Does anyone have any good figures for the economic impact of a job being created. I am trying to find a general figure of direct and indirect impacts. Or even if it was in the form of "for every $50k spent on employment, you would see $X in economic impact".
Obviously there are a million factors at play here, but I am just trying to find a general number or average of the U.S. or something...
Any help would be greatly appreciated!
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I don't think I've ever seen a figure for something at a national level precisely because there are way too many factors involved to get anything accurate. I am sure that somebody has plugged in the numbers somewhere for the nation as a whole but I would be pretty suspect of any result they got.
The two most important factors I can think of are A) What is the specific industry? and B) What is the local geography (state or even better MSA)?
$50,000 spent to employ a librarian in New York City will have a much different multiplier than $50k for an oil rig worker in Odessa, TX, a software engineer in Seattle, or a financial analyst in Sioux Falls. Additionally, is the industry something that exports their product or service outside of their local market? An automotive line foreman making $50k in Detroit effects the local economy quite differently than a teacher or plumber in that same area with the same salary.
I know this is a big, convoluted non-answer, but if you want to provide a bit more information, I know I have some notes from some old econometrics classes around somewhere that included determining very basic multipliers. I know that the BEA website used to also have some basic information about figuring these types of calculations out for specific geographies as part of their RIMS program so you may want to check that out as well.
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WSU's answer is about as good as you can expect. There is so much variability between jobs and locations that any general numbers would be meaningless. If you want to persist in looking, then you might google economic multipliers. There is a good explanation here: http://www.ipsr.ku.edu/publicat/mult...ultipliers.htm.
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Wow! Almost identical discussion on a LinkedIn group. Similar question and response - not by me, though.
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Another complication: some jobs have more impact than others. It is sometimes distinguished between primary and secondary jobs. A primary job is often a manufacturing job or major service type job that then attracts people and results in more job creation (teachers, policemen, nurses, etc.). These others are thought to produce less economic impact.
It is possible to do quite a bit with RIMs II data. That's the U.S. Bureau of Economic Analysis’ input-output modeling database and methodology. RIMs tracks the impact of a change in demand (in a given industry/sector) on measures of gross output, earings and employment. Obviously, you can use RIMs output data backwards (use employment to predict change in demand, or sideways - to predict changes in employment on changes in demand, and then changes in demand to predict changes in gross output, etc.). The only problem is that BEA charges for access to RIMs II ($250 for a region and $50 for an industry, I think). Download requests for excel data take credit card info and work off the BEA's Federal website. Dunno why BEA is one of the few government agencies that actually charges real money to access their basic data.. since the main audience for this stuff are planners who work for local, state and other Federal government organizations (and their contractors).. It's not like people actually want to access RIMs data for fun. Two commercial providers of similar products are IMPLAN and REMI. You can order regional multiplier data from both online, but they may even more more expensive than the Feds. Again, to WSU's comment, this data is really only valid within a given region, so if you do download RIMs datasets, make sure you choose the more expensive regional (not the national cross-section) option. The latter, although cheaper, may be interesting for economists but is of minimal practical use for us planners, in my experience.
The military has several organizations that offer (free) guidance in this respect (since they like to track the impact of their own projects on local economies by translating measures such as sales into jobs and vice versa).
http://corpslakes.usace.army.mil/emp...ic/mullook.cfm
...is an example... google around DOD websites. Some websites even provide BEA data sets for free for regions that have military bases or operations.
Before you jump in, you may want rehash the basic equations for multiplier analytics from your AICP study materials or course notes from planning school.
Enjoy.
I'll echo others in that it's impossible to answer without more information. Where I live, we've (well... people far smarter than me) have figured out that for each secondary job lost results in 1.77 tertiary jobs lost. I know this can't relate directly to jobs created, but it shows us that every manufacturing job results in more than one service-related job.
To hop on a soapbox quickly, I don't think think issues like these are taught well-enough or pounded in as much as they should be in college. After 4 or 5 years plus a master's I know people (myself included) that can't really do economic number-crunching or anything technical.
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Normally it is the type of number crunching that is taught in higher level economics classes or statistics. You MIGHT get involved in it some if you decide to get a PhD in planning with a focus on economic development or land economics. It would be nice if there was some emphasis on this sort of technical knowledge but most planning programs are lacking in this area and choose to focus on more broad-based philosophical approaches to teaching planning.Originally posted by stroskey
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Its also not all that well decided. There are big controversies about these calculations.
I'll venture that the kind of economic restructuring now underway may change the fundamentals of how much you would want to rely on a multiplier also, even if you bought the data and calculated the multiplier correctly (after referring to some of your textbooks, no doubt).
When economic events seemingly pop up chaotically--some very optimistic, some very pessimistic--averages from the past, including a calculated multiplier, may or may not be a very good predictor of the future.
We aren't very encouraging, are we?
I agree that there should be a bit more focus on these types of classes for folks in undergrad studying policy or those working on a MURP, MUP, or MPA. Even getting an undergrad econ degree I never touched on it (but I imagine that different econ programs or maybe a couple different electives would have changed that). I took a few econometrics classes during grad school and we looked at multipliers a bit more in depth.
Our office belongs to The Council for Community and Economic Research which puts out cost of living reports each year among other things but I think one of their best resources is their annual training conferences where they bring in the folks from the BEA who actually work with the RIMS data and give some basic, but thorough, instruction on how to figure out multipliers by hand for a specific location. If you have the right inputs, it's actually considerably easier that one might imagine.
"Where free unions and collective bargaining are forbidden, freedom is lost." - 1980 Republican presidential candidate Ronald Reagan
I actually have started teaching this in our graduate City and Regional Economic Development Planning course at the University of Maryland and will be doing more with it next fall. To those who commented that it should be taught in planning programs your cries have been heard.
In response to your original question I will echo what many commenters have already said - it depends on the location and the industry, but also your overall mix of industries. What the multipliers are really telling you is how many times a dollar's worth of sales from an industry circulates in that community before it leaks out (leaves your local economy via WalMart, for example). At the national level you can get the 2002 benchmark multipliers from BEA (http://www.bea.gov/industry/index.htm#benchmark_io) and these will give you some idea of the difference between industries. (It's kind of a bear to format, so email me dempy@umd.edu and I'll send it to you as an excel file with corresponding NAICS codes.)
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