Understanding Types of Income

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INTRODUCTION:

In IMPLAN, there are four types of income that can be identified: Labor Income, household income, disposable income, and household spending.  This article breaks down the differences and how IMPLAN data compares to government estimates.

 

DEFINING INCOME:

First off, let’s define the fours types of income.

LABOR INCOME

Labor Income is the sum of Employee Compensation (wages and benefits) and Proprietor Income.

HOUSEHOLD INCOME

Household income represents the income from all sources received by residents, including total wages & salaries, benefits, interest, dividends, & transfer payments, less all contributions to Social Security/Medicare.  Labor Income less payroll taxes and in-commuting income is included in household income in addition to all non-employment sources of household income. This is based on the BEA definition of personal income and is not comparable to money income as defined by the Census Bureau.

DISPOSABLE HOUSEHOLD INCOME

Disposable income is household income less personal taxes. Disposable Income is money that is available to be saved or spent. 

HOUSEHOLD SPENDING

Household spending is what is actually expended by households on goods and services less personal taxes and savings.

 

WHERE TO FIND THEM IN IMPLAN:

LABOR INCOME

Labor Income can be found in IMPLAN Behind the “i” in the Study Area Data tab. Within the Industry Detail table you will find the two forms of Labor Income, Employee Compensation and Proprietor Income, by Industry. Within the Industry Summary table you will find Labor Income as a total and Labor Income per Worker by Industry. 

In the Social Accounting Matrix (SAM) you will find Employee Compensation and Proprietor Income represented as columns and rows. The columns reflect the allocation of each of these forms of income to each row, largely to Households. The rows reflect all sources of Employee Compensation and Proprietor Income. Because Labor Income is only earned from Industries, you’ll only find a value in the Industry column of these rows. 

HOUSEHOLD INCOME

Household Income can be calculated as the sum of all nine Household Income column totals from the Social Accounting Matrix. Each Household Income row here shows all the sources of Household Income, which in large part will be Labor Income.

DISPOSABLE HOUSEHOLD INCOME

Disposable Household Income can be calculated as Household Income as described above less the payments to government rows within the Household Income columns. 

HOUSEHOLD SPENDING

Household Spending can be calculated as the sum of payments to the Commodity total row and Foreign and Domestic Trade rows within each Household Income column in Aggregate SAM. These payments reflect Household Spending on goods and services sourced from within the Region (payments to Commodity row) and outside of the Region (payments to trade rows). 

 

UNDERSTANDING THEIR RELATIONSHIP:

 

Labor_Income_to_Spending.png

 

TWO EVENT TYPES:

To model spending of individuals, there are two Event Types in IMPLAN.

LABOR INCOME EVENTS

Labor Income Events are most appropriate to use when an analyst intends to model a change in labor payments isolated from an industry’s production. When creating a Labor Income Event in IMPLAN, analysts may specify whether the income is earned by employees (wage and salary), by proprietors, or some combination of the two. However, they cannot specify the specific household income categories which will receive that income.

Labor Income Event Value should include all new labor payments in the Region (local workers and in-commuters), including their 

  1. Payroll tax
  2. Personal tax
  3. Savings

HOUSEHOLD INCOME EVENTS

Household Income Events are most appropriate to use when an analyst intends to model changes in household income that are independent of both production and payroll. In Household Income Events (unlike Labor Income Events), you can specify the specific income group(s) receiving the income into one of nine categories.

Household Income Event Values should include all new household income all residents in the region, including their –

  1. Personal tax
  2. Savings

USING WAGE & SALARY INCOME DATA

When you’d like to analyze wage and salary income data, it must be first converted into a fully loaded Employee Compensation value before entering the value into your Labor Income Event. Employee Compensation in IMPLAN is the fully loaded cost of the employee to the employer, therefore a wage and salary value would be missing the employer’s cost of benefits and contribution to Social Insurance Tax.

You can use the following resource to convert your wage and salary income to an Employee Compensation value as well as to convert an Employee Compensation value in the IMPLAN data or Results to a wage and salary income value. 

USING DISPOSABLE INCOME OR HOUSEHOLD SPENDING DATA

If you’d like to analyze a change in disposable income, you can adjust a disposable income value to a household income value by dividing your disposable income value by the portion of household income (for a given income group column) allocated to non-government rows. In other words, dividing household income by the portion of household income that is disposable income for a given household income group. This will produce a value that can be entered in a Household Income Event. Similarly, dividing household spending by the portion of household income that is for household spending will produce a value that can be entered in a Household Income Event. 

 

CONSIDERATIONS FOR USING AN INCOME EVENT:

Labor Income Events are commonly and appropriately used for analyzing the impact of wage increases and business operations where Analysis-by-Parts is needed such that Labor Income and Industry Spending on goods and services are analyzed as two separate Events. 

Household Income Events are commonly and appropriately used for analyzing new income in a Region due to new residents that live in the Region but do not work there. 

Households and individuals may experience other economic shocks that increase or decrease the amount of income available to them. Before analyzing any impacts in IMPLAN its important to consider the underlying assumptions and then state the assumptions made in your analysis when reporting the results. 

For example, if a policy change results in savings to households due to a reduction in cost on necessary goods and services such as electricity or insurance, how might these households react? If this household is living paycheck to paycheck, they may spend this newly available income on the items they typically buy. If so, a household income event would be appropriate. If this household already has their expenses covered maybe they go out to the movies more often, maybe they buy a few things on Amazon, or maybe they save it up for a future purchase like a new car. In this case a Household Income Event would not be appropriate since this household would not be appropriate. These considerations are explored further, specifically in the context of Utility Purchases and Energy Rebates here. 

 

ONE MAJOR SOURCE OF CONFUSION:

So, you may look at the data Behind the i and then get ready to email your Customer Success Manager at support@implan.com to announce that what IMPLAN is reporting for Household Income is not even close to what the Census Bureau reports for Household Income. It’s OK, we know.

IMPLAN uses the BEA’s definition, which is not the same as what the Census uses. So, you won’t be able to compare these two sources. For more information on this, check out our article Why is Personal Income for My Region so High? Basically, the BEA definition includes imputed income, adjustments for misreporting and under-reporting, and employment paid benefits. 

Explaining Event Types

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EVENT TYPE DESCRIPTIONS:

INDUSTRY EVENTS

Industry Events indicate that you know what Industry or Industries are experiencing the change in production and you are interested in targeting those specific Industries. 

  • There are four different types of Industry Events:
    • Industry Output
    • Industry Employment
    • Industry Employee Compensation
    • Industry Proprietor Income
  • These four Industry Event Types represent each value that can be entered into a single Industry Event. Picking among the 4 types should be determined by which value you have available about the industry.
  • When more than 1 value is known, those additional values can be entered in the Advanced Menu. 
  • Total vs Marginal Revenue selection is available for Retail and Wholesale Industries in the Advanced Menu, and will default to Total Revenue. 

 

Event_Type_-_Industry.jpg

 

COMMODITY EVENTS

You would use if you knew there was a change in Commodity demand or production but didn’t know what Industry or Institution (e.g., government) would meet the demand. For example, you know there will be an increased need for nursing home-care in the Region because of an aging population, but you don’t know what the mix of private hospitals, nursing homes, and government hospitals will provide this need.

 

Event_Types_-_Commodity.jpg

 

LABOR INCOME EVENTS

This Event type is appropriate if you’d like to model a change in labor payments isolated from Industry production- e.g. examining the impacts of a wage increase for current employees.

Total Labor Income should include all new labor payments in the Study Area-
New income for all workers in the region even if they don’t live there (local workers and in-commuters), including their –
       i. Payroll tax
      ii. Personal tax
     iii. Savings

Note: the model will automatically deduct in-commuting income, payroll tax, personal tax, savings, and imported goods and services. All payroll taxes stay in the location of the employment. That is, only commuters’ post-payroll-taxes-income is deducted. 

With a Labor Income Event, you can specify whether the income is earned by wage and salary employees or sole proprietors (or some combination of the two) but you cannot specify the specific household income categories receiving the income— after deductions, the remaining income is distributed across all household income groups according to the household column totals in the SAM. At this point the income is applied to the income group specific multipliers. 

Event_Type_-_Labor_Income.jpg

HOUSEHOLD INCOME EVENTS

This Event type is appropriate if you’d like to model changes in Household Income that are independent of production and payroll. 

Total Income should include all new household income in the Study Area-
New income for all residents in the region, including their –
     i. Personal tax
    ii. Savings

Note: the model will automatically deduct personal tax, savings, and imported goods and services. The model assumes payroll tax and in-commuting income has been excluded from your total income entry. Benefits should be included as household income in your entry. 

The leftover amount after deductions is then applied to the multipliers. In this case, you can specify the particular household income group(s) receiving the income.

 

Event_Type_-_Household.jpg

SPENDING PATTERN EVENTS

Industry Spending Pattern Events are appropriate if you have the data required to build your own spending pattern based on what your specific Industry purchases. They are also useful when an Industry needs to be modified beyond the Event customization available in an Industry Event. This is highly useful for making an IMPLAN Industry more specific to your business/impact using Analysis-by-Parts.

 

Event_Type_-_Industry_Spending_Pattern.jpg

 

INDUSTRY CONTRIBUTION ANALYSIS EVENTS

Industry Contribution Analysis is a method used to estimate the value of a Industry or group of Industries in a region, at their current levels of production, rather than estimating the value of a change. While the focus of the analysis still looks at backward linkages, the purpose of this analysis differs. When considering the Indirect and Induced Effects of an impact analysis, we are looking at how Industries in our Region will respond to a change in the key Industry or Industries being modeled in our Events. Industry Contribution Analysis shifts this framework to see what Industries and what level of production in these Industries is being supported by the current activity of the target Industry or Industries in the Region. Contribution Analysis is a unique method which affects a constraint upon the Model by removing feedback linkages or buy backs to the Industry being analyzed.

Find more information about Industry Contribution Analysis here to learn more and determine if an Industry Contribution Analysis Event is right for your study. 

 

Event_Types_-_ICA.jpg

 

 

 

WHERE THE EVENT VALUE IS APPLIED:

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DIRECT EFFECTS AND OMITTED DIRECT EFFECTS:

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Construction: Building the Right Model

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INTRODUCTION:

There are a few special considerations for modeling construction impacts. Not only are all projects different, they need to be carefully considered in IMPLAN.

Construction Industries don’t have a perfect NAICS crosswalk as the other Industries do.  Instead, there is the file Definitions of IMPLAN’s 546 Construction Industries found on our 546 Industries, Conversions, Bridges, & Construction – 2018 Data page. This is where you can find which Industry will be best to use whether you are modeling the construction of a power plant, office, or even a museum.

The value entered in Industry Output for construction should be the full cost of the structure, and only the structure. This includes hard costs and soft costs.  Because Employment, by definition, is based on where the job is located not where an individual resides, Employment should include the full value full-time, part-time and temporary Employment on the job site during the year. Additional considerations of costs attributed to construction are considered below.

 

SQUARE FOOTAGE:

Sometimes rather than construction cost or Employment, only the square footage of the project is known. Calculators to convert square footage to construction costs, by building type, can be found online.

 

EMPLOYMENT & SPECIALIZED SKILLS: 

While all Industries are likely to source some Employment from outside the region, construction Industries are among a group that may be more likely to do so, because in many cases either:

  • The needed skills for a project may not be available in the region
  • Contractors may be sourced from outside the region

In these cases, it is important to remember that Employment is site based in IMPLAN, so even if a worker is brought in from outside the region they still count as “local” employment during the period of their work.

It is sort of unreasonable to assume that these outside workers will spend their income in the same way as residents. Thus, what we will modify is the Labor Income values for the construction Industry. The Employee Compensation and Proprietor Income should be reduced by the amount of payroll that is going to workers outside the region, less the regional commuting rate. But do these outside workers then have no local impacts? That also is unlikely if they are in the region for any period. The best way to capture these impacts is by using per diem spending patterns, ideally from the company’s budget or allowances, but when these are not available government per diems can be used as an estimate. This not only captures a more reflective amount of local spending by these temporary residents, but it also prevents their income from being spent on common resident household expenditures like utilities and the costs of owning a home.

An in-commuting rate is gross regional rates in which local workers commute out of the region to go home. In the calculation of the Induced Effects the in-commuting regional rate reduces the total income before it’s distributed to local households. To avoid underestimating the effects of Labor Income you will want to be sure to account for the commuting rate from the Social Accounting Matrix.

 

CONTRACTORS:

Construction employment differs between new construction and maintenance/repair. New construction is considered a capital purchase, which is a final demand (not an intermediate demand). Therefore, new construction contractors and subcontractors do not appear in any Industry’s production function. So, in new construction the contractors and subcontractors are found in the Direct Effect as proprietors. Maintenance and repair, however, is not considered a final demand, therefore it can be purchased by Industries. So for maintenance and repair, contractors and subcontractors are found in the Indirect Effect.

 

LAND VALUES:

When construction impacts are being considered, a question that often arises is: “What is the impact of the sale of the land?” The truth is, the sale of the land has very little impact on the economy. The purchase of the land necessary for a construction activity should not be included as Industry Output for the construction Industries. Why? Land sales are considered asset transfers, where one person receives money while the other receives tangible property. Thus, the land sale itself has no value in IMPLAN. Some small impact may be captured however, by creating an Event for real estate fees, and for large commercial projects, legal fees.

 

HARD & SOFT COSTS:

Construction spending patterns in IMPLAN include architectural engineering, legal fees and other common soft costs, so these should be included into the Industry Output value. However, if you want to specify these values or have soft costs that are significantly different than a typical construction project in your selected Industry, these can be modeled separately.

A common question we hear is how to handle interest payments for pre-development or construction loans. If these are to be included in your model, ensure that it is only the interest portion of the loan, not any principle, as that is considered an asset transfer and has no impact. Interest can be input in Industry 441 – Monetary authorities and depository credit intermediation.

 

FURNITURE, FIXTURES, & EQUIPMENT:

Furniture, Fixtures, and Equipment (FF&E) are large, movable investments that businesses make.  FF&E consists of movable furniture, fixtures, and other equipment that is not directly attached to a building.  FF&E should not be modeled through the construction Industry.

Often times, the specialized FF&E will not be produced in your region of study. If you know that everything is being brought in, it is considered leakage and you can omit the spending from your model. Investments like these can be captured but must be modeled separately. You may know that it was purchased through a local retailer or wholesaler, so then you can model the purchases through the appropriate Industry. Maybe you know that some of the purchases will be sourced locally. Then you can again choose the appropriate Industry, like 370 – Wood office furniture manufacturing, and enter the spending.  

You could also consider using an Investment Spending Pattern to model the FF&E expenditures. This file has the general capital investment spending patterns for FF&E alone and for FF&E and construction for consolidated Industries. These spending patterns can be input into IMPLAN by modeling the associated Commodity Events.

 

HOUSING CONSTRUCTION & NEW HOUSEHOLD INCOME:

When new housing developments or multi-family apartments are built, there is obviously an economic impact due to the construction. Just because it is built, however, doesn’t necessarily mean that there will be new income in the area. If the residents of the new development are moving from other locations within the region, there is really no impact due to their spending just because the new houses were built. If you can make the argument that a portion of the buyers are coming from outside of your region and that they will be employed, then you can make the assumption that their spending is new and run it through the appropriate Household Income category.  Remember that Household Income needs to be Employee Compensation less payroll taxes.

 

TEMPORARY AND LONG-TERM IMPACTS:

It is important to distinguish between temporary impacts and long-term impacts. For construction projects, the impact is limited to one time frame. This is unlike the continued operations of a college or a casino that will have yearly impacts.

People love job numbers. It is not uncommon for studies to overstate construction jobs by assuming they are recreated each year. Also, it is not advisable to report rolled-up construction and operational impacts to have job numbers that mix both temporary and ongoing Employment. This is one popular way that input-output analyses overestimate impacts.

The same principles apply to other economic factors as well. The Labor Income, Value Added, and Output of the construction are occurring only over a short period of time and thus have a more limited impact than operational changes. This is best reflected when the two types of impacts are handled separately.

 

CREATED VERSUS SUPPORTED:

Are the construction jobs created or supported? In most impact scenarios, the Direct Employment impact is considered to be created the first year of the project, but with construction this typically not the case. The reason is that construction jobs are usually supported job to job. Thus new construction projects are keeping construction workers employed rather than genuinely creating new jobs in the economy. Of course, there are some cases where construction jobs clearly are created, such as the real estate boom that occurred in North Dakota because of drilling.

Understanding Zip Code Data

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INTRODUCTION:

When working with Zip Code level data, there are several factors to consider. This article, while not exhaustive, lists the main items to keep in mind when using Zip Code data for your geographical study Region.

 

AGGREGATION & LEAKAGES:

Zip code files, like other IMPLAN files, can be combined to create a Region or used independently. Please keep in mind that while an individual zip code file will create Multipliers and have impacts, these impacts will be minimal. This is because zip codes may have little or no population and/or little to no employment. Also, many individual zip codes are not large enough to allow for local sourcing of materials needed for the indirect effect or to provide adequate services to create significant induced effect leading to much of the potential impact being lost in leakages.

Zip code regions may represent very small economic Regions and consequently, be extremely open to leakages. These leakages, even to nearby regions (in some instances this could literally be across the street) are lost from the Region resulting in very small Indirect and Induced Effects. Please take into consideration where indirect purchases will be located and where employees may be spending their labor income when customizing zip code regions for analysis.

 

MRIO:

Multi-Regional Input-Output (MRIO) analysis allows for purchases to be made between Regions (the zip code(s) and the linked regions) by tracking trade between these regions, potentially capturing many of the lost impacts. 

 

MISSING ZIP CODES:

Not all zip codes listed by the U.S. Postal Service may be represented in the zip code package you receive. The USPS can open/close post offices or reorganize routes on an on-going basis, thereby changing zip-code demographics. Because of this, the County Business Patterns and Census demographic zip code representation may not be current.

Depending on the year, roughly 4% of zip-codes have neither County Business Patterns (CBP) employment nor Census (demographic) data. If your region includes any of these zip codes, they will not be available in the package you purchase, as there is inadequate information to create Multipliers for these regions. Depending on the year, there will be roughly 8,000 zip-code files for which there is only CBP data with no demographic data. Most of these are P.O. boxes and “unique” point codes. They serve business but do not represent residential population. With no household representation, all employment would be considered in-commuting and have no local induced effect.

Conversely, there are also some zip-code files with only demographic data and no CBP data. While CBP data does not exist for these zip-codes, they may still contain employment in some sectors since CBP data do not cover all IMPLAN sectors. Population is used as a distributor for most of these non-covered sectors. Farm counts by zip-code from the 2017 Census of Agriculture are used to distribute agricultural industry data in these cases.

There will be cases where you may find an Industry exists in an actual zip code region but does not show up in the zip code data (or even the county data). This occurs because of unreported sectors in the CBP and inconsistencies in data between CBP and BLS covered wages and employment. When this issue occurs, you will need to customize your Region to add the Industry to the Study Area. CBP data are primarily obtained from administrative records supplied by the IRS, Social Security, and other sources. CBP is tabulated on an establishment basis, and each business location is tabulated only once according to the primary business activity. The industry classifications of establishments in the CBP are self-reported in the vast majority of cases. BLS CEW data are obtained from quarterly tax reports submitted to State Employment Security Agencies.

Industry Aggregation

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INTRODUCTION:

Did you ever wish you could combine two or more IMPLAN Industries together to run an analysis? Ever wanted to model 2 or 3 digit NAICS? Industry Aggregation is the answer.

Industry Aggregation allows you to combine Industries together. You can create your own aggregation scheme, for example if you wanted to examine the supply chain of all manufacturers producing vehicles, vehicle parts, aircrafts, spacecrafts, boats, railway vehicles, and any other form of transportation manufacturing as one combined Industry. You can also work with Projects using pre-built Industry Aggregation schemes based on North American Industry Classification System (NAICS) Codes, either by NAICS Sector (2-digit) or Subsector (3-digit).

 

BEFORE GETTING STARTED:

Here are a few things to note before starting work with aggregated Industry schemes. With aggregated schemes, you can model Industry Events, Commodity Events, Labor Income Events, Household Income Events, and Industry Contribution Analysis Events. Spending Pattern Events are not enabled using aggregated schemes.

If you want to use an aggregation scheme, you must start with the aggregation. You cannot aggregate Impacts or Results after the model is built. Also, Regional customization is not allowed in aggregated scheme Projects.

When you aggregate Industries, not only will you create Events using those Industries, but the Results will also be reported in the aggregated scheme. Basically, the aggregation scheme will follow your entire Project. 

While the aggregation happens at the Industry level, Commodities are aggregated on a 1:1 basis with them. When you aggregate Industries, you are also aggregating the associated Commodities.

You will know that you are using an aggregated scheme on the Regions and Impacts screens by looking at the bottom of the screen as shown here.

Aggregation_-_Display_at_bottom.jpg

NAICS AGGREGATION:

IMPLAN has 546 Industries in its more recent Industry scheme which largely corresponds with the North American Industrial Classification System (NAICS) codes. The most detailed NAICS Codes are 6 digits. The fewer the digits (ie 2 digit), the more broad a NAICS Code becomes, including more Industries. IMPLAN Industries vary in the number of NAICS Codes they each include. Most IMPLAN Industries bridge to 3 to 6 digit NAICS Codes. Projects based on 2 or 3 digit NAICS Codes allow you to work with Industries that are broader than IMPLAN’s 546 Industries, as they will include just 22 (2 digit) and 88 (3 digit) Industries respectively. Learn more about the 546 Industries and how they are defined in the Picking an Industry article. In IMPLAN, you can create a Project using a pre-built Industry Aggregation scheme to run your analysis by NAICS Sector (2-digit) or Subsector (3-digit). 

 

QUICK AGGREGATION

To aggregate IMPLAN Industries into either the NAICS Sector (2-digit) or Subsector (3-digit), begin on the Projects screen. Click on NEW PROJECT in the upper right corner of the screen.

Give your New Project a Title and Choose the Aggregation Scheme you wish to use. Next, click CREATE PROJECT.

Aggregation_-_New_Project.jpg

This will take you to the Regions screen and you can proceed as you normally would. The difference is that Behind the i and on the Impacts and Results screens, the Industries that you see will be those by aggregated NAICS codes, instead of the 546 IMPLAN Industries.

Aggregation_-_3_Digit.jpg

LOOKING AT THE DETAILS IN NAICS AGGREGATION

If you want to look at what Industries are included in the 2 digit or 3 digit NAICS aggregation schemes, follow these steps. 

As always, start on the IMPLAN dashboard. Upon clicking on the avatar icon next to your user profile in the upper right, a call out box will open. Choose Preferences. 

Aggregation_-_Preferences.jpg

This will take you to the Industry Aggregation screen.

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The default in Select Industry Aggregation is 546 Unaggregated (2018). Using the drop down under the heading Select Industry Aggregation, you can choose IMPLAN 2 Digit NAICS 546 (2018) and IMPLAN 3 Digit NAICS 546 (2018) for the current Industry Scheme. You can also choose 2 and 3 digit aggregation for the 536 scheme (2017 and earlier datasets).

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In this example, IMPLAN 2 Digit NAICS 546 (2018) was selected. Clicking on VIEW will open up the aggregated scheme.

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The screen will then display the aggregated scheme. 

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Clicking on one of the down arrows below the NAICS Sector (aggregated name) will open up the description to show what IMPLAN Industries are included. Clicking on the NAICS Sector again will close the details.

Aggregation_-_2_Digit_Display_Arrown_Down.jpg

To return to the Preferences screen, click Close. 

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CREATING A PROJECT FROM PREFERENCES

You can also start a New Project using a aggregation scheme from Preferences. At the Preferences screen, click New Project.

Aggregation_-_2_Digit_New_Project.jpg

A box will pop up that will prompt you to Create a New Project, exactly as if you started from the Projects screen. Name the New Project and ensure that the Aggregation Scheme represents the desired selection. Then, click CREATE PROJECT.

Aggregation_-_2_Digit_Name.jpg

Now, IMPLAN will direct you to the Regions screen. Choose your Region and continue to model as you would normally. The 546 Industries are now aggregated into the selected scheme. On the Impacts screen, you can see the aggregated Industries under the Specification. 

Aggregation_-_2_Digit_Impacts.jpg

Entering a Value using the aggregated scheme will affect all of the Industries included in that Group, in this case, the 2 digit NAICS Sector. Remember, your Event Specifications and your Results will all be in the aggregated scheme.

Aggregation_-_2_Digit_Results.jpg

USER DEFINED AGGREGATION:

CREATING YOUR OWN SCHEME

Sometimes, you just want to look at a certain group of IMPLAN Industries aggregated in a way that doesn’t follow the standard NAICS 2 and 3 digit breakdown.  Maybe your client wants to look at transportation manufacturing versus all other manufacturing. 

Note this is only available for the current 546 Industry Scheme (2018). You cannot create a customized aggregation scheme for older Industry Schemes

To create your own Industry Aggregation scheme, begin on the IMPLAN dashboard. Upon clicking on the avatar icon in the upper right, a call out box will open. Choose Preferences. 

 

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This will take you to the Industry Aggregation screen. Click on the box labeled NEW CUSTOM SCHEME. 

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This will take you to the New Industry Scheme page. The box on the left side of the screen contains all 546 IMPLAN Industries. To begin your scheme, click on + Add New Industry.

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A popup will appear asking you to name your New Industry. For this example, we will create a New Industry for all transportation manufacturing (IMPLAN Industries 340-364. So, we’ll name our New Industry accordingly. Next, hit SAVE.

Aggregation_-_Name_New_Scheme.jpg

The name of the New Industry is now in the box on the right. To add the IMPLAN Industries that we want to include, click on each from the box on the left so that it is highlighted in teal. Next, drag the highlighted set to the New Industry.

Aggregation_-_Custom_Drag_Industries.jpg

The Industries you selected will no longer appear in the box on the left. The box on the right will show the number of Industries included in each New Industry just to the right of the name. In this example, there are 25 Industries in this New Industry. 

To view or edit what Industries are included, click the down arrow and the New Industry will expand to show the list. Here you can also delete and add additional individual Industries. Use the up arrow at the bottom of the list to collapse it.

To change the name of the New Industry, click on the pencil icon. To delete it, click on the trash can icon.

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In this example, we will look at Transportation Manufacturing against all other manufacturing. So, create another New Industry called All Other Manufacturing by following the same process. This group will include IMPLAN Industries 63-339 and 365-391 for a total of 384 included Industries.

To keep the remaining Industries at the individual Industry level, leave them in the box on the left. To create another group that contains the remaining Industries, add another New Industry and include all 217 remaining Industries from the box on the left. You can add all of the Industries that remain on the left to a new Industry on the right by clicking the Select All button.

Aggregation_-_Custom_Drag_Select_All.jpg

Note, there is no undo button, so be careful where you drag your Industries to ensure that they end up in the correct spot. Also, individual Industries will populate in the order you add them in; they will not sort numerically.

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A popup will remind you that all Industries that are left outside of a New Industry (in the box on the left) will be left as individual Industries in the new aggregation scheme. Click CONFIRM to accept.

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A new popup will appear asking for a name for the New Scheme. Once it is built, you can continue to use it across Projects, so give it a logical name to help you find it later.  

Note, once you click on SAVE, your custom aggregation scheme cannot be edited.

Aggregation_-_Name_New_Ind.jpg

IMPLAN is now building the new aggregated scheme. You will see a moving circle spinning on the screen to indicate that it is being created. This will take a few moments as IMPLAN is rebuilding the deflators, margins, and multipliers for the new scheme.

USING A CUSTOM BUILT SCHEME

All of your Custom Industry Aggregation schemes you have built will be saved in IMPLAN. If you want to use one of your Custom Industry Aggregation schemes later, you can start the Project from the Preferences screen or the Project screen. Create a New Project and search for the name of your Custom Industry Aggregation scheme in the Aggregation Scheme drop-down box. 

Aggregation_-_From_Projects.jpg

In Projects using an Industry Aggregation scheme, there are no longer 546 Industries when you look Behind the i at the Region Overview. Instead, there are the three aggregated groups just created.

Aggregation_-_Behind_the_i.jpg

Similarly, the Results are also aggregated.

Aggregation_-_Custom_Results.jpg

546 Industries, Conversions, Bridges, & Construction – 2018 Data

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The following downloads are for the 2018 data. They are not valid for the 536 Industry Scheme used in datasets from 2013-2017.

IMPLAN 546 INDUSTRIES AND COMMODITIES

This file contains the full list of IMPLAN’s 546 Industries and Commodities.

 Download

2017 NAICS TO IMPLAN 546 INDUSTRIES

Convert 2017 NAICS codes to IMPLAN Industries using this downloadable spreadsheet.

 Download

2012 NAICS TO IMPLAN 546 INDUSTRIES

Convert 2012 NAICS codes to IMPLAN Industries using this downloadable spreadsheet.

 Download

DEFINITIONS OF IMPLAN’S 546 CONSTRUCTION INDUSTRIES

View the breakdown of IMPLAN’s construction Industries using this downloadable spreadsheet. 

 Download

536 TO 546 BRIDGE

This bridge allows you to convert from the 536 Industries scheme (2013-2017 data years) to the new 546 Industries scheme. Note that the ratios only work one way: The 536 to 546 bridge is useful for converting 536-based Industries to 546-based Industries , but is not useful for converting 546-based Industries to 536-based Industries .

In the 536 to 546 bridge, a ratio of 1 means that 100% of the 536 Industries should be classified as the corresponding 546 Industries. In theory, there could be any number of Industries with a ratio of 1 merged into a single Industry. So, the ratio of 1 for two different 536-based Industries simply means that both fit entirely into the same 546-based Industry. In general, this happens rarely since we disaggregated more Industries than we aggregated.

  Download

546 TO 536 BRIDGE

This bridge allows you to convert from the 546 Industry scheme to the old 536 Industry scheme (2013-2017 data years) . Note that the ratios only work one way: The 546 to 536 bridge is useful for converting 546-based Industries to 536-based Industries, but is not useful for converting 536-based Industries to 546-based Industries .

In the 546 to 536 bridge, a ratio of 1 means that 100% of the 546 Industry should be classified as the corresponding 536 Industry. In theory, there could be any number of Industries with a ratio of 1 merged into a single Industry. So, the ratio of 1 for two different 546-based Industries simply means that both fit entirely into the same 536-based Industry. In general, this happens rarely since we disaggregated more Industries than we aggregated.

  Download

2018 MARGINS

Margins represent the value of the wholesale and retail trade services provided in delivering commodities from producers’ establishments to purchasers. This file contains the four components of the Value Chain: retail, wholesale, and transportation margins for each Industry along with the Producer value.

 Download

2018 DEFLATORS

Deflators are used by the software whenever the Event Year is set to a year that differs from the model Data Year. This file has the deflators/inflators for 1997-2060.

 Download

2018 IMPLAN 546 TO FTE CONVERSIONS

IMPLAN jobs are not FTE equivalents. This spreadsheet allows you to convert between IMPLAN jobs and FTEs or FTEs and IMPLAN jobs with simple ratios for each Industry.

Also, many people are given wage and salary data, but not Employee Compensation (which is a fully loaded payroll value) or prefer to report in W&S. This sheet also provides information for making these conversions. Data on the original federal data sources used in these derivations is also provided.

  Download

INVESTMENT SPENDING PATTERN

Investment Spending Pattern (Furniture, Fixtures, & Equipment and FFE with Construction) with 544 commodities.

 Download

RESULTS AGGREGATOR

This document will help you move your IMPLAN results by Industry into 2-digit and 3-digit NAICS.

Panel Data

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INTRODUCTION:

Are you interested in looking at IMPLAN data across years? Our Panel Data might be what you are looking for! It is produced using our latest and best methodologies, which have been improved over the past 20 years of data development. These enhanced features make more accurate statistical analysis possible. Panel Data consists of repeated measures on the same regions over time. In IMPLAN, we have data going back to 2001 that allows you to compare your Region and your Industry through time.

 

DATA SOURCES:

The Panel Data are the standard IMPLAN datasets. Each year a variety of data sources are compiled to create the IMPLAN datasets. Most of IMPLAN’s Industries are based on definitions put forth by the Bureau of Economic Analysis (BEA). For more information, visit the article IMPLAN Data Sources.

You’ll receive data files for Demographics, Industries, Commodities, and a file that contains deflators (as all data are presented in nominal dollars and not adjusted for inflation). This way you can quickly look at changes by Industry and Year for your geography to see how your economy is changing.

DEMOGRAPHIC DATA:

These data include, for each geography and year, population, land area, total personal income, the total number of households and the number of households by 9 income categories, and the Shannon-Weaver Index (S-W Index). Personal income includes not just labor income, but also personal dividend income, personal interest income, rental income of persons, and transfer payments. Labor income information can be found in the Industry Data file. The Shannon-Weaver Index is an index of economic diversity based on the distribution of employment among all sectors.  

INDUSTRY DATA:

These data include, for each geography and year, each IMPLAN Industry’s Output, total Employment, Wage and Salary Employment, Proprietor Employment, Employee Compensation (EC), Proprietor Income, Other Property Income (OPI), and Taxes on Production and Income net of subsidies (TOPI).

COMMODITY DATA:

These data include, for each geography and year and Commodity, the Institutional level, the foreign exports of each IMPLAN Commodity from the region (via the Foreign Exports institution), foreign imports, each IMPLAN Institution’s gross final demand for each IMPLAN Commodity, and each IMPLAN Institution’s sales of each IMPLAN Commodity. 

Household final demand is reported for all households combined as opposed to by household income group. Household final demand by income group is available but please inquire for more information regarding this data.

 

DATA DELIVERY & SUPPORT:

The data will be provided in .xlsx files containing the Panel Data for the requested years and/or Industries. Users will have unlimited access to IMPLAN Community Forum at support.implan.com for questions specific to the data. IMPLAN economists will gladly respond to questions on IMPLAN’s Community forum within 5 business days at no additional charge. IMPLAN does not support data-application or related questions via email, phone, project consultation, or community forum.

To learn more about our Panel Data and pricing, please contact IMPLAN at 800-507-9426 or sales@implan.com.

 

LICENSE AGREEMENT:

Access to the IMPLAN Panel Data is protected with a custom license agreement.  The license agreement will be presented when you are ready to purchase data. Sorry, the lawyers make us do it.

 

SAMPLE DATA:

Read Me File

Industry Data

Commodity Data

Demographic Data

Deflators

Adding an Industry that Doesn’t Exist Yet

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INTRODUCTION:

Sometimes the Industry that we want to examine does not exist in our study Region. The Industry might be new to the area.  It also might be a new Industry altogether. It also might be an Industry that only recently became legal. This article outlines the best way to model these new Industries in IMPLAN. 

 

DETAILS:

The economy is always changing and Industries come and go.  Federal data follows these changes by adjusting the North American Industry Classification System (NAICS) codes.  IMPLAN follows suit, so when the NAICS codes change, so do IMPLAN Sectors.

There are two ways to create a new Industry depending on what you want to accomplish.  Both methods are outlined in this article.  

 

INDUSTRY THAT EXISTS IN THE US:

If you have a Region that will be gaining an Industry that does exist somewhere in the US, you can follow the steps outlined in the article Adding an Industry by Customizing a Region.

 

BRAND NEW INDUSTRY:

Federal data lags in categorizing these new Industries, which can pose a problem for researchers.  When the newest widget is invented, it is usually categorized with a similar product or under one of the catch-all codes like “all other…”  One interesting case is that of the legalization of marijuana or cannabis production and sales. The 2017 NAICS do have information on where the pieces of the supply chain fall for marijuana:

  • Marijuana, grown under cover – Industry 6 – Greenhouse, nursery, and floriculture production
  • Marijuana, grown in an open field – Industry 10 – All other crop farming
  • Marijuana merchant wholesalers – Industry 400 – Wholesale – Other nondurable goods merchant wholesalers
  • Marijuana stores, medical or recreational – Industry 412 – Retail – Miscellaneous store retailers

Let’s say we want to examine the effect of a $100M in cannabis agricultural production in Ohio and we know that a full $5M of that will be spent on legal fees. We also know there will be 25 employees each making $50,000.

First we have to decide what Industry we want to use.  In this case knowing the climate in Ohio, we make the assumption that the agriculture will be most closely related to IMPLAN Industry 6 – Greenhouse, nursery, and floriculture production. 

Create an Industry Spending Pattern Event for $100M in Industry 6.  If we know more details about the spending of cannabis growers as compared to other greenhouse products, we can edit the spending pattern to further reflect this new Industry.  Remember in this example we know that $5M will be spent on legal fees specifically. To model this, we click the Advanced button to open the details of the Industry Spending Pattern and scroll down to Commodity 3455 – Legal Services.  Next, we override the value with 5%; the dark blue color shows the edited Commodity. If any further information is known including Industries that could be deleted entirely from the Spending Pattern, that can be done at this point as well. More details on this can be found in the articles Editing Industry Spending Pattern Events or Editing Institutional Spending Pattern Events.  

You’ll notice that the Sum of Percentages at the bottom is now 104.94%.  

 

Adding_an_Industry_-_Sum_of_Percentages_2018.jpg

 

To fix this and return to 100%, click on the Advanced button and choose Normalize.

 

New_Industry_-_Normalize.jpg

 

Now, a full 5% will be spent on legal fees.  Make sure to choose Total Output (instead of Intermediate Expenditures). Remember: Output = Intermediate Expenditures + Value Added.

 

Adding_an_Industry_-_Sum_of_Percentages_100_2018.jpg

 

Next, we create a second Event for our Labor Income (25 employees x $50,000 = $1,125,000).  We can then add them to our Group and Run our economic impact.

 

Adding_an_Industry_-_2_Events.jpg

 

Notice that there are no Direct Effects in our Results so we will need to add those back in manually.  We know our total Output is $100M and our Labor Income is $1,125,000 with 25 employees. Now we need to navigate back to our Regions screen and click 

Study Area Data > 
     Industry Summary

Here we can find IMPLAN’s known totals for Sector 6 – Greenhouse, nursery, and floriculture production. Calculating the ratio of the overall Value Added to the overall Output shows that VA is, on average for this Industry, 37% of the total Output.  Therefore, we multiply $100M in Output by 37% to yield a Direct Value Added for this project of $36,727,998.33. The template for these calculations is here.

 

Adding_an_Industry_-_Excel_Calcs.jpg

 

Shannon-Weaver Diversity Index Data

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INTRODUCTION:

Economic diversity is believed to enhance economic stability and growth by limiting the number of imports a local economy needs to sustain its current production and by providing increased availability of locally produced final demand purchases. The Shannon–Weaver (S-W) Diversity Index measures economic diversity on the basis of the number of Industries in a region and the distribution of employment across those Industries.  

 

PRODUCT DETAILS:

Generally, entropy methods measure the order or disorder found in the data. The S-W Index is an entropy method that measures the economic diversity of a region against a uniform distribution of employment; where the norm is equal employment in all Industries. 

In other words, it is a measure of the extent to which the employment of a region is evenly distributed among its Industries. It ranges in value from zero to one, with zero indicating minimum diversity and a value of one indicating maximum diversity. A value of zero (complete specialization) occurs when the economic activity of a region is concentrated in only one Industry. A value of one (perfect diversity) occurs when all industries are present in the region, with employment spread equally among them.

 

DATA DELIVERY & SUPPORT:

The data will be provided in .xlsx files containing the S-W Index Data for the requested geographies and years. Users will have unlimited access to IMPLAN Community Forum at support.implan.com for questions specific to the data. IMPLAN economists will gladly respond to questions on IMPLAN’s Community forum within 5 business days at no additional charge. IMPLAN does not support data-application or related questions via email, phone, project consultation, or community forum.

The S-W Index is available for 2001 to the current Data Year (2018). The data is available for zip codes, congressional districts, counties, and states.

 

LICENSE AGREEMENT:

Access to the IMPLAN S-W Index Data is protected with a custom license agreement.  The license agreement will be presented when you are ready to purchase data. Sorry, the lawyers make us do it.

 

SAMPLE DATA:

Sample Shannon-Weaver Diversity Index Data

 

RELATED ARTICLES:

The Shannon-Weaver Index of Economic Diversity: An Overview and Descriptive Analysis

 

OTHER RESOURCES:

Thorvaldson, J. & Squibb, J. (2017). An Expanded Look into the Role of Economic Diversity on Unemployment. The Journal of Regional Analysis & Policy, 42, 2, pp 137-153.

Tax Data

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INTRODUCTION:

For those that wish to dig deeper into Tax Data, IMPLAN has details available at the county and state levels. This data allows you to examine the total taxes collected at by more specificity than in IMPLAN.

 

PRODUCT DETAILS:

The Tax Data captures all tax revenue across all levels of government that exist in that study area for the specific industries and institutions affected by an event or group of events. It is available from 2001 to the current IMPLAN Data Year (2018). 

IMPLAN compiles this report from datasets produced by the Census Bureau; specifically, we combine data from the most recent Census of Governments (released every 5 years, comprehensively covering units of government), the Annual Survey of State and Local Governments (covering a selection of units of government including all large units, released annually with a 1-year lag), and the annual State Government Tax Collections survey (released annually with no lag).  Our process uses the most recent data available, filling in holes with projected values from older datasets (e.g., updating the annual surveys with information from the 5-year census). We preserve detail about the units of government, allowing you to see in this report, for example, individual cities and special taxation districts. The underlying data that supports the Tax Data has limits, however. More details on the Tax Data can be found in the article: Generation and Interpretation of IMPLAN’s Tax Impact Report.

 

FEDERAL TAXES INCLUDE:

Air Transportation

Education

Employment Security Administration

General Local
Government Support

Health and Hospitals

Highways

Housing and Community Development

Natural Resources

Public Welfare

Sewerage

Water Utilities

All Other

 

OTHER TAXES INCLUDE: 

Air Transportation

Alcoholic Beverage License

Alcoholic Beverage Sales

Amusements License

Amusements Sales

Bond Funds – Cash and Securities

Corporation License

Corporation Net Income

Death and Gift

Documentary and Stock Transfer

Education

Electric Utilities

Employment Security Administration

General Local Government Support

General Sales and Gross Receipts

Health and Hospitals

Highways

Housing and Community Development

Hunting and Fishing License

Individual Income

Insurance Premiums Sales

Miscellaneous – Fines and Forfeits

Miscellaneous – Rents

Miscellaneous – Royalties

Miscellaneous – Special Assessments

Motor Fuels Sales

Motor Vehicle License

Motor Vehicle Operator License

Natural Resources

NEC

Occupation and Business License, NEC

Other Funds – Cash and Securities

Other In Trust – Other Contributions

Other License

Other Selective Sales

Pari-mutuels Sales

Property

Public Utilities Sales

Public Utility License

Public Welfare

Severance

Sewerage

Sinking Funds – Cash and Securities

Tobacco Products Sales

Transit Utilities

Water Utilities

Workers Compensation – Other Contributions

All Other

DATA DELIVERY & SUPPORT:

The data will be provided in .xlsx files containing the Tax Data for the requested geographies and years. Users will have unlimited access to IMPLAN Community Forum at support.implan.com for questions specific to the data. IMPLAN economists will gladly respond to questions on IMPLAN’s Community forum within 5 business days at no additional charge. IMPLAN does not support data-application or related questions via email, phone, project consultation, or community forum.

To learn more about IMPLAN Tax Data, please contact IMPLAN at 800-507-9426 or sales@implan.com.

LICENSE AGREEMENT:

Access to the IMPLAN Tax Data is protected with a custom license agreement.  The license agreement will be presented when you are ready to purchase data. Sorry, the lawyers make us do it.

 

RELATED ARTICLES:

Generation and Interpretation of IMPLAN’s Tax Impact Report