Hipster Economics

Why Knoxville’s business elite should be kind to the street punk; he may contribute more to our economy than you do

We’ve been hearing catastrophic reports of layoffs lately. I’ve been lucky to have kept the same full-time job for almost 14 years now, but before that, life was exciting. I’ve been laid off three times, each time with small children depending on me to keep making a living somehow. I know it hurts.

Obviously, there’s always an impact beyond the misery of each family, as shopkeepers and waiters and tax collectors notice the absences. And there’s a disproportional disparity between the laid off. The loss of some incomes will be noticed in the community at large more than others. And it’s not necessarily the biggest incomes that will be missed most.

Consider the hypothetical contrast between two local guys. One is a long-successful professional with a graduate degree who makes $100,000. Maybe he lives the high life, spends most of the money he makes. But he does much of his shopping online, on Amazon or eBay. He watches movies on Netflix. He buys trendy furniture from Ikea. He lives in a small house in the country, and makes up for his lack of property with a plasma TV he ordered from Samsung. He drives a Jaguar he bought in Atlanta. He doesn’t eat out much, preferring to save for big vacations—a cruise to the Bahamas, or a ski trip in Jackson Hole. He and his family spend a lot of time at their big tax-exempt church, which sponsors lots of activities, and has a gym and a gift shop and a restaurant. He sends his kids to private colleges in other states. He contributes thousands a year to lots of worthwhile national charities. He’s an upstanding guy, honest, hardworking, generous, loved by his family and appreciated by his colleagues.

Now consider another guy, a scruffy hipster who quit school sophomore year. He works part-time for a non-profit, plays bass for a punk band for a percentage of the door. In the spring and summer, he does some yard work. In a good year, he makes maybe $18,000. He spends most of it on cheap beer at his favorite bars and coffee houses, most of them downtown. He has a cheap old car that’s often broken down, and lives in a rental apartment he shares with a couple of friends in a renovated old house in Fort Sanders. He eats out with his friends, sushi and pizza mainly, and buys tickets to cool shows at the Bijou or the Tennessee or the Square Room or the Valarium. On a special occasion, he invests in another tattoo.

Now lay them both off, discouraging both so profoundly that they move away forever. Which one’s loss will be felt more in the community, in ways measurable by the Chamber of Commerce, or in balancing the budgets of local governments, paying for law enforcement and our public schools? My money’s on the hipster.

Chances are, despite the income disparity, he spends more in town. Considering we have a sales-tax-based state government, the hipster may well contribute much more even on a statewide level, to fund the University of Tennessee and other state institutions, than the professional does. For his 1985 Honda with a busted window, he pays the same county wheel tax as the guy with the Jag does.

Thanks to his lifestyle, he pitches in much more in city taxes than the suburban guy does; the nightclubs he patronizes pay steep entertainment taxes. And his favorite bars and restaurants on Market Square and in the Old City are not only within city limits, but also still subject to the sales-tax recapture policy. Whether he cares or not, he’s helping the city pay off the Convention Center debt and keep its AA+ bond rating. And though he may own no property, he’s helping keep property taxes low.

On the city’s public and private balance sheets, the large-living suburban professional can be, in comparison, almost a nonentity. His income doesn’t show up in state and local accounting. He’s detectable mainly by the county property tax—which, if he lives in the outer suburbs, may well be less than the hipster spends on PBRs.

I’m sure there’s some study to confirm this: The higher the salary, the greater the percentage of that salary is spent outside of the local or state economy.

Sometimes I wonder if we observe that priority deliberately, almost as if it’s a moral imperative. Spend two bucks on a cup of coffee at a local coffee shop every morning for a year, and you may enjoy it—not just the coffee but the newspaper, or the space. Time in a good coffee shop can be like a little vacation. Chances are, though, somebody will likely give you a hard time for it. Heck, they say, I make my coffee at home. Or heck, you can get the same thing at McDonald’s for 89 cents.

But spend 10 times as much as your annual coffee investment on one week in Hawaii, or a Carnival cruise, or a wild weekend in Las Vegas, and your friends will gush, “That’s the life,” and exalt you as a celebrity for a day. Same if you spend it on Italian shoes, or a Japanese luxury car, or Swedish furniture. That’s what we’re supposed to spend money on, we say. Not fritter it away on local stuff, lattes or pizza or movie tickets. Why, that’s just throwing your money away. But those are the things drive our local economy, and our K-12 education budget, and our university.

It’s almost as if there’s a subtle ethic running through our culture that the smart thing to do is to economize on the local stuff so we can spend extravagantly on the non-local stuff. And of course the consequence of the ethic is to bleed the local place dry, and send its tenuous wealth elsewhere.

The hipster and the professional have a right to their own pursuits of happiness. But when we recruit new jobs to replace the old, maybe we ought to keep that in mind. Maybe it’s the modest incomes, the people who spend a lot of money at home, who keep us in business.

© 2009 MetroPulse. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Comments » 4

JMG writes:

I never really thought about it but that makes sense to me. Thanks.

crescentfresh writes:

"In a good year, he makes maybe $18,000." If that's the case, sign me up.

tactilezero writes:

Moral of the story: We live in a consumer based economy. And have been for a very long time. If the consumers are not spending, then the retail businesses are hurt, and so on. The problem now is the government trying to save the economy by pumping more money into its already failing system. They are trying to put a fire out with kerosine.

Motorway writes:

This is a really interesting concept about hipster economics. Quite the relevant and current topic being discussed too. Very intelligent points made throughout. I'm sure you're right that people with modest incomes have more to contribute to the economy than those making six figures. I definitely see your points.

www.hipsterwave.com

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