So you ran your Industry Event impact and you get to the Results screen. Great! But have you ever wondered exactly what each of those boxes in your summary results mean? This is the article for you!
There are nuances with each type of Event you run. This article specifically addresses the Industry Output, Industry Employment, Industry Employee Compensation, and Industry Proprietor Income Event types.
INTERPRETING THE RESULTS
Let’s walk through an example. Andrew’s Bootleg, a craft vodka company, went legit in 2021. We modeled his $1.5M in Output on the state of North Carolina (Dollar Year 2021 and Data Year 2019).
The Results screen will begin on the Summary tab. This shows an overview of the Economic Indicators by Impact and Tax Results as well as the Top 5 Industries by Employment, Output, and Value Added. At the bottom, you will find a graph with the top 15 Industries by estimated growth percentage and a table detailing the estimated growth percentage for all Industries. These are both based on the Values that were entered on the Impacts screen - because of the $1.5M in Industry 108, it shows the estimated growth across the region.
Our results are as follows:
Now let’s unpack exactly what his sales mean for the North Carolina economy. We see a total impact of 4.97 jobs, $363,180 in Labor Income, $1.1M in Value Added, and $2.2M in Output. This is the total economic impact from Andrew’s Bootleg; the sum of the Direct, Indirect, and Induced effects. Each of the next sections outlines what each part of this impact actually means.
The 1.44 Direct Employment shows that with $1.5M in Direct Output, it looks like Andrew can support himself as an employee of the distillery. This figure is the direct number of job years associated with the Output. But remember, jobs in IMPLAN are average annual employment. To switch between IMPLAN jobs and FTE, use the 546 FTE & Employee Compensation Conversion Table (2019). Using this converter, we see that the 1.44 IMPLAN jobs translate to 1.38 FTE jobs.
Andrew has to buy things like corn and yeast for his distilling. Because he is able to purchase some of his inputs from within the state, 2.02 jobs are supported in business-to-business transactions with the corn and yeast (and other) suppliers, as well as suppliers of those suppliers in the state. This Indirect employment represents the number of job years that are supported by business to business transactions as a result of the economic activity generated by the Event.
Andrew himself, and the employees in the businesses supported by Andrew's operational purchases, spend a lot of their take-home income in North Carolina on things like paying rent and buying groceries. Through this, 1.51 jobs are supported in industries like real estate, health care, and restaurants. Induced employment represents the number of job years that could potentially be supported by household spending as a result of the economic activity generated by the Event.
Direct Labor Income
Andrew pays himself well - as he is the only employee with a Direct Labor Income of $155,320. Even though EC includes wages and salaries, all benefits (e.g., health, retirement), and payroll taxes, he still takes home quite a bit. To switch between IMPLAN Employee Compensation and Wage & Salary figures, we can again use the 546 FTE & Employee Compensation Conversion Table (2019). Using this converter, we estimate that Andrew will take home $125,589 in wages. Direct Labor Income is the initial income earned by the Direct employees of the Industry specified in the Event.
Indirect Labor Income
The $135,521 in Indirect Labor Income is the EC and PI that Andrew’s Bootleg supports in the corn and yeast (and other) suppliers. Indirect Labor Income is the amount of EC and PI that is associated with business-to-business transactions as a result of the economic activity generated by the Event.
Induced Labor Income
Because Andrew and the other supported workers are spending their paychecks around the state, there is an Induced Labor Income of $72,340, including both EC and PI. Induced Labor Income is the amount of EC and PI that is associated with household spending as a result of the economic activity generated by the Event.
Direct Value Added
Value Added is akin to Gross Domestic Product (GDP) or at the North Carolina level, Gross State Product (GSP). Value Added includes the Labor Income dollars, as well as Taxes on Production and Imports (TOPI), and Other Property Income (OPI). Andrew’s Bootleg contributes $738,481 in Direct Value Added. Remember, this includes the $155,320 in Labor Income, plus TOPI and OPI.
Indirect Value Added
Through the business-to-business transactions, the company contributes $230,160 to Value Added or Gross Domestic Product (GDP). Again, this includes the $135,521 in Indirect Labor Income plus TOPI and OPI. This is the specific Value Added that is generated by business to business transactions as a result of the economic activity generated by the Event.
Induced Value Added
Because of the spending of the employee working at Andrew’s Bootleg and the supply chain companies, $135,379 is supported in Value Added. This includes the $72,340 of Induced Labor Income, plus TOPI and OPI. This is the specific Value Added that is generated from household spending as a result of the economic activity generated by the Event.
Andrew’s Bootleg has a Direct Output of $1.5M. We know this because that’s what we modeled. Output is equal to Value Added plus Intermediate Inputs; it is the total value of production. Remember, it includes Value Added (and Value Added includes Labor Income). Output is also the basis for all other calculations in IMPLAN. Total production value or Output, includes unsold production and excludes sold inventory. If Andrew sells all of his vodka produced this year within the year and only sells vodka produced this year, his $1.5M of Direct Output will be equivalent to his 2021 revenue.
Because of the business-to-business transactions resulting from local input purchases by Andrew’s Bootleg, $466,250 in Indirect Output is supported. Indirect Output represents all of the Output generated because of the Direct business to business spending. This figure includes the $230,160 in Indirect Value Added; and that Value Added then includes the $135,521 in Indirect Labor Income.
Finally, $235,638 of Induced Output is supported when the employees working at the distillery and their suppliers (and the suppliers of their suppliers) spend their money throughout the economy. Induced Output is the total value that all industries take in as a result of household spending. This figure includes the $135,379, in Induced Value Added; and that Value Added then includes the $72,340 in Induced Labor Income.
SUMMARY ECONOMIC INDICATORS AND TAXES
Clicking on the Summary tab, there are two other options.
Economic Indicators and Taxes will each open a table that breaks out Employment, Labor Income, Value Added, and Output by Direct, Indirect, and Induced Effects for each Group, Event, and Region. This is especially helpful when examining complex projects.
OUTPUT & EMPLOYMENT TABS
The tabs for Output and Employment all contain the same tables. Here you will find a graph of the top 15 Industries and then a table of all of the Industries. Each of these separate out the Direct, Indirect, and Induced Effects. Below that, is a graph with the top 15 Industries by estimated growth percentage and a table detailing the estimated growth percentage for all Industries.
VALUE ADDED TAB
The Value Added Tab is similar to the Output and Employment Tabs, however, it breaks out Value Added into its four components. There is a graph of the top 15 Industries and then a table of all of the Industries for Employee Compensation, Proprietor Income, Taxes on Production & Imports, and Other Property Income. The final table outlines the Direct, Indirect, and Induced values for each of the components of Value Added, and Value Added in Total, by Industry.
The Tax tab shows the total taxes for each level of government taxation: federal, county, sub county general (city/township), sub county special district (police, fire, school), and state. Taxes are broken out into those paid by Employee Compensation (EC), TOPI (Taxes on Production & Imports), OPI (Other Property Income), and Personal Tax. To read these tables, remember columns make payments to rows. In this example, we can see that Employee Compensation makes a $139,090 payment to EX: Social Insurance Tax - Employee Contribution. Note there are different taxes levied at different levels of government and each level may or may not collect taxes in your Region.
To see tax results by Direct, Indirect, or Induced effects, filter on the Impact you wish to examine.
The Occupation tab contains three tables. The first outlines the occupations associated with the impact. The Impact Averages table shows the averages from the occupations like average Wage & Salary Income. The Core Competency tab outlines the Abilities, Knowledge, Skills, Required Education, Work Experience Required, and On-the-Job Training Required.
The Environmental tab shows an overview of the Direct, Indirect, and Induced Impacts by each of the Satellite Accounts: Criteria Pollutants, Greenhouse Gases, Land Use, Mineral Use, Nitrogen & Phosphorus Releases to Water, Pesticide Emissions, Toxic Chemical Releases, and Water Use. You can drill into the details of each by choosing that title from the drop down menu.
And that’s it! You can use this guide to help you understand the individual effects of your IMPLAN analysis. I’ll drink to that!
Written November 18, 2019
Updated October 6, 2021