Positive Economics: A Hypothesis on Reliance on Out-of-Town Dollars

Economics is divided into two fields: positive and normative. I usually spend my time in normative economics, thinking and arguing about how our economy -- local, national, and global -- should be structured. Positive economics is merely descriptive economics, analysis of how the economy is structured. You can't do good normative economics without good positive economics.
So here I offer a mere observation on why our local economy works the way it does. I've compained before about how Madison's marketing efforts focus on tourism, on drawing out-of-town dollars. I've suggested that we might build a more stable local economy if we focused on building local industries that serve local needs. However, it hit me why that model would not necessarily provide the economic growth that our fearless leaders want. Madison's wages, like wages throughout South Dakota, are significantly below the national average. We don't have a lot of high-salary jobs. We have lots of farmers who aren't even protected by minimum-wage laws. We thus don't have a lot of workers with expendable income to pour into the local economy in the first place. We have more workers who must pinch pennies and shop at Wal-Mart to keep their costs down. To get economic growth, we need to import wages from elsewhere, from folks in Sioux Falls and across the border in Minnesota who do have high-wage jobs that give them the freedom to travel and spend more money. Our own workers, on the wages we pay them, can't support strong economic growth, so we have to borrow the buying power of workers from states with higher wages. When we do import those wages, we still don't experience enormous growth -- tourism and entertainment jobs pay below-average wages to most of their workers -- but we get at least a little economic boost that our own wage base can't provide.

Like I said, this observation is only positive economics, not normative economics. Given the situation, I can at least understand why South Dakota puts so much emphasis on trying to draw tourists. However, I wonder: could we get an equal economic boost by diverting our tourism-promotion dollars into some sort of wage-support program? Here and there we could find advertising dollars that could be diverted into local paychecks. The City of Madison, for instance, instead of forking out $100,000 a year to the Lake Area Improvement Corporation to market Madison could instead give 50 city employees a $1000 raise. The state could cut back its budget for the Department of Tourism and give more property tax rebates. Or the state could really think big, increase the minimum wage, and businesses could enjoy the trickle-up economic impact of workers in the state having more money to spend at local businesses. Such wage increases seem to offer a more reliable source of economic growth than the gamble of advertising for tourist dollars. But as long as an economy's wages remain low, it must rely on somehow importing dollars from wage earners in more profitable places.