IMPLAN Users Guide

Labor Income Events

August 12, 2020/0 Comments/in Basic Analysis, IMPLAN Users Guide, Support Site/by Joe Demski

INTRODUCTION

Labor Income Events are appropriate to model a change in labor payments which are isolated from Industry production. An example would be a wage increase for current employees. There won’t be any new production, but the workers will earn more.

IMPLAN will automatically deduct in-commuting income, payroll tax, personal tax, and savings from Labor Income Events. All payroll taxes stay in the location of the employment. That is, only commuters’ post-payroll-taxes-income is deducted. Household spending of income on imported goods and services will also be treated as leakage.

Event Type	Labor Income Events
Event Use	Analyzing a change in Labor Income separately from production
Event Specification ”WHO”	Employee Compensation or Proprietor Income
Event Value “WHAT”	Employee Compensation or Proprietor Income

LABOR INCOME EVENTS

IMPLAN can be accessed via app.IMPLAN.com. Once you are logged in, you will be directed to the IMPLAN dashboard. From the dashboard you can navigate to the Regions, Impacts, or Projects screen.

Once you have chosen your Region and named your new Project, you will be directed to the Impacts screen. From here, click on Add New Event to create a Labor Income Event. In this set of examples, 2018 Nevada data is utilized.

Labor Income represents all forms of Employment income, including Employee Compensation (wages, salaries, and benefits) and Proprietor Income. When using a Labor Income Event, there are two Specification options: Employee Compensation and Proprietor Income.

Employee Compensation is the total payroll cost of wage and salary employees to the employer. This includes wages and salaries, all benefits (e.g., health, retirement) and payroll taxes (both sides of social security, unemployment insurance taxes, etc.). It is also referred to as fully-loaded payroll.

Proprietor Income consists of payments received by self-employed individuals and unincorporated business owners. More specifically, it represents the current-production income of sole proprietorships, partnerships, and tax-exempt cooperatives. It excludes dividends, monetary interest received by nonfinancial business, and rental income received by persons not primarily engaged in the real estate business.

In this example, there will be an additional $1M in Employee Compensation and an additional $250K in Proprietor Income. The Industry or Industries in which employees are earning new income is irrelevant in this example because there is no change in production, just an increase in earnings by existing employees. One Event will be set up for each type of Labor Income.

Now that you have your Events, ensure that all are highlighted in teal by clicking on them individually or checking Select All Events at the top of the screen. Now the Events can be dragged into your Group on the right.

You will know when the Events have populated in the Group when the number in the upper right of the Group box equals the number of Events.

Now click Run in the bottom right of the Impacts Screen.

The first thing you will notice is that there are no Direct or Indirect Effects. Labor Income Events only affect household spending, so there will only be Induced Effects. Learn more in the article Explaining Event Types.

In this example, we included two Events, so the default on the Results screen will include both. If you want to look at the impacts for just one Event, click on Filters and search for the Event Name that you want to see.

Labor Income Events are often used as part of Analysis-by-Parts (ABP). ABP allows you to examine a specialized Industry or a firm that is not

reflected by an IMPLAN Industry due to differences in the structure of the

Leontief Production Function and/or Spending Pattern that cannot be edited via a single Industry Event. This type of analysis is typically used to split the stemming ripple effects of an Industry Impact into its individual impact components – budgetary Spending Pattern (Intermediate Inputs) and payroll.

ABP: Introduction to Analysis-By-Parts

Explaining Event Types

Running Your First New Business Impact

Understanding Labor Income (LI), Employee Compensation (EC), and Proprietor Income (PI)

Industry Events

August 12, 2020/0 Comments/in Basic Analysis, IMPLAN Users Guide, Support Site/by Joe Demski

INTRODUCTION

There are four Industry Event Types in IMPLAN: Output, Employment, Employee Compensation, and Proprietor Income. Each of them operates in the same manner. This article will walk you through an example of each type of Industry Event.

Event Type	Industry (Output, Employment, Employment Compensation, Proprietor Income)
Event Use	Analyzing a change in an Industry’s production
Event Specification ”WHO”	Industry 1-546 experiencing change in demand/production
Event Value “WHAT”	1 or more: Output Employment Employee Compensation Proprietor Income

INDUSTRY EVENTS

IMPLAN can be accessed via app.IMPLAN.com. Once you are logged in, you will be directed to the IMPLAN dashboard. From the dashboard you can navigate to the Regions, Impacts, or Projects screen.

Once you have chosen your Region and named your new Project, you will be directed to the Impacts screen. From here, click on Add New Event to create your first Industry Event. In this set of examples, 2018 Nevada data is utilized.

INDUSTRY OUTPUT

The first type of Event is Industry Output. In IMPLAN, Output represents the value of Industry production. For service Industries, Output equals sales. For manufacturing firms, Output equals sales +/- the change in inventory. For retailers and wholesalers, Output equals their gross margin or Marginal Revenue (not gross sales) and does not include the value of goods sold. By default, the Event Value of an Industry Output Event with a retail or wholesale Industry specified is interpreted as Total Revenue. Learn more about retail and wholesale margins in the article Retail and Wholesale: Industry Margins.

In this example using an Industry Output Event, we are told a cheese manufacturing firm will have $1M in new production. We will give our new Event a Title, select the Type as Industry Output, the Specification is 82 – Cheese manufacturing, and the Value is $1,000,000. Check out the article Picking an Industry for assistance in choosing the appropriate IMPLAN Industry.

Perhaps we are also told that this cheese company will pay $250,000 of that $1M in production in Employee Compensation. We can click on the menu button to enter additional information for Employment, Employee Compensation, and Proprietor Income.

Clicking on Close will collapse the Advanced Menu.

IMPLAN will always prioritize the Event Values in the following order:

Output
Employee Compensation
Proprietor Income
Employment

Therefore, if this Event had instead been entered as an Industry Employee Compensation Event with a Value of $250,000 and an Output Value of $1,000,000 entered in the Advanced Menu, the Event would still produce the same Impact Results.

INDUSTRY EMPLOYMENT

Sometimes, we are only given an Employment figure. In this example, we are told there will be 100 new employees in a new sawmill. We will give our new Event a Title, select Industry Employment as the Type, select Industry 267 – Sawmill, woodworking, and paper machinery as the Specification, and type the Value of 100.

INDUSTRY EMPLOYEE COMPENSATION

If Output is unknown, but you do know the Employee Compensation associated with a new project, an Industry Employee Compensation Event is appropriate. Employee Compensation is the total payroll cost of wage and salary employees to the employer. This includes wages and salaries, all benefits and payroll taxes. It is also referred to as fully-loaded payroll.

In this example, we are told there will be $5M in new Employee Compensation at a crane manufacturing facility. We will give our new Event a Title, select Industry Employee Compensation as the Type, select Industry 289 – Overhead cranes, hoists, and monorail systems manufacturing as the Specification, and enter $5,000,000 as the Value. If you know more information, utilize the Advanced Menu to add in other known Values.

INDUSTRY PROPRIETOR INCOME

The final type of Industry Event is Industry Proprietor Income. Proprietor Income consists of payments received by self-employed individuals and unincorporated business owners. More specifically, it represents the current-production income of sole proprietorships, partnerships, and tax-exempt cooperatives.

In this example, we are told there will be $2M in new Proprietor Income at a packaging machinery manufacturing plant. We will give our new Event a Title, select Industry Proprietor Income as the Type, select Industry 293 – Packaging machinery manufacturing as the Specification, and enter the Value of $2,000,000. If you know more information, utilize the Advanced Menu to add in other known Values.

You will know when the Events have populated in the Group when the number in the upper right of the Group box equals the number of Events.

Now click Run in the bottom right of the Impacts Screen.

When the analysis is finished, you are ready to check out your Results. For more information on how to interpret them, check out the article Industry Impacts: Direct, Indirect, and Induced Effects.

In this example, we included four Events, so the default on the Results screen will include all four. If you want to look at the impacts for just one Event, click on Filters and search for the Event Name that you want to see.

Explaining Event Types

Industry Impacts: Direct, Indirect, and Induced Effects

Picking an Industry

Running Your First New Business Impact

Scaling Groups & Events

August 12, 2020/0 Comments/in Advanced Analysis, IMPLAN Users Guide, Support Site/by Joe Demski

INTRODUCTION

IMPLAN is an annual, linear model. This means that analyzing $100 would yield the same Results as analyzing $1 and multiplying the results by 100. The scaling feature in IMPLAN allows you to set up Events and then adjust all the Events by this figure.

SCALING GROUPS

Scaling is especially fun when looking at a group of Events for a tourism impact. When analyzing tourism impacts, we have a list of expenditures usually by individual visitors. We can set this up as shown with one Event for each affected Industry. In this example, we are examining a basic visitor spending for a weekend with the Idaho Falls Chukars. We know that each visitor spends approximately $2,000 on a weekend trip across six spending categories.

If we are told there were 5,000 visitors, we could just multiply each Value by 5,000. However, we can also use scaling to tell IMPLAN to multiply each value by 5,000. Drag your Events into the Group. Then on the number 1 next to the Group name, type 5,000. This will multiply each Event by 5,000.

Our Results will show the impacts of $2,000 total spending for each of the 5,000 guests. Our Direct Output is therefore just shy of the $10M in total spending, due to the fact that we used one retail Industry and therefore margins were applied. For more information on this, check out the articles Margins & Deflators and Why don’t my Direct Effects match my Direct inputs?

SCALING EVENTS

Perhaps we are told that only 3,000 of the total 5,000 attendees used hotel rooms, transit, and airfare. We can scale each Event individually to reflect this new information. Ensure that the scaling on the entire Group is 1. Then click on the menu icon and select scaling.

Now you can edit the 1s that are located to the right of each Event in the Group. In our example, we enter 3,000 for Hotel, Transit, and Airfare, and 5,000 for Restaurant, Retail, and Sports.

This will then tell IMPLAN to multiply the first three Events by 3,000 and the last three Events by 5,000. We would expect a Direct Output of slightly less than $8.4M and we see $7.9M in our Results.

Margins & Deflators

Surveying for Input-Output

Tourism Spending

Why don’t my Direct Effects match my Direct inputs?

Indian Tribes: Considerations for Native American Impacts

August 12, 2020/0 Comments/in IMPLAN Users Guide, Modeling Specific Industries, Support Site/by Joe Demski

INTRODUCTION

There are 1.9 million American Indians and Alaska Natives belonging to 574 federally recognized American Indian tribes and Alaska Native Villages in the U.S. Not only are Native Americans an important part of our national identity, but they are also a large part of the national economy.

TRIBAL GOVERNMENTS

Generally, Tribal Governments are covered by QCEW (from the BLS, our main source for wage & salary employment) and BEA (another source for employment), and both sources classify tribal establishments as local government.  Therefore, they are included in IMPLAN data. However, some tribal authorities are not subject to Federal/State employment security (ES-202) laws. Those who are must report employment and income.  It is optional for those who are not.

If they are covered and included, there is unfortunately no way to identify in the data sets which employment is Tribal vs. other Local Government.  You could ask employment security for your state if the reservation reports.  If it does, their information will be included in the county data – if not, it probably is not included. It is best to work with Tribes to get detailed data or use proxies based on related IMPLAN spending patterns like Institutional Spending Pattern 12001 – State/Local Government Other Services.

Tribal Government can potentially be found in:

532 – Local Government Passenger Transit
533 – Local Government Electric Utilities
534 – Other Local Government Enterprises
542 – Employment and payroll of local govt, education
543 – Employment and payroll of local govt, hospitals and health services
544 – Employment and payroll of local govt, other services

BUSINESSES

Tribes operate many businesses and enterprises. While Tribal data falls into the above mentioned Industries, determining the effects of a specific Tribal business operations is often better achieved through using the appropriate Industry for each business, working with the Tribe to determine appropriate inputs, and applying some modifications to the results as required.

For example, many casinos are owned by Tribes, in which case these establishments will be captured in the region’s data for Industry 534 – Other local government enterprises. Unfortunately, in such a case there’s no way to determine how much of Industry 534 belongs to the Tribal government, and of that, how much belongs to Tribal casino operations. If we want to analyze the operations of a Tribal casino, working with the Tribe to determine the scale and specifics of their casino operations is recommended. With those initial findings, we can utilize the methods described in the article Casinos: Acing the Impact to run our analysis.

INTERNALIZING TRIBAL GOVERNMENT

Let’s take an example where a Tribal casino makes a payment to the Tribal government (like a tax). By default, IMPLAN will treat this payment as a leakage, as it treats all tax payments. If we want to look at how that government payment ripples through the economy, we can add an Institutional Spending Pattern 12001 – State/Local Government Other Services Event in the amount of the payment, being sure to set the LPP to 100% in the Menu by unclicking the SAM checkbox. Because this is not a Direct Effect (or even an Indirect one), all of the Results of the Institutional Spending Pattern (Direct + Indirect + Induced) should be moved to the Induced line. Then the Results from the casino can be added to the Results from the Tribal Government.

FEDERAL PROGRAMS

There are many federal programs specifically designated for Tribes like the Tribal Transportation Program and the Indian Health Service. Through various programs, federal dollars are invested in local economies on everything from healthcare to bridge construction. To best model this funding, the Industry receiving the grant should be utilized. So, if you are modeling the construction of a new school, Industry 53 – Construction of new educational and vocational structures should be used.

OTHER RESOURCES

Federally Recognized Indian Tribes and Resources for Native Americans

National Congress of American Indians

U.S. Department of the Interior Bureau of Indian Affairs

Casinos: Acing the Impact

Electric Vehicles: Industry on the Move

August 12, 2020/0 Comments/in IMPLAN Users Guide, Modeling Specific Industries, Support Site/by Joe Demski

INTRODUCTION

According to Bloomberg New Energy Finance, more than half of the cars produced by 2040 could be electric. This poses a huge change for traditional gasoline combustion engine production that has dominated the U.S. landscape. Currently, electric vehicles make up only a small portion of the market, representing only 3% in 2020. Because this industry is both relatively new and still small, it isn’t represented well in the automobile manufacturing industry.

PRODUCTION

The production of new vehicles of any type will fall under Industry 340 – Automobile manufacturing, 341 – Light truck and utility vehicle manufacturing, and 342 – Heavy duty truck manufacturing. However, these will be based on the status of the total Industry in the Data Year. That means that it includes all types of vehicles regardless of engine type.

The best way to model the production of new electric vehicles is using Analysis-by-Parts (ABP). To use ABP, you would need to know detailed spending. Let’s take a look at an example of a new facility that will be built in Illinois by Varnado Motorcars, which will produce electric automobiles. We know they will spend $2.5M on labor and $15M on supplies. We also know that a full 5% of their supply spending will be on batteries sourced from within Illinois. So we will set up one Labor Income Event for $2.5M and one Industry Spending Pattern Event for $15M. Because Varnado Motorcars is a corporation, the $2.5M of Labor Income is all Employee Compensation earned by Wage and Salary workers. For our Industry Spending Pattern, we’ll specify the Industry most similar to the facility opening, Industry 340 – Automobile manufacturing, and then make the appropriate modifications.

Because we are told that 5% of the spending on Intermediate Inputs from local supplier Garrett’s Gadgets on batteries, we can open up the spending pattern to make the change.

Scroll down to Commodity 3333 – Storage Batteries and change the given percentage to represent the 5% that will be spent on batteries from Garrett’s. Then unclick the SAM setting the LPP to 100% as we know these batteries will be sourced from Illinois. You can see the total sum of percentages is now 104.73%. To reset this to 100%, click Normalize in the upper right. Learn more about editing Industry Spending Pattern Events for other necessary changes, such as deleting Commodities not purchased as an Intermediate Input for electric vehicle manufacturing or adding Commodities that are unique to the electric vehicle production process.

Now the sum of percentages is 100%. Click Save, Drag and Drop the 2 Events into the Illinois Region, and Run your Impact. With just a Labor Income Event and an Industry Spending Pattern Event in this ABP analysis, we have no Direct Effects in our Results.

To calculate our Direct Effects of Varnado Motorcars, the only other piece of information we need is Output/worker, which can be found:

Behind the i

> Study Area Data

> Industry Averages

Then we can use the Excel template to calculate the Direct Effects.

If this facility is being built instead of a traditional automotive plant, you might consider the opportunity cost of a combustion engine plant not being built. If the new facility is replacing the demand for combustion engine cars which may cause an old manufacturing plant to close, consider a Net Analysis to show how the electric vehicle production facility will differ from a combustion engine manufacturing facility.

CHARGING

In terms of construction of charging stations, if you don’t have the necessary details to conduct an ABP, the construction would fall under Industry 55 – Construction of new commercial structures, including farm structures. The operations of those facilities would usually fall under Industry – 408 Retail – Gasoline stores or whatever business is operating the station. If you have detailed information, however, ABP is suggested as this type of construction and operations represents such a small portion of these Industries in the current data and therefore any details you have on specific spending will yield a stronger analysis.

Charging stations do not take a lot to set up for operations. Treehugger notes that an electrician can install the unit and then it’s ready to go. Some of these charging stations are built in the U.S. and if they are being sourced from within your Region, this can be modeled as an Industry Event in 339 – All other miscellaneous electrical equipment and component manufacturing. Coupling this with associated costs to a local electrician in Industry 55 will round out the impact for installing charging stations. Here we see the addition of $4M in charging stations and $250K in electrician installation costs.

After running the analysis with these additional Events added to the Illinois Group, use the Filter on the Results screen and choose only the Charging Station and Electrician Events and click Run to see the Results from these two Events.

SUBSIDIES & SAVINGS

Many states offer rebates to people purchasing electric vehicles which can result in savings of thousands of dollars. These savings can be modeled using Household Income Events. Again, think through if the rebate is enough to offset the potentially higher cost of the electric car in the first place. For example, if I purchase an electric car for $45K instead of a combustion car for $40K and I get a rebate of $2K, I still paid $3K more for the electric vehicle. Obviously there will be tradeoffs in terms of the environmental impact as well, but that’s a whole other dataset.

There could be savings to consumers because the price to power your electric car is lower than purchasing gasoline. This can also be modeled using Household Income Events. There could also be overall savings to the economy from a switch from reliance on one type of energy, say fossil fuels that are imported, to wind energy that is produced locally. This switch is also perfect for a Net Analysis.

If we know that higher income Households will see significant savings, this can be modeled by a few Household Income Events. In this example, we are told that Households that earn between $100-150K will save $500K, Households that earn between $150-200K will save $750K, and Households that earn more than $200K will save $1.25K, we create one Event for each earning level.

Again using the Filter on the Results screen, once these additional Events have been analyzed, and choosing only the three Household Events and clicking Run, we see the Results from the Household savings.

RELATED RESOURCES

National Economic Value Assessment of Plug-In Electric Vehicles

ABP: Introduction to Analysis-By-Parts

Environmental Data

Net Analysis: Considering Both Sides of an Impact

Error Messages & How to Fix Them

August 12, 2020/0 Comments/in Getting Started, IMPLAN Users Guide, Support Site/by Joe Demski

INTRODUCTION

The IMPLAN Development Team works tirelessly to ensure that your experience using the application is as smooth as possible. Once in a while, however, you will see “Oops! Something went wrong” or the dreaded coral colored error bar shows up on your screen.

The first thing we recommend to fix any issues is to clear your cache and then logout and log back into your account. If that doesn’t work, here’s what all of these error messages mean and how to fix them.

WEB BROWSER

IMPLAN recommends using Google Chrome to get the best experience. IMPLAN also works in Edge, Firefox, and Safari. Internet Explorer is no longer supported.

OOPS SOMETHING WENT WRONG

It’s never good when a frowny face shows up on your screen. The error notes “There could be a misconfiguration in the system or a service outage. We track these errors automatically, but if the problem persists feel free to contact us. Please try again.”

Cause	Solution
Using Internet Explorer	Literally use anything else
Using an outdated bookmark to login	Go straight to app.implan.com to login
Outage or server disruption	Our Product Team has automatically been alerted and will be working on this fix ASAP

CORAL ERROR BAR

Sometimes you will see a coral error bar pop up on your screen. Here are the reasons why the error is being triggered.

Cause	Solution
Specification Code cannot be negative or zero.	Choose an appropriate selection in the Specification field and hit Run.
Model is not built yet for group X.	IMPLAN is building your Combined Region or Custom Aggregation Scheme; give it a few minutes and try again. You can check to see if a Region is done building by checking for the information icon being available on the Regions screen.
Object Progress Event	Take out any special characters you have in your name like #, +, %, etc.
This action cannot be completed because one or more Groups has no name. Please name all Groups.	One or more of your Groups on the right side of the screen is missing a name, please add one.
Please ensure that all groups have Region selected from the Regions drop down menu for each group	Ensure that there is a Region name populated in each Group

BLANK SCREEN

If you navigate to a screen in IMPLAN and you don’t see the tables you expect, refresh your screen. If that doesn’t work, clear your cache and then logout and log back into your account.

IF ALL ELSE FAILS

Your Customer Success Manager is here to help! Shoot an email to support@implan.com and one of our team members will look into the problem to ensure you can successfully complete your project.

Did You Know?

Known Issues in IMPLAN

All Aboard! Modeling Public Transit

August 12, 2020/0 Comments/in Modeling Specific Industries, Support Site/by Joe Demski

INTRODUCTION

Public transit in the form of buses and rail lines are essential to functioning cities. Governments make huge investments in infrastructure ensuring access for all residents. This article looks at how these investments look in IMPLAN.

OPERATIONS

Public transit comes in the form of two Industries in IMPLAN: 529 – State government passenger transit and 532 – Local government passenger transit. Both of these Industries are government-based and operate by selling goods and services to the public. Generally, they operate like private sector firms; they hire employees and purchase Intermediate Inputs. Other government transportation related spending and investments are captured in IMPLAN within two Institution categories: 12001 – State/Local Government Other Services and 12004 State/Local Government Investment.

Below shows the two public transit Industries for New York in 2018. Note not all areas will have both local and state run transit.

Behind the i

> Study Area Data

> Industry Detail

The first thing to notice is that both of these Industries have no Proprietor Income. They also both have negative OPI and TOPI. Negative OPI indicates that the Industry spent more than it brought in as revenue – it ran a deficit. Negative TOPI is due to the given Industry receiving subsidies from the government.

To model an expansion of spending on transit, an Industry Event with the appropriate values is best. To examine how transit contributes to the regional economy as it is funded currently, an Industry Contribution Analysis is best. Note that when any type of analysis is run on one of these Industries (in the New York 2018 Region and many others), the Results will show no Direct Proprietor Income, negative TOPI, and negative OPI. In fact, in the case of this Region, the Negative TOPI and OPI are so significant, the net Value Added for these Industries are negative. This will result in a negative Direct Value Added when these Industries are analyzed. Shown below for the Region of NY 2018, the Value Added Coefficient for the State government passenger transit Industry is about -141%, and -801% for the Local government passenger transit Industry.

Behind the i

> Social Accounts

> Balance Sheets

> Industry Balance Sheet

> Value Added

> Filter for Industry 539 or 532

INDUSTRY 529 – STATE GOVERNMENT PASSENGER TRANSIT

INDUSTRY 532 – LOCAL GOVERNMENT PASSENGER TRANSIT

CONSTRUCTION & CAPITAL PURCHASES

The construction of new transit lines falls under IMPLAN Industry 56 – Construction of other new nonresidential structures. When analyzing any construction, the value entered in Industry Output should be the full cost of the structure, and only the structure, including hard costs and soft costs. For further details, visit the article Construction: Building the Analysis.

Capital purchases can be a bit tricky and need to be analyzed separately from construction costs. Perhaps your local authority is purchasing light rail cars or hydrogen fuel cell buses. In today’s global economy, it is unlikely that these are produced within your Region, so the entirety of the cost would be considered a leakage. If the capital purchases are made in your Region, it is typically appropriate to choose the manufacturing Industry that produced the item when analyzing the purchase via an Industry Output Event. For example, if a locally made bus is purchased, choose Industry 343 – Motor vehicle body manufacturing, and enter the cost of the bus. For more information on capital purchases, check out the article Analyzing Capital Investments.

Multipliers Changing Over Time

August 12, 2020/0 Comments/in Region Details: Behind the "i", Support Site/by Joe Demski

INTRODUCTION

IMPLAN introduces new data each year. With new data, comes new multipliers. In general, it is not advisable to treat annual IMPLAN datasets as a time series as our data sources and methods often change from year to year. Additionally, some of our raw data sources revise estimates, so that, for example, what a source reports about 2013 in 2018 is different from that source would report about 2013 in 2019. This is especially true of data from the Bureau of Economic Analysis. On a 5-year basis (following the incorporation of a new BEA Benchmark, Census of Agriculture, and IMPLAN Industry scheme) we publish Panel Data, spanning from 2001 to the latest annual IMPLAN data year, to facilitate year-over-year analysis. These datasets use all the data and methodological changes incorporated over the preceding 5 years, and are reported in the same (latest) IMPLAN sectoring scheme.

DETERMINING MULTIPLIER SIZE

Again, as the data changes over time, it is not uncommon to see changes in the multipliers. Changes of less than 10% (positive or negative) are quite routine and expected. Larger changes can be expected if comparing non-consecutive years or years that span one of our 5-year data sets (see next section on Five Year Data). Employment and Value Added multipliers can vary greatly across geographies and years whereas Output multipliers tend to be relatively more stable.

Multipliers are influenced by many factors, so it is not possible to isolate a single factor when examining their changes over time. These factors include some that are specific to the geography in question, while others are specific to the Industry in question. Still others may be related to global trends. Here are some reasons why there are yearly changes.

A greater reliance on imports (whether foreign or domestic) will result in lower RPCs in general, which, all else equal, reduce multipliers.
When productivity, as defined as Output per worker, rises in a given Industry, the Employment per dollar of Output falls. All else equal, a smaller Direct Employment will result in a larger Employment multiplier for this Industry.
Change in Labor Income per dollar of Output, whether from changes in wage rates or the changing fortunes of proprietors, will change the magnitude of Induced Effects, and therefore multipliers. Proprietor Income can be negative and can vary substantially from one year to the next.
A decrease in a multiplier can also be caused by a large increase in corporate profits and/or taxes paid per dollar of Output. Corporate profits make up the bulk of Other Property Income (OPI), a component of Output that is treated as a leakage in I-O modeling, in the sense that they are not spent within the model and therefore do not generate Indirect or Induced Effects. Similarly, all taxes, while accounted for in the tax impacts report, do not generate additional rounds of impacts. The larger the percentage of Output that goes to OPI and taxes, the less leftover to drive Indirect and Induced Effects.

FIVE YEAR DATA

Some raw data sets are released only every 5 years; thus, larger year-over-year changes can be expected when comparing IMPLAN data across two years that span the release of one of these 5-year data sets, like between 2017 (536 Industry Scheme) and 2018 (546 Industry Scheme).

THE BEA BENCHMARK I-O TABLES – RELEASED EVERY 5 YEARS

A new BEA Benchmark provides new industry spending patterns for all IMPLAN industries. The magnitude of total Intermediate Input purchases per dollar of Output and the relative mix of input purchases both influence Indirect Impacts, and the Induced Impacts associated with those Indirect Impacts.

A new BEA Benchmark also provides data on the foreign imports and exports of Commodities. While we have annual Census data for the foreign trade of all shippable Commodities, no such data source exists at this level of Commodity detail for the annual foreign trade of services. Thus, we turn to the BEA Benchmark to give commodity detail to the NIPA control total for the foreign trade of services.

A new BEA benchmark also provides new national indicators of the relationship between Output, Employee Compensation, gross operating surplus (PI + OPI), and TOPI. These relationships are especially important for farm data, as many of our annual sources report data for agriculture only at the farm level. We use the BEA Benchmark for other components, including detailed Commodity margins, which will have more minor effects on multipliers.

THE CENSUS OF AGRICULTURE – RELEASED EVERY 5 YEARS

The Census of Agriculture provides us with data on farm counts (both proprietor-owned and corporate-owned) by farm sector, by county. These data are used annually to distribute state-level farm Output data to counties and to provide Industry detail to the aggregate farm BEA REA data we use for farm Industry Employment and Labor Income.

INVESTIGATING A CHANGE

If you see a change in multipliers that has you curious, here are four steps to investigate what may be causing it.

STEP 1: PRELIMINARY CHECKS

Are both data sets in the same Industry Scheme?
Is any aggregating or splitting needed to make the Industries comparable?

STEP 2: EXAMINE THE STUDY AREA DATA

Has Employment per Output changed significantly?
Has Labor Income per Output changed significantly?

STEP 3: EXAMINE SPENDING PATTERN AND RPCS OF TOP ITEMS

Has the ratio of Intermediate Inputs per Output changed significantly?
Have the RPCs of the top few Commodities purchased by the Industry changed significantly?

STEP 4: CONTACT IMPLAN SUPPORT FOR ASSISTANCE

Help us help you! To expedite the process of investigating a value, it is extremely helpful for us to have the following details at the outset:

What type of multiplier are you concerned with (Employment, Output, etc.)?
What specific IMPLAN Industry or Industries, with the associated Industry number(s) are in question?
What are the two data years being compared?
What is the geography in question?
Is the multiplier in question from the Multipliers Report in IMPLAN or calculated based on impact results?

Then shoot an email to support@implan.com and our Data Team will take a look!

BEA Benchmark & The New 546 Industry Scheme

IMPLAN Annual Data Updates

Multipliers

Negative Multipliers

Panel Data

Understanding Multipliers

Region Details: Behind the “i”

Volunteers: Estimating the Economic Impact of Free Labor

August 12, 2020/0 Comments/in Advanced Analysis, Support Site/by Joe Demski

INTRODUCTION

Volunteers don’t get paid, not because they’re worthless, but because they are priceless.

Sherry Anderson

Unfortunately, not all productive activity is actually included in GDP. Volunteer or unpaid work is not included as it is not only difficult to measure, it has no explicit economic activity related to them that can be measured using I-O analysis. However, the results of that volunteer activity as measured by other economic activity related to the workers (additional tourism, increased productivity, etc.), then one can use that activity as the input, claiming the value exists due to the volunteer work.

Not all volunteers are essential. Some may perform functions that are wonderful, although not required and the organization would still operate without them. However, it is hard to think about an organization like Girl Scouts or the American Legion running without volunteers. If the argument can be made that “but for” these volunteers, none of the activity would occur, then estimations of their economic impact make sense. However, care needs to be taken when outlining your methodology to avoid valuing volunteer work as full Output-producing jobs.

VALUING VOLUNTEER TIME

The Independent Sector estimates the Value of Volunteer Time for each state and the U.S. each year. The current estimation is $25.43 per hour at the national level. Their methodology is based on average hourly pay “of all production and non-supervisory workers on private non-farm payrolls” from the BLS. They note that following the Financial Accounting Standards Board guidelines, volunteer time should only be included if they are performing a specialized skill. Note that the Value of Volunteer Time is based on the volunteer work, not the person’s paid employment. So if a rocket scientist volunteers for a park beautification, the value of his or her time should be based on the earnings of a groundskeeper and not a rocket scientist.

Another way to value volunteer time is using the BLS Occupational Employment Statistics data. This data is released by occupation, so a closer estimate to the actual value of a certain job duty can be found. This is best utilized when a volunteer is performing a specialized skill like a trained medical doctor volunteering to do health screenings at a community event.

A third school of thought is that the value of a volunteer’s time should be based on the hourly wage that the person normally receives for their paid employment. This is problematic on a few levels and is the least preferable method, but may provide useful insight in some situations.

ANALYZING THIS IN IMPLAN

Now that you have estimated the value of the volunteer time you want to capture in IMPLAN, create an Industry Employee Compensation Event in the Industry that reflects the work. Enter the value of the volunteer work in the Employee Compensation. If you know the number of volunteers, add that in using the advanced menu. Also in the advanced menu, zero out the Proprietor Income field. Run your analysis.

You may only want to estimate the value of the Intermediate Inputs that would be required because of volunteer time, as well as the associated Indirect and Induced Effects. In this case, we recommend that you run either an Industry Employee Compensation Event or an Industry Employment Event and zeroing out Proprietor Income. Then on your Results, deduct the Direct Employment and Direct Employee Compensation associated with the volunteers. So if you ran $500,000 in an Industry Employee Compensation Event, on the Results screen you would zero out the Direct Employment and deduct $500,000 from Direct Labor Income, Direct Value Added, and Direct Output.

Life’s most persistent and urgent question is, what are you doing for others?

Martin Luther King, Jr.

Pandemic: Additional Considerations when Modeling the Coronavirus

August 12, 2020/0 Comments/in Advanced Analysis, Support Site/by Joe Demski

INTRODUCTION

As the world continues to see changes stemming from the COVID-19 pandemic, more questions arise on best practices for how to look at the economic impact of the latest developments in IMPLAN. Here are some considerations to think through when analyzing your impacts.

ASSUMPTIONS

The assumptions inherent in Input-Output analysis remain the same. However, two specifically come into play.

The Constant Make Matrix assumption states that an Industry will always produce the same mix of Commodities regardless of the level of production. In other words, an Industry will not increase the Output of one product without proportionately increasing the Output of all its other products. Given the increased production of items like personal protective equipment, this assumption could be called into question when manufacturing firms like Ford have pivoted to make respirators and masks; not a usual Commodity coming from automobile manufacturers.

On the flip side, another assumption states that there are No Supply Constraints. This means there are no restrictions to raw materials and employment to produce an unlimited amount of product. During this pandemic, there is excess capacity as plants are operating at reduced capacity and there are a lot of unemployed people. Because of this, businesses are willing to accept lower prices and also not increase prices, so increases in demand (i.e., the changes analyzed in Input-Output) are less likely to change prices and Input-Output is therefore more reasonable.

PURCHASING CHANGES

People and businesses normal purchasing patterns have changed. Industries may be spending less on payroll and travel, while spending more on technology. These changes will affect how the multipliers react.

Additionally, household purchases are changing. There are fewer trips to restaurants and far less travel and entertainment. So, the multipliers for household spending are also affected.

The government issued stimulus checks to people that are working and those that are not. This money will likely be saved by those working and spent by those who are currently not employed.

Finally, while some people have been furloughed or lost their jobs entirely, unemployment benefits are being collected. In some cases, people are actually earning more with the expanded unemployment benefits. This money may be spent or saved.

INDUSTRY CHANGES

Industries are changing, too. Trade across the U.S. and the world has changed. Also, the relative sizes of Industries have changed. Some tech and manufacturing industries, for example, have grown, whereas in-person service industries (e.g., restaurants, sporting events, other personal services) have declined. Some businesses have been completely shuttered while some are booming and employing additional staff and shifts. The Paycheck Protection Program (PPP) has given out loans to small businesses to pay their employees during the pandemic in order to ensure that Employee Compensation levels are maintained, benefits retained, rent is paid, and utilities are continued. These forgivable loans might make the difference between a business staying open or closing for good.

ANALYZING THIS IN IMPLAN

Some of the changes to the economy are easily modeled in IMPLAN like adding 100 new jobs at a manufacturing plant with an Industry Employment Event. However, given the systemic nature of many of the current changes, Analysis by Parts (ABP) is often the best approach. Using ABP allows you to tailor the Leontief Production Function by inputting your own Direct Effects and even modifying your Indirect and Induced Effects.

For example, the Indirect and Induced Effects can be altered to move spending that was going to restaurants to spending at grocery stores. Also, an assumption could be made that people are saving more money than normally because they cannot go anywhere and therefore less disposable income is expended. On the other hand, many people have lost income and are probably spending a higher percentage of income than in the model. In these cases, you can export the SAM, rearrange and rebalance it, and recalculate your own multipliers that more accurately reflect what you want to show.

Governments have also been reporting large losses in sales tax revenues. Most of this stems from reduced overall economic activity, not from changes in effective tax rates. By adjusting your inputs and results, you should not have to do much editing to the tax impact report. However, effective personal income tax rates are based on labor income and capital income; reduced capital income (e.g., from dividends and rent) might require adjustments to personal income taxes. Corporate income taxes likely also would need to be edited. In this case, we recommend supplementing the direct tax impacts with your own estimates.

DATA RESOURCES

The following lists some data sources on how the economy has changed to help inform how to edit direct effects, the model, and/or results.

Several news outlets, research organizations, banks, and consultancies have identified particular industries and occupations affected by changes related to COVID-19.

Brookings: The places a COVID-19 recession will likely hit hardest

JP Morgan: COVID impact on markets: stimulus and valuations

New York Times: The Workers Who Face the Greatest Coronavirus Risk

Moody’s: Coronavirus impact on sectors

Government sources have some timely information as well.

BEA: Aggregate preliminary data on components of GDP and Value Added

BLS CES: Changes in Industry Employment and Compensation

BLS Labor Productivity: Changes in Productivity

Census: Small Business Pulse Survey Data

CONCLUSION

Until all of the dust settles from the economic changes spurred by the pandemic, we will not know the full extent of the impact. Be cautious not to overstate the effects in your analysis. Consider taking additional care in analyzing the Results by Industry and Type of Effect. As there are likely to be winners and losers, consider both sides of the equation by using a Net Analysis.

Pandemic: Analyzing the Economic Impacts of the Coronavirus

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INTRODUCTION

LABOR INCOME EVENTS

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INTRODUCTION

INDUSTRY EVENTS

INDUSTRY OUTPUT

INDUSTRY EMPLOYMENT

INDUSTRY EMPLOYEE COMPENSATION

INDUSTRY PROPRIETOR INCOME

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INTRODUCTION

SCALING GROUPS

SCALING EVENTS

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INTRODUCTION

TRIBAL GOVERNMENTS

BUSINESSES

INTERNALIZING TRIBAL GOVERNMENT

FEDERAL PROGRAMS

OTHER RESOURCES

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INTRODUCTION

PRODUCTION

CHARGING

SUBSIDIES & SAVINGS

RELATED RESOURCES

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INTRODUCTION

WEB BROWSER

OOPS SOMETHING WENT WRONG

CORAL ERROR BAR

BLANK SCREEN

IF ALL ELSE FAILS

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INTRODUCTION

OPERATIONS

INDUSTRY 529 – STATE GOVERNMENT PASSENGER TRANSIT

INDUSTRY 532 – LOCAL GOVERNMENT PASSENGER TRANSIT

CONSTRUCTION & CAPITAL PURCHASES

INTRODUCTION

DETERMINING MULTIPLIER SIZE

FIVE YEAR DATA

THE BEA BENCHMARK I-O TABLES – RELEASED EVERY 5 YEARS

THE CENSUS OF AGRICULTURE – RELEASED EVERY 5 YEARS

INVESTIGATING A CHANGE

STEP 1: PRELIMINARY CHECKS

STEP 2: EXAMINE THE STUDY AREA DATA

STEP 3: EXAMINE SPENDING PATTERN AND RPCS OF TOP ITEMS

STEP 4: CONTACT IMPLAN SUPPORT FOR ASSISTANCE

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INTRODUCTION

VALUING VOLUNTEER TIME

ANALYZING THIS IN IMPLAN

INTRODUCTION

ASSUMPTIONS

PURCHASING CHANGES

INDUSTRY CHANGES

ANALYZING THIS IN IMPLAN

DATA RESOURCES

CONCLUSION

RELATED ARTICLES

IMPLAN BLOGS

IMPLAN WEBINAR

IMPLAN

CONTACT

REFERENCE

NAVIGATION