Earth, okay? At no point—I mean Arizona has constantly—Phoenix and Las Vegas have been in number one and number two for growth in this country for the last 10 years. Could you imagine any retailer that doesn’t want to be a part of that? No. They want to be a part. They should be paying us. Right?

I mean Bass Pro out in Mesa got $32 million. Wal-Mart’s averaged $25 million per store. These companies want to be here. We need to turn that upside down. We did a good example, a study looking at a good example of a company in Arizona that is really making a difference. We looked at SCF Arizona.

SCF gave us the okay to go in and study their books. They make it their mission to buy locally. They go out of their way. Their board is engaged. Their staff is engaged. They think we’re gonna support Arizona companies. Why do you think that is? It’s gonna come back to them. They are the state’s largest workers’ comp insurance company. They want a healthy Arizona economy, right? They’re investing in the future of Arizona by supporting local businesses.

In 2009—actually in 2010, we looked at their books from 2009. We found out that 82 percent of their contracts were sourced locally. Eighty-two percent of their contracts were sourced locally. That is an enormous number, huge. We discovered two key things from this study.

The first thing we studied—the first thing we found out, a key point. They spent $500 million. That was how much they—I’m sorry, they spent $100 million. That was their total budget, but it had a $500 million impact on Arizona by the time we measured it going throughout Arizona’s economy. $100 million, $500 million impact.

The second thing that we studied or that we came up with in our study was they directly employed 518 people. That’s how many people wake up everyday and say, I work for SCF Arizona, 518 people, but because of the way that they award their contracts, they are supporting 3,600 Arizona jobs in the secondary market. These jobs are in manufacturing, medical supplies, on and on and on and on.

We’ve been able to take this study, we landed on the front page of The Business Journal. We went around to other Arizona companies. We said to APS, “Hey, look at what SCF is doing.” APS said we are on board. It would benefit us as well. What can we do? So, they have pledged to shift five percent of their spending every year. SRP, huge response, absolutely. This makes perfect sense for our company, and it makes sense for the future of Arizona, okay?

We are working on trying to get more of our large companies and institutions on board with this. Hospitals. Phoenix Children’s Hospital. They were like this makes perfect sense for us, for our company, for our vision, our mission, everything. We’re absolutely going to respond to this.

So, what does this mean to each one of you guys? Shift Arizona is a campaign that really kinda brings it down to size. I’m up here talking about big companies and institutions. What can you guys do? We started a campaign called Shift Arizona. This campaign is about almost two years old. I guess it’s about 19 months old, and it grew from a study that our colleagues did in Grand Rapids, Michigan.

It showed that in a community the size of Tucson, basically the size of Tucson, if everyone there linked arms and simply shifted 10 percent of their spending from a national to a local company, just 10 percent, it would create $130 million new dollars recirculating in that community. It would create 1,600 brand new jobs and $52 million in new local wages for a 10 percent shift.

Again, I’m not up here you have to change your whole life. You don’t have to. If you look at your finances today and you said, I’m spending about 20 percent locally, I want you to get to 30 percent. Okay? Think of all the things you could be doing. I bet a lot of you are already doing things locally.

You may be getting local haircuts. You go to a local salon. You may be going to a local auto mechanic already, okay? Some of you may be banking at a credit union, which makes sure that that money stays and is lent back here in Arizona. There’s a million ways to go local. It doesn’t have to be more expensive. I’m not telling you you have to go buy expensive clothes, handmade clothes, at a boutique downtown, and they’re only open from noon to one on Tuesdays.

It’s easier than you think it’s going to be, okay? We like to—we have a calculator on our website where we can get people to go and you can enter your monthly expenditures, click I pledge to shift 10 percent, and it will calculate for you how much you’re personally going to recirculate for things like parks and libraries and fire department. Okay?

I think it’s critically important that we all just start thinking about—hey, it’s my Fed Ex guy. What’s up? I didn’t see you before. I would invite him in here. Okay. Oh my God. So, I think it’s really easier than people think. On this website, where we have a calculator, we’ve had $62 million pledged of people and businesses coming and saying I wonder how I could do this, okay?

I’m working on some top line things. Top line things like QuickBooks. Intuit owns QuickBooks. They wanted to be more involved in the local movement. Why? Same as American Express with Small Business Saturday. Why? Because their future depends on small businesses in America, okay?

So with Intuit, they said what kind of ideas could you throw at us that we could be more engaged with local businesses? I said, “Wouldn’t it be great if when you’re entering in online, if you’re balancing your checkbook, there was a box where you could say that’s local. That’s local, and that’s local. You could find out where your strengths and weaknesses are. You could find out oh, wow, I’m doing pretty good. I’m already at 62 percent local whatever that looks like, okay? I don’t know that I’m gonna get it done, but you might as well dream big, okay?” They were certainly like wow, that was a big idea.

So thinking about procurement, we changed the way the City of Phoenix does business. We haven’t had success at the statewide level yet. We haven’t had success at the statewide level, but in the City of Phoenix, they really got this concept that low bid isn’t necessarily the low bid, okay?

The old model used to be $5,000 was the threshold at which they had to go to a full open public bid. We don’t care if you’re from the other side of the world, the other side of the country, it doesn’t matter. The low bid wins. I can tell you some deals that are shockingly small margin.

A huge deal where the Arizona company said, “If we lose this contract, we’re gonna have to lay off 20 people tomorrow.” The State of Arizona says, “You know what? Sorry about that. It’s not our problem.” You know how much money they saved? Twelve hundred bucks. I don’t know about you guys, but I’m like I will give you guys 1,200 bucks. Save these 20 jobs, okay?

We’re not thinking properly about the way we’re doing our purchasing. So we raised this $5,000 threshold up to $50,000. Now staff—they visit a website, a database that we’re helping them create that has all Arizona certified vendors. They can get three bids from that database, and they go with the lowest of the three bids.

I want to underscore it is still a competitive process. It is not a preference. We are not just randomly preferencing local businesses. We are saying smartly local business does more for Arizona’s economy, so for contracts that are this size, we are going to award them locally.

Now the straw that broke the camel’s back and got some traction, the City of Phoenix awarded a $15,000 contract to print their new City of Phoenix t-shirts to a company in Green Bay. When I said, “Gosh, why did you do that? I have a hard time understanding why you had to go to Green Bay and pay the shipping and everything, all the unsustainable pieces to that.” They said, “We couldn’t find a local screen printer. Sorry.”

I said, “That’s odd because I have 42 of them in my coalition. I’m pretty sure I could stand in the street anywhere with a rock and hit a screen printer that could use a $15,000 job right about now.” When I took that to the city council, they just went nuts. They started having a very real conversation with staff about we have to change the way we’re doing this.

So, I ran in, I found a solution in San Diego. Had it running over my head, went straight past the mayor. This was Mayor Gordon at the time. I went to the legal team. They were like, oh, here she comes again because I kept getting held back and tripped up by the state law that mandates low bid wins. This is the way we got around it. We changed the procedure, not the law.

This change is gonna do an additional $20 million this year alone in local Arizona business, okay? We’re bringing in a lot of companies into that database. I want to talk to you real briefly—how am I doing on time? Five minutes?

Okay. This is something just to get you thinking about the things that we do to one another, and we don’t think about them very clearly. Let’s give an example of soccer mom. Soccer mom goes out week after week after week and she buys the team snacks at Costco—see ya—at Costco, right?

She thinks she’s saving money, she’s doing the right thing. In fact, she’s not really thinking about it at all. She’s sure that Costco must be cheaper because they’re huge, and we all think that the bigger they are, the cheaper their prices must be, okay? This is what media’s been telling us for 20 years. She doesn’t think about it much.

At the end of the year when all the soccer moms get together and they’re gonna have their big year end party, they bring in all the soccer moms together. They’ve all been spending all of their money at Costco. All of them are doing this. Then they decide well, we need to get a huge donation. We need a food donation for this party, this year end party. Are they gonna be able to go back to Costco and get a donation?

What do you think they’re gonna do? They’re gonna go straight out and knock on Bashas’ door. They don’t even think about how wrong this is. This is a broken social cycle. I tell this sometimes in front of soccer moms and you can see three of them going huh because they weren’t thinking about it. Bashas gives and gives and gives.

I’m personally just devastated by the loss of Eddie Basha this week, but he just hosted a breakfast ask for Local First Arizona about nine months ago. He told a story in his jovial way, still smiling through it all, about a woman that he knew in the community who, her husband had tragically died, and that husband used to work for Eddie years before.

She was financially kind of in a bind. Eddie called her up randomly and said, “I would like to donate the food after the services. I can bring food for 200 people. I can’t do the drinks, but I’d be happy to do the food.” Without hesitating, the woman said, “That’s okay, I’ll get the drinks at Costco.”

We do these things, and we do them often. So, she’s not thinking, wait, he’s giving me all this stuff, clearly I should spend what money I have with him, right? That’s a broken social cycle. It doesn’t work. We tend to think to ourselves, my spending doesn’t matter. My spending doesn’t matter to the outcome of it all. It does. Okay?

We are buying our way out of jobs, and we are making very poor choices. We’re conditioned this way, right? If there’s a hammer built in Taiwan and a hammer built in America right next to one another, we’re always gonna go for the one even if it’s $2.80 cheaper. We’re just gonna leap for that one because we are conditioned. We’re actually told we’re sexier when we save money. That’s what the media wants us to believe, okay? Let’s reevaluate what saving money actually means.

I’m gonna give you an example of what this means to you in real life. This is a faucet. Let’s all pretend we had to go out and buy a faucet tomorrow. There’s a million ways you could do that. A lot of people raise their hand and say, “Gosh, I hear what you’re saying, but it’s so confusing. It’s really hard for me to know what’s local and what’s not. I frankly don’t have enough time to dissect all this stuff all the time.”

I realize that I was raised in business, so it’s really easy for me to spot a local versus a non-local. A couple of things to keep in mind, if everybody in the place where you’re going to spend your money is wearing the exact same uniform and has a name tag and a hat, it’s not a local. Pretty much that’s a simple rule, okay?

So, let’s think about we had to go buy a faucet. I’m gonna put them in an order about the most impact versus the least. The most impact, the furthest you can go with your money is to go out and support a local hardware store. They do still exist. People like to say they don’t, but they do. You drive by them at 40 miles an hour, and then you stop at the corner where the big guy owns the corner and has a big neon sign. You continue on another block, and you drive by more local business. You stop at the corner where the big guys own all the real estate, okay?

The general consensus is those local guys, I don’t even know where they are. Well, you just drove by them at 40 miles an hour. That’s a whole other talk that I give on the connection between local healthy economies and the built environment, but think about that. So, that’s the number one thing you could do.

The next thing on the list you could do would be to go to a True Value. A True Value is a co-op. That means that their employees have ownership opportunities. They live in the community and more of that money is gonna stay to their personal spending habits right here in the community. The next thing on the list—one, two, and three—right up at top is an Ace.

An Ace is a franchise, but you can guarantee that they owner is gonna have a little league plaque on the wall. They’re gonna be committed to the community. They’re giving back in some capacity. They live right here in Arizona, but you’re not gonna see the Ace, Steven’s Ace Hardware, with a whole different logo. They can’t hire a local designer to come up with a new Ace logo. They can’t. There’s a lot of things they can’t do. They’re half and half, but a franchise is definitely going to be a better option.

Now dropping significantly down on the list is going to be Home Depot and Lowe’s. I mean, you’ve got one, two, and three, and then shoo, now we’re all the way down here. You know that for every 100 bucks you spend in a Home Depot or a Lowe’s, only $13 is gonna stay here in Arizona. They don’t do business here. They offer below living wages. We have to take this into consideration, okay?

Then the bottom of the list, you’re thinking, what else could there be? Going online and buy that faucet without even paying your sales tax. Okay? I could go on for days about the importance of sales tax. Cities don’t run when we don’t pay our sales tax. So unless we are ready to fight our house fires with a garden hose, unless we are ready to take our trash to the dump on our own, we have to pay our sales tax.

If we don’t, if we think we’re so smart that we’re gonna find out a way to buy all of our stuff without paying sales tax, then we can’t be surprised when our property taxes go up because that money has to come from somewhere. We can’t have the same quality of life that we have and not pay into that system. It doesn’t miraculously run on its own. That gives you an overall idea.

Regional thinking, so important. We can define regional in a million different ways. Regional could be the southwestern United States. Regional could be Arizona. Regional could be the valley. Regional could be Phoenix. Regional could be the ASU campus. Regional could be a cluster of small businesses on a corner somewhere.

Regional thinking. No matter what that is, we have to work together as a team and figure this out together. We can’t independently conquer these issues on our own. Alright? Thank you so much for having me here.