indirect impacts for jobs and payrolls

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    IMPLAN Support
    Hello Victoria. When you use the Type SAM Multiplier, it includes the “Direct”, “Indirect”, and “Induced” effects of the impact scenario. If you navigate to the Explore>Multipliers>Highlight Sector 394>View By>Output, Employment, Labor Income, or Value Added from the dropdown menu. The Type SAM Multiplier for any of the 440 IMPLAN sectors is the sum of the first three columns, direct effects, indirect effects, and induced effects divided by the direct effect, respectively. So, in looking at your analysis in the post, what you are showing as the indirect effect is really the sum of the indirect and induced effects. Why is this important, generally, if you want to show the impact on businesses associated with Sector 394, the indirect effect basically captures the business-to-business transactions in your Study Region. If you want to show the impact of Sector 394 on households, then the induced effects capture the household spending effects. If you want to see which industries in Pennsylvania are most impacted by Sector 394 in output, you can navigate to Scenario Results>Detail Results>View By>Output from the dropdown menu. Now, click at the very top of the “Indirect” column and IMPLAN will sort the results from highest to lowest value. What this shows you are the sectors from highest to lowest that benefit from Sector 394 in Pennsylvania. A similar analysis can be done looking at households and the “induced” column. With that said, if you are rolling up the indirect and induced effects into a catch all category of “indirect effect”, then you need to state that in your report. Otherwise, just be aware of that what you are showing now as indirect effect is really indirect and induced effects. Let us know if we can be of further
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    vdivino
    Great, thanks! I understand that when I say indirect, I am also including induced effects. But we are still surprised to see: Direct Payroll/Direct Jobs = ($23,569,215,092 / 172,802) = $136,394 per job (Indirect + Induced) Payroll/ (Indirect + Induced) Jobs = ($11,894,055,310 / 21,661) = $549,100 per job Is there a reason (indirect + induced) jobs are associated with 4x higher payroll then direct jobs?
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    IMPLAN Support
    Hi Victoria. We agree. Could you please tell us what year (2011 or 2012)of Pennsylvania data are you using and where are you getting you payroll data and employment, if not from IMPLAN Sector 394. We would like to check this out as well. Thanks!
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    vdivino
    I am using 2011 IMPLAN Type SAM multipliers for 394 for PA: Output: 1.903451 Employment: 1.88814 Payroll: 1.504644 And then I am using the 2012 MGMA Cost Survey (at the per physician level) x Number of physicians in PA for direct output, employment and payroll, through which I have: Direct Output: $24,389,264,071 Direct Employment: 172,802 Direct Payroll: $23,569,215,092 And then I am calculating indirect/induced impacts as: Indirect/Induced Output: $24,389,264,071 * (1.903-1) = $22,034,502,766 Indirect/Induced Employment: ($24,389,264,071/$1,000,000) *(1.888-1) = 21,661 Indirect/Induced Payroll: $23,569,215,092 = $23,569,215,092 *(1.505-1)= $11,894,055,310 Thank you!
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    vdivino
    I'm not sure if it's just the source data that might be the cause of this. Can you confirm my approach is correct? Even if I am using 2011 IMPLAN multipliers and output, employment and payroll data I get a similar issue higher indirect/induced payroll per indirect/induced job : 2011 IMPLAN Type SAM multipliers for 394 for PA: Output: 1.903451 Employment: 1.88814 Payroll: 1.504644 From 2011 IMPLAN Study Area for PA: Direct Output: $26,702,100,000 Direct Employment: 216,756 Direct Payroll: $17,259,400,000 And then I am calculating indirect/induced impacts as: Indirect/Induced Output: $26,702,100,000 * (1.903-1) = $24,111,996,300 Indirect/Induced Employment: ($26,702,100,000/$1,000,000) *(1.888-1) = 21,411 Indirect/Induced Payroll: $17,259,400,000 *(1.505-1)= $8,715,997,000 And then I still get higher indirect/induced payroll per indirect/induced job ($407,071 per job) compared to direct payroll per direct job ($79,626 per job): Direct Payroll/Direct Jobs = ($17,259,400,000 / 216,756) = $79,626 per job (Indirect + Induced) Payroll/ (Indirect + Induced) Jobs = ($8,715,997,000 / 21,411) = $407,071 per job
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    vdivino
    Analyzing a scenario in PA with the IMPLAN 2011 Output, I get: Impact Type Employment Labor Income Value Added Output Direct Effect 216,756.3 $17,259,405,770 $17,796,989,621 $26,702,100,000 Indirect Effect [b]57,935.9[/b] $2,899,804,586 $4,597,884,793 $7,252,216,061 Induced Effect [b]134,574.3[/b]$5,810,057,241 $10,255,881,928 $16,871,852,160 Total Effect 409,266.6 $25,969,267,597 $32,650,756,342 $50,826,168,221 So it seems like I might not be applying the employment multiplier the correct way because I get the below: Indirect/Induced Employment: ($26,702,100,000/$1,000,000) *(1.888-1)=[b]21,411[/b]
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    vdivino
    Hello, Can you please confirm the methods below to calculate indirect/induced impacts manually, if I am just using IMPLAN direct output, jobs and payroll? indirect/induced output= (direct output) * (Type SAM output multiplier - 1) indirect/induced employment= (direct output/$1,000,000) * (employment indirect effects + employment induced effects) indirect/induced labor income= (direct output) * (labor income indirect effects + labor income induced effects) And is there any documentation on this? Thank you!
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    IMPLAN Support
    Hi Victoria. We have just a couple of comments for you to consider concerning your methodology. First, Equations #1 and #2 for computing the indirect and induced effects for Output and Employment, from an initial change in Output looks fine. Regarding Equation #3, it also should be on a $1 million of Output basis, whether you are using Payroll or Labor income. In your post you say that you are using IMPLAN direct output, jobs, and payroll as your impact variables, which is fine. But in Equation #3, you are deriving the indirect and induced effects of Labor Income. If you want Payroll, which is Employee Compensation (EC), then you should use employee compensation. Labor Income includes Employee Compensation and Proprietor Income. Is this what you want? Otherwise, to use Payroll (i.e., Employee Compensation) instead of Labor Income, you can navigate to EC by Explore>Study Area Data>Scrolling down to Sector 394>Employee Compensation. This will make Equation #3 consistent with the three variables you identify as pulling from the 2011 IMPLAN Dataset for Pennsylvania. As far documentation on your procedures, we are checking to see if there are any. I hope this helps. Please let us know if we can be of further help to you.
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    vdivino
    Thank you! To clarify, sorry when I say payroll, I actually mean labor income. So I am confused about Equation 3. Can you let me know if A, B or C below is correct? And are B and C essentially the same? Is it (A): indirect/induced labor income= (direct output/$1,000,000) * (labor income indirect effects + labor income induced effects) If I do this, I get: = (direct output/$1,000,000) * (indirect effects + induced effects) = ( $26,702,095,703/1,000,000) * (0.108598 + 0.217588) = 26702.1 * (0.108598 + 0.217588) = $8,709.851 This seems to be missing 6 zeros based on if I run an industry change analysis using the direct output (where I get $8,709,860,426 as indirect/induced labor income) If I do ( B ), indirect/induced labor income= (direct output) * (labor income indirect effects + labor income induced effects, I get: = (direct output) * (indirect effects + induced effects) = ($26,702,095,703) * (0.108598 + 0.217588) = $8,709,849,789 And if I do (C), indirect/induced labor income= (direct labor income) * (labor income multiplier - 1) I get, = ($17,259,402,344) * (1.504644 - 1) = $8,709,853,836 Thank you! 2011 IMPLAN data for 394 for PA: Type SAM: Output:1.903451 ; Labor Income: 1.504644 Labor Income Indirect + Induced: 0.108598 + 0.217588 From 2011 IMPLAN Study Area for PA: Direct Output: $26,702,095,703 Direct Labor Income: $17,259,402,344
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    IMPLAN Support
    Hello Victoria, The Labor Income Direct, Indirect, Induced and total multipliers tell us for each dollar of Output production, how many dollars of Labor Income are created in the local economy. For A ), since you divide Output by 1 million the resulting Labor Income is in millions of dollars - ie, $8,709.851 millions. B ) is dollars of LI as you give. C ) is also correct and would be the same as B ) if we had more units of precision in the software. Hopefully this answers your question.
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    vdivino
    Thanks! Another question, If I am looking at the example of PA (using PA direct employment) it seems that: A) indirect/induced employment= (direct output/$1,000,000) * (employment indirect effects + employment induced effects) is the same as B ) indirect/induced employment= (direct employment) * (Type SAM employment multiplier - 1) Are A and B the same? Are these just different ways to think about it/ calculate?
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    IMPLAN Support
    Hi Victoria. We apologize for the delayed reply, but our office was closed the last one and half days due the snow and ice we received during this period. After reviewing your information, we may have figured out what you are doing to get the results you are. First, the data that you are correctly pulling from the “Study Area” data section of your model are all “Total” values, meaning they represent the direct, indirect, and induced effects in your region from which the multipliers are also derived. When you divided Total Payroll of $17.259B by 216,756 jobs and obtained an average payroll per worker of $79,626, this figure represents the combined direct, indirect, and induced effects of payroll on the average worker in your region. In order to separate the total average payroll per worker into the direct and indirect/induced portions, you first must obtain the direct portion of the average payroll worker. You can do this by simply dividing the average payroll per worker of $79,626 by the payroll multiplier of 1.504644 to get $52,920. This is the direct amount of average payroll per worker. To obtain the indirect/induced portion of average payroll per worker, you would simply multiply the direct payroll portion of $52,920 x (1.504644-1), which equals $26,706. If you sum the figures of $52,920 and $26,706, they should total $79,626. Using these figures, you can derive the payroll multiplier by dividing ($52,920 + $26,706) by $52,920, which equals 1.504644. We also used the data you supplied to us in your Forum Post to develop a spreadsheet, which is attached,to show how we derived the figures in this text as well. Hopefully you will see how we derived the direct and indirect/induced effects in sector 394 in Pennsylvania. I hope this resolves your concerns. Please let us know if we can be of further assistance to you.
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    IMPLAN Support
    Hi Victoria. We apologize if you have received an earlier request for additional information concerning this Post. I would like to know more about what data are you using to derive the indirect/induced employment in Method A. Could you share your information with us? We have not been able to derive similar results as obtained using Method B. At this moment, we cannot say whether Method A and Method B are similar in their calculations. Thanks!
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