Wages in Operating Budget

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7 comments

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    jenny
    A Labor Income Change Activity captures the spending of that Labor Income - these are the induced effects. It does not report the original wages (i.e., the value you set as the Activity Level) - this is the direct Labor Income and you need to add it to your report separately. Typically with analysis-by-parts, a Labor Income Change Activity is combined with an Industry Spending Pattern for the sector being operated. In your case, instead of using an Industry Spending Pattern, you appear to be creating your own via a set of Industry Change Activities - is this correct? This is fine, but the reported "direct" effects are actually the first round of indirect effects and should be added to the other indirect effects. The direct output is the value of the project (or expected revenues), the direct employment is the expected employment at the site, and the direct labor income is the payroll, as already discussed.
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    slinford
    I think that's what I'm doing, but I should recap. Is there a option to talk to someone? Would be easier. For my analysis of annual operations I have two options: 1) analyze the total project value (i.e. total operating costs for my nonprofit museum-- not revenues that are less than total operating costs) as one industry change in sector 406. I'm looking at two geographies, one contained within the other. The estimated LPP value for the larger geography is much lower than the smaller geography, which because the smaller is within the larger cannot be correct. I bought the zip code data for the county and am analyzing inputs with the entire county and in a selection of 6 zip codes, the city. How can I get correct calculated LPP values? 2) analyze payroll and other operating costs separately with the analysis by parts method. In this case, I enter a Labor Income Change for the payroll expenditures (those I estimate within the geography) to calculate induced effects. I analyze the rest of the operating costs as industry change activities. The reported direct effects need too be added to indirect effects for total indirect effects. The direct output for the annual museum operation is then the total project value (i.e. total operating costs), the direct employment is the expected employment at the site, and the direct labor income is the payroll. Direct effects are the combined reported direct and indirect effects from the industry change analysis. The induced effects are the combined reported labor income change and industry change induced effects. Total effects can be summed from there in my report. Do I have this correct? Thanks!
  • Avatar
    jenny
    1. If you are using an Industry Change Activity, then you should leave LPP at 100% - this simply means that the museum is located locally. Where the museum purchases its inputs is already accounted for in the multipliers (via the RPCs for each of the inputs). Please see this forum discussion on LPPs being lower in a larger study area: http://implan.com/V4/index.php?option=com_kunena&func=view&catid=80&id=12995&Itemid=35. If you are not going to be adjusting this sector's production function, this is the simplest and recommended approach. You can customize the Event so that Employee Compensation equals your known loaded payroll value and so that Proprietor Income = 0. 2. With this approach, are you saying that you know all the expenditures the museum makes and you are entering these values as Industry Change Activities? In this case, you would want to set LPP = SAM Model Value. In this case, these two sentences are correct: "The reported direct effects need too be added to indirect effects for total indirect effects. The direct output for the annual museum operation is then the total project value (i.e. total operating costs), the direct employment is the expected employment at the site, and the direct labor income is the payroll." But this sentence is not correct: "Direct effects are the combined reported direct and indirect effects from the industry change analysis." This contradicts what you said above and double-counts the "direct" effects reported from the Industry Change Activity. What it should say is: "Indirect effects are the combined reported direct and indirect effects from the industry change analysis." This sentence is correct: "The induced effects are the combined reported labor income change and industry change induced effects."
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    slinford
    Thanks! Does this mean that I should leave the LPP at 100 percent for my construction costs as well? I have the total construction estimate separated for hard and soft costs (two events within the total Industry Change activity). D What about estimated off-site visitor spending? Right now I'm including spending by broad categories (e.g. retail, hotel) as Events within an Industry Change Activity and applying the SAM Model LPP values. I believe the reported direct and indirect effects are actually all Indirect effects. Is that correct? 1) How do I customize the Event so that Employee Compensation equals my known loaded payroll value and so that Proprietor Income = 0? Thanks!
  • Avatar
    DougO
    Employment for new structures, by definition occur at the site of construction. If you are specifying good and services that go into construction, rather than a construction sector itself, then you would need to set LPP = trade flows if you don't know the source. If it is off-site but within the region modeled, lpp would = 100%. If they are en-route expenditures, then you would not apply any to the local multipliers. If you don't know, then you could set LPP = Trade flows. Since there is no tourism "sector" you have to specify tourist spending as the direct effect. In actually, this spending represent exports for the region and as such can be considered direct effects. This confusion can be avoided by telling the story. Tourists spend so much in certain industries providing x employment and y income which in turn creates an addition x employment and y income in industries who supply goods and services to those sectors who serve tourists - avoiding the direct, indirect and induced terminology. 1) After you plug in employment or sales for the event, the software fills in the other industry data fields. You simply plug in your known compensation and zero out the proprietor income - thereby, "customizing" the event. The induced effect will reflect the values you used to customize the event.
  • Avatar
    slinford
    1) I'm sorry, I don't see the options for entering compensation and proprietor income... I'm entering my total operation budget as an Industry Sales total for in my sector. My Activity Type is an Industry Change. Do I need to enter it differently? Could you provide more specific instructions?
  • Avatar
    DougO
    In the Setup Analysis event window go to: Event Options > Show >Show All.

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