Job creation from NEW household spending

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    IMPLAN Support
    Hello, You have a choice of modeling the new income as either Employee Compensation or Household Income, depending on what you know or assume about these households. You will need to determine whether your household income data are pre- or post-tax, pre- or post-savings, include the value of benefits (e.g. health insurance), and are based on where people live or work. This will help you identify the appropriate modeling solution. If you know that they are employed in your region and you know their loaded payroll (i.e., before taxes, including benefits), you will want to model that as a Labor Income Change with "Employee Compensation" as the chosen 'sector' for the Event. Otherwise, a Household Income Change will likely be your best option. These forum discussions may help: https://implan.com/index.php?option=com_kunena&func=view&catid=84&id=11088&Itemid=35 and https://implan.com/index.php?option=com_kunena&func=view&catid=84&id=10757&Itemid=35. The spending patterns for households (whether modeled via a Labor Income Change or a Household Income Change) do include rent, so you will not be overstating their spending on other items. IMPLAN also adjusts for what is spent locally vs. non-locally. To see the household spending patterns, go to Explore > Social Accounts > View By: Household Local Commodity Demand. Note that this is the household purchases of commodities from within the study area - i.e., local purchases; to see total household demand, go to Explore > Study Area Data > View By: Household Demand. You will see that the values in the latter table are larger than those in the former since they include non-local purchases. To see IMPLAN's estimates of % local purchases, go to Explore > Social Accounts > View By: Commodity Summary and note the RPCs (Regional Purchase Coefficients). You are seeing only induced effects because the effects of household spending are by definition “induced”. So, if you’re estimating the number of jobs created from new spending as a result of new households in the region, the only new jobs created will be jobs from induced effects. This is perfectly fine. You can report the household income value as a 'direct' effect if you are so inclined. If you happen to also know the moving expenses, money spent on furnishing the home, any real estate fees, etc., you could model those as well via an Industry Change Activity. If you don’t know how much money is spent locally versus elsewhere, you can adjust the “Local Purchase Percentage” from 100% to “SAM Model Value” by going to Event Options>Edit Event Properties (or Change All if you have multiple events)>Local Purchase Percentage>Set to SAM Model Value. Also, be sure to margin any purchases from retail sectors - see here for more: http://implan.com/index.php?option=com_multicategories&view=article&id=178:two-situations-for-using-retail-margins&Itemid=16 http://implan.com/index.php?option=com_multicategories&view=article&id=594:594&Itemid=71.) Please let us know any additional questions.
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    mfwhipple
    Thank You. Question: My understanding is that Household Spending Patterns is used in situations such as quantifying impacts of tourism on new job creation. Is this approach considered appropriate for calculating new job creation from new households and new spending if savings and taxes are deducted - since all of the specified amount is spent? If used, should rent be deducted so not to overstate spending?
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    IMPLAN Support
    Yes, if the data you have is household income that does not include payroll taxes, income taxes, or savings then it is appropriate to use a household income change. All of the specified amount with be spent on the purchase of goods and services. Rent is already considered in IMPLAN's household spending pattern so you will not be overstating spending and do not need to make a further adjustment.
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    mfwhipple
    Thank you. To clarify my question: Purpose: TO calculate new job creation. Scenario: Gross Household Income = $100,000 and Household Income after deduction for income taxes, social security and medicare, savings is = $60,000; Question 1: If using Household Income Change, should the Events Household Income Change amount input be $60,000 or $100,000? Thanks
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    IMPLAN Support
    If you want to use your estimates of taxes and savings: Under Setup Activities > Activity Options > Import > Institutional Spending Pattern, then choose a median HH income class for your region. Set the Activity level for this to the $60,000. The entire amount will be spent on goods and services, but there will be imports as well.
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    mfwhipple
    Ok, So if we don't use our own estimate of taxes and savings, and rely on IMPLAN model, should the gross household income of $100,000 be the input?
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    IMPLAN Support
    Hi Mike, That is correct. If you have Household Income less payroll taxes and benefits you will want to use a Household Income Change and the Model will remove the income taxes and savings before spending the remainder of the value. If you are already removing the income taxes and savings you will want to import the Household Spending Pattern and use your adjusted $60K as the Activity Level. The Household Spending Pattern Activity assumes that the entire amount entered as the Activity Level is spent and thus deducts nothing. If you are interested in modifying the spending pattern for Households for any income group the Household Spending Pattern method is the only way to do that as well. Hopefully this will help to clarify. Please let us know if you have any additional questions.
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