The opening and closing of military bases cause major shifts in local economies. While there is usually not a net change at the national level, there can be drastic changes within regions when such large employment centers open or close. This article walks through some considerations when modeling military bases.
EMPLOYMENT & PAYROLL ONLY
If you only want to analyze the employment and payroll, you can utilize one or both of the federal Employment and payroll industries: 545 - Employment and payroll of federal govt, military and 546 - Employment and payroll of federal govt, non-military. Note that these government payroll Industries do not generate any Indirect Effects because they have no associated spending patterns. This makes sense for military bases as their purchasing is usually handled through GSA. Also, for these Industries, Value Added = Output; there is no Taxes on Production & Imports or Other Property Income.
In our example, Lamont Army Base will be relocating 1,000 service members to North Carolina. So we will add an Industry Employment Event, with the Specification 545 - Employment and payroll of federal govt, military and an Event Value of 1,000. If you also know the Value for Employee Compensation, you can add that using the Advanced Menu.
Examining the Results, we see, as expected, there are no Indirect Effects associated with this Industry.
PAYROLL AND INTERMEDIATE INPUTS
To analyze the losses associated with the payroll and all the spending in Intermediate Inputs, let’s examine the potential closure of the Brooklynn Base, also in North Carolina. We are told they spend $100M annually on goods and services and $60M of that is in Employee Compensation.
In this case, we can use an Institutional Spending Pattern, 11002 - Federal Government Defense and a Value of -$100M.
To account for the $60M that is going toward Employee Compensation, we can open up the Spending Pattern by clicking on the gear icon. At the bottom of the list of spending on Commodities we find 3545 - Employment and payroll of federal govt, military. The default states that 47% of the total spending for Federal Government Defense is on payroll. Given that we know 60% (or $60M) is spent on this, we can change the 47% to 60%. Note that this will change the Sum of Percentages to 113%. Click on the menu icon and select Normalize to reset this to 100% and click Save.
Now drag your Event into your North Carolina Group and click Run.
You might notice that the direct effect is -$81M and not the full $100M. In our Spending Pattern, we left the LPP = SAM. Therefore, IMPLAN is assuming that not all of the spending on that Commodity was purchased in the Region, and is excluded from the analysis. We also see leakage from the Commodity Market Share. Some of the purchases of each Commodity come from Institutional Sales (inventory and government production) and this is not included in the Direct effect. For more information on this, check out the article Why don’t my Direct Effects match my Direct inputs?
If there are large contractors that will see a change in production, these can be added as individual Events in their respective Industries. For example, perhaps a vehicle manufacturing firm will lose a contract valued at $50M and an aircraft manufacturing firm will lose a contract for $5M.
Here our Results show the combined impact of the losses from the Brooklynn Base and the two contractors. You can examine just the effects from the contractors by filtering for just those two Events.
Editing Institutional Spending Pattern Events
Institutional Spending Pattern Events
Written December 28, 2021
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