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The College Economy: Incoming students create spike in business

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Summer is gone, but about 50,000 college students in the Springfield area are here.

What follows is a positive blip on the local economy.

“All of their supplies and equipment – that does have an impact,” said Springfield Finance Director David Holtmann.

Local bars and restaurants also expect to benefit, said Anne Baker, a co-owner of Finnegan’s Wake downtown.

“That’s something we look forward to every year, for sure,” Baker said. “Finnegan’s loves its college crowd.”

As a proportion of the city’s 167,000 population, students enrolled in the area’s dozen or so colleges represent nearly a third.

The city of Springfield’s sales tax data show a correlation to the college economy.

In a review of city sales tax collections, purchases in August generally rank in the top five revenue months – up there with holiday sales and summer’s kickoff. And in an era of volatile and difficult to predict sales tax collections, purchases in August have held steadily above $3.7 million the last three years. Last year was only a couple thousand dollars short of the $3.8 million mark – a big difference from the $3.06 million netted in August 2013.

This year’s August numbers will be known in October; sales taxes clear with the Missouri Department of Revenue two months after they occur.

Holtmann said the numbers also reflect grade school and high school students’ return to their classrooms.

Sales, sales, sales
The retail stores and coffee shops seem to get flooded this time of year.

“We definitely see an increase in foot traffic and business when the students come back,” said Kimber Woodar, the store manager at Envy clothing boutique downtown. “They all want new fall looks.”

At 323 E. Walnut St., Envy is close to campus and student housing developments. Woodar said the store makes up for its slow summers with sidewalk sales and other promotions to reach different demographics, such as high school students.

The Mudhouse around the corner also experiences an influx, barista Taylor Dye said.

“We do see a pretty significant change in the demographic here when school starts,” Dye said, noting the crowd thickens during late-night study hours. “They’re in here doing their homework.”

But Finnegan’s might experience the highest traffic differential. In summers’ past, Baker has offered staff plenty of time off.

“It would just be the time for all our employees to take their vacation, if they needed it,” Baker said.

But when school gets going, everything’s back to business.

“If there’s one thing we appreciate, it’s the renewable income and this force of students coming every year,” Baker said. “There’s always a class turning 21 and that’s something we will always welcome with open arms.”

Human capital
While college students spend their money in boutiques and bars, a bigger picture is at play.

The role of most universities is to increase the human capital of its students. Economists define human capital as the ability of individuals to contribute to the output of the nation’s goods and services.

Though not in Springfield’s college economy footprint, Southeast Missouri State University in Cape Girardeau performed an economic impact study in 2011. Business school officials estimated 36,000 graduates lived in the 24-county region it served and they represented $602 million in human capital. Income earned by those graduates also contributed to $36 million in state income tax revenue, $205 million in retail sales and $8.65 million in state sales tax revenues.

Another study, in 2014, found Northwest Missouri State University’s impact generated $617.5 million in regional income by graduates.

Springfield area schools contacted by Springfield Business Journal didn’t have recent economic impact studies to cite.

As for student employment, Bass Pro Shops has created jobs for graduates at its base camp here in Springfield, said Katie Mitchell, communication manager for the retailer.

“We usually host more than a dozen interns every year,” Mitchell said. “In the past two years, we have offered full-time positions to the majority of our interns following their graduation. They include staff accountants, retail specialists, business analysts and information technology project managers and software engineers.”

The company currently is hiring 54 part-time entry-level jobs, according to postings at Indeed.com.

“Springfield’s college and university students have a tremendous impact on our region’s economy,” said Ryan Mooney Springfield Area Chamber of Commerce’s senior vice president of economic development, in a provided statement.

“Not only do their sheer numbers bring significant business and economic vitality, but many will also play a vital part in our future by learning the skills needed to drive the future as leaders of our regional workforce.”

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