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Project Construction Wages & Materials Modeling

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dj1985
Hi, I am modeling construction of a $10 million project. The project is split 50/50 between labor and materials cost. I'm assuming that the local market retains 80% of each expenditure. I have tried to complete the analysis under Type SAM for a mid-size market in California. The two activities that I used in my scenario: Industry Change: Category 36 - Construction of non-res structures - $4 million Labor Income Change: $4 million Unfortunately, the amount of total wages I'm getting back is less than the $4 million I plugged in. Do I not use my own leakage assumptions and let the software do it for me? Clearly I'm missing something. Or I suppose its possible that I don't use labor income and instead put all $8 million under construction of non-res structures? Any help is appreciated. Thank you.
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    IMPLAN Support
    Hi Derek, Thank you for your post. When you plug $5 million into sector 36 the multipliers associated with sector 36 already assume that a portion is going to Labor and a portion is going to buy goods and services with associated import rates already assumed by the software. Also, the direct employment will be based on a $5 million project instead of your $10 mill. When you use a Labor Income Change, the software will "spend" that money. The direct effect is really the first round of that spending (by definition that first round of spending is induced). Therefore, the "direct effect" will be missing taxes, savings and monies going to imported goods. I would enter the entire $10 million as the event industry sales, then edit the employee comp to $5 million and zero out the proprietor income. If you don't see the "Employee Compensation" item in the event line, go to Event Options > Show> Show All. After you enter the 10,000,000 you can replace the default values for employee compensation and proprietor income. The software will display the little exclamation point icons to signify the values are no longer default. Thanks!
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