Give the Gift of Plumbing, An Economic Christmas Story

With Black Friday safely out of the way (sales up only 0.5% from last year), the usual economic story about December is the savior of the retail activity because of Christmas and Hanukkah. But is it really? That’s the question posed by the Courant’s Dan Haar, who makes the case that when it comes to measuring economic activity, holiday retail sales aren’t a big thing.

Sounds crazy. But consider this: Strictly by the numbers, the painting industry is just about as important to the U.S. economy as Christmas.

Christmas gift buying, in fact, is not a huge driver of prosperity in America. Plumbing, electrical work, dentistry and many other ways we spend our money are bigger.

How can this be? After all, consumer spending accounts for two-thirds of the economy, and Christmas — with Hanukkah and Kwanzaa along for the ride — is the culminating linchpin of the retail year. Certainly that’s the case for many merchants, who count on the season for 40 percent or more of their profits.

For the economy as a whole, the numbers tell a very different story.

Spending in stores this year will total $437 billion in November and December, a widely reported forecast based on a survey by the National Retail Federation. That total includes most of the stuff we buy, including food and drinks but not restaurant meals, and not vehicles or gasoline.

What about gift-buying? The retail federation predicts the average adult will spend $507 this year. That comes out to $117 billion for the nation. But the difference between total retail sales in November-December, compared with other months, suggests the “holiday excess” is closer to $60 billion.

The sidebar to the article is where things get really interesting.

By comparison, Americans spend:

$30 billion: Roofing work

$40 billion: Painting contractors and paint

$70 billion: Plumbing

$95 billion: Dentist

And when we look at the whole gift giving thing, all those made in china items kinda of make you want to say bah humbug. Heading over to Walmart to buy a GPS doesn’t do anything for the local economy except support the $12.68/hr sales job. For a full time worker. On average. According to Walmart, they employ a total of 9,559 (they don’t separate full time from part time) and they say:

In FYE 2009, Walmart spent $3,247,957,724.00 for merchandise and services with 435 suppliers in the state of Connecticut. �As a result of Walmart’s relationship with these suppliers, Walmart supports 32,711 supplier jobs in the state of Connecticut.

Supplier figures provided by Dun & Bradstreet.

According to the local 777 web site, there are over 3200 members. I think there are more plumbers than that. The State of Connecticut regulates plumbers and therefor there’s a list of licensed plumbers somewhere. The state web site however delivers some lame message about that not being available. So much for supporting the local businesses State of Connecticut. So let’s run some math anyway. I got the hourly wage average for plumbers based on the average yearly salary of $80k.

9559 x 12.68/hr = $121,208.12/hr

3200 x 38.46/hr� = $123,072/hr

So, going by this back of the envelope, or in my case google calculator, it would appear that plumbers, at least those identified as local 777 members earn more per hour than all the employment generated by Walmart. And at a wage of $12.68 an hour, you know that the income generated is not flowing back into the local or Connecticut economy except in the form of taxes and housing costs. Which is why local health care clinics and hospitals are basically Walmart health centers funded by everyone else, but that’s another post for another day.

It’s not like those sales tax revenues would go away if Walmart weren’t here. They would just be collected by other retailers.� In either case goods that are made in China. Which is really the problem. All that stuff being sold by retailers gets so much press yet it’s disproportionate to the impact on the economy.� So buying stuff that is made in China just sends your dollars to China, without contributing to the local economy let alone the Connecticut economy.

So if you really wanted to buy local, and have your dollars stay local consider the gift of a new toilet instead of a gift made in China placing our economy in the toilet. And if plumbing isn’t your thing, consider all the local service economies–who employ more people –who spend more dollars in taxes, dining, food, other services, and most importantly support your local community.