Agricultural employment, compensation, and VA

Hello Nicolas, Could you please send in your model to implangroup@implan.com? We would like to take a detailed look into the issue you are having so we can provide accurate advice. You will want to compress the model into a folder before sending. Please include forum post 17352 in the subject line. Thanks!

Hi Nicolas. We apologize for the delay in getting back to your question concerning unusually high average per compensation and employment values in your results. After reviewing your model and your Forum Post explaining you problem, we noticed that you are mixing two different but related concepts: employee compensation and labor income. Employee compensation is a part of labor income which would make the average labor income extremely high as you found. But what you want is average compensation per worker and not average labor income per worker. Labor income includes proprietor income and most farmers are proprietors. Thus, you are mixing workers earnings with owners’ income or profits.[br] If you look back at the “Setup Activities” section of the model that you sent us and divide employee compensation by employment, you will get an average employee compensation for the Oilseed farming of $19,926. It looks like that is the only sector that you customized in the model.[br] Next, the other issue that we noticed in your model is all of the “Event Years” are set to 2007. To get the correct results, consistent with the data that you customized in the “Oilseed Farming” sector, you need to set your “Event Years” to 2014. Since you have already populated your model and if you changed the “Event Year” now, the model will adjust the deflators to 2014 causing some of the data in the sectors to change or be higher. Thus, we recommend that you rebuild your Virginia Model, select each sector, change “Event year” to 2014, and then customized these sectors with the data that you want to change. We did this for your model, simulated the results, and looked at the Oilseed Farming sector. When you click on “Detail Results”, scroll down and click on “Value Added.” You will get a dropdown menu of which employee compensation is found for all sectors in the model. Use the employee compensation for oilseed farming and divided it 34 the sector’s employment, which will equal your original value of about $19,926 [br]We hope that solves your problem. Please let us know if we can further help you.

Hi Nicolas. We apologize for the delay in getting back to your question concerning unusually high average per compensation and employment values in your results. After reviewing your model and your Forum Post explaining you problem, we noticed that you are mixing two different but related concepts: employee compensation and labor income. Employee compensation is a part of labor income which would make the average labor income extremely high as you found. But what you want is average compensation per worker and not average labor income per worker. Labor income includes proprietor income and most farmers are proprietors. Thus, you are mixing workers earnings with owners’ income or profits.[br] If you look back at the “Setup Activities” section of the model that you sent us and divide employee compensation by employment, you will get an average employee compensation for the Oilseed farming of $19,926. It looks like that is the only sector that you customized in the model.[br] Next, the other issue that we noticed in your model is all of the “Event Years” are set to 2007. To get the correct results, consistent with the data that you customized in the “Oilseed Farming” sector, you need to set your “Event Years” to 2014. Since you have already populated your model and if you changed the “Event Year” now, the model will adjust the deflators to 2014 causing some of the data in the sectors to change or be higher. Thus, we recommend that you rebuild your Virginia Model, select each sector, change “Event year” to 2014, and then customized these sectors with the data that you want to change. We did this for your model, simulated the results, and looked at the Oilseed Farming sector. When you click on “Detail Results”, scroll down and click on “Value Added.” You will get a dropdown menu of which employee compensation is found for all sectors in the model. Use the employee compensation for oilseed farming and divided it 34 the sector’s employment, which will equal your original value of about $19,926[br] We hope that solves your problem. Please let us know if we can further help you.

Thank you for your reply and assistance. Since labor income includes both hired labor and proprietors (and presumably tenant farmers), is it then the case that when Implan estimates farm employment that it includes not only hired labor but adds to it farm operators (i.e., proprietors and tenants) in the industry employment figures combined with hired farm labor, OR is the employment measure exclusively that of hired labor? If it's the former, then labor income/(proprietors+tenants+hired labor) will calculate an accurate measure of average labor income. (Although, in a really bad year, this could yield very low average income if proprietors and tenants lose a crop but still count as employees.) If not, then wouldn't the labor income/hired labor ratio be off because labor income (which by definition includes nonwage income of farm owners and operators) is divided by only the hired labor, the latter understating true employment? Am I getting comparable figures for labor income and employment in all cases? I would appreciate a reply confirming this before I move further. Again, thanks.

Hello Nicolas We apologize for the delay in getting back to you. There are two reasons for the difference you are seeing: 1. In order for your impact results to reflect the same Employee Compensation per Worker as in your Event, you need to set the "Dollar Year for View" in the Scenario Results screen to the same year as your "Event Year" (in your case, this is 2007. 2. It appears that you are dividing your direct Labor Income impact by your direct Employment impact, but Labor Income is not the same thing as Employee Compensation; rather, Labor Income = Employee Compensation + Proprietor Income. To get the same Employee Compensation per Worker, you need to select View By: Value-Added > Employee Compensation, where you will see that your direct Employee Compensation is the same value you specified in your Event. If you want Labor Income per worker to match your desired ~$20,000/worker, then you may want to zero-out the Proprietor Income in the Event. Keep in mind, however, that Proprietor Income includes any proprietor profits as well, so it can be significantly different from Employee Compensation on a per-worker basis and may make sense to leave as-is." Please let us know if you have any additional questions.

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