The Stimulating Power of Hiring In-State

Regular readers of this blog know that Greg and I are huge advocates of doing business with Oklahoma-owned companies. We go out of our way to do that and believe our state’s economy would be much better off if everyone did the same.

Common sense also tells us that if the above is true for businesses, how much more impacting is it for state government to select all-Oklahoma firms when awarding contracts and making purchases?

But how significant is that impact? That’s a question we recently posed to Dr. Robert Dauffenbach, Associate Dean and Director of the University of Oklahoma’s Center for Economic and Management Research. His response served to confirm what our common sense suggested.

Here’s an excerpt of his reply:

I find myself in accord with Professor Jennifer Long, University of Science and Arts of Oklahoma, who writes:

“A contract from a local entity can serve as a powerful economic development tool if awarded to an in-state company. Not only will the contract immediately create jobs and income for the state, but also create additional business volume for other firms that will come into contact with the contracted business. This is the very definition of economic development: investing new dollars in a community that will generate more economic activity, ultimately impacting the community’s standard of living . . .”

. . . an in-state provider pays taxes locally, is employing workers who already reside in the state and paying income and business taxes on those earnings, and is much more likely to deal with suppliers based in the state for inputs to his or her business operations . . . [I]t is clear that the multiplier effects and tax consequences are significantly higher when contracting with local entities.

We’re grateful for Dr. Dauffenbach’s thorough and thoughtful response. And we are gratified to know that we’re on the right track in our belief in, and advocacy of, Oklahomans doing business with Oklahomans—including our state government.

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