Local businesses could be the key to revitalizing the Las Cruces economy post COVID-19.
“It doesn’t have to be the next Microsoft. Economic development is getting people who are not gainfully engaged in the economy, engaged,” Michael Shuman said.
Economist Michael Shuman has written multiple books on local economies, advised many cities on how to better support small businesses and, just recently, presented his suggestions on rebooting the local economy to the Las Cruces City Council.
“Locally owned entities generate two to four times the jobs as other economic development impacts. The reason is, is that the local business, because of its relationships, spends more of its money locally,” Shuman said. “If you want to reduce poverty, raise social equality, local businesses are your best ticket.”
Shuman shared his three alternative rules for local prosperity: The first two are maximizing the diversity of businesses and the percentage of jobs in locally owned firms. His third rule is to identify leaks in the economy.
Shuman says an analysis is needed to understand where money is leaving Las Cruces, followed by policy initiatives to address the findings. Shuman gave examples of prospective ideas, including an investment tax credit for those who spend locally.
“If they've spent a dollar on a local investment, they might get say 25, 30, 40 cents off their taxes,” Shuman said. “In New Brunswick, this has been an extremely effective way of mobilizing the population to put millions of dollars into local businesses.”
Cultivating small businesses is especially important in a state like New Mexico, where the U.S. Small Business Administration reported they make up approximately 99 percent of all businesses as of 2018.
While small businesses might be one key to greater economic prosperity in Las Cruces post COVID-19, these local entities have to survive the pandemic first.
New Mexico State University Economics Professor Dr. Chris Erickson recently told KRWG how some small businesses have been utilizing CARES Act funds to stay afloat.
“The way the CARES Act is working with small businesses is that it’s making loans to those small businesses through the SBA (Small Business Association) and the SBA loans are administered to private banks,” Erickson said. “And there’s a fair amount of uncertainty as to how to qualify.”
Councilor Johana Bencomo stressed the importance of connecting business owners with the right people who can help them navigate the uncertainty of owning a business.
“My parents are immigrants, and five years ago they became small business owners,” Bencomo said. “And I just wonder how many other people are like that in our communities that just haven't had the support, that push, access to capital, access to information.”
The city of Las Cruces has resources for small business owners, such as the Arrowhead Center for business development. But some councilors, including Gabe Vasquez, say there is more to be done. And he says, this isn’t just an economic issue, it’s also about social justice.
“I think about the power of wealth building opportunities in our local community, being just as important as bringing economic based dollars into our community because in particular for the families here that could benefit from better high paying jobs,” Vasquez said. “The argument, in terms of bringing new economic dollars to help support those jobs versus redistributing existing wealth in our community, so that we have folks that are in lower tiers of the economy that actually have better opportunities.”
Shuman agrees, underscoring that caring about society and attracting business are not mutually exclusive.
“What I would argue is many of the forms of high social performance actually have strong economic development impact,” Shuman said. “So if you pay your workers more, well, that pumps up the local economic multiplier, if your business is buying more local goods and services, that too, also is increasing the local economic multiplier…the point is, is that social progress and economic progress can and should be one in the same.”
