Very high income individuals and induced impacts
Do you have any guidance on how to handle a labor income change when a significant fraction of the income is going to a small number of high-income individuals. As a hypothetical, imagine a new facility with 101 employees, 100 of whom are paid $50,000 each, and one of whom is paid $5 million, for $10 million total in labor income (if it matters, say the region is a city). One certainly expects the induced impact of the first half of the labor income to be larger than that of the second. This is probably an area for modeler discretion, but do you have any guidance?
Thanks.
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Hello, Labor Income Activities focus on Employee Compensation and Proprietor Income. If you are using the Employee Compensation, then that value includes everything as you mentioned, it’s a loaded payroll. If your study region is a city comprised of a few ZIP Codes, that will have an effect on the higher income individuals as they are more likely to spend their money outside the model's region. Since you know the split between the incomes that is going towards higher income households, we suggest running a Household Income Spending Pattern. Please note that the household income is a different type of income that has all payroll taxes and commuters removed. Your value for Activity Level should include income tax and savings payments, but not payroll taxes, and it must already be adjusted to only represent local Household income. Please let us know if you have any further questions. -
Thanks, this is helpful. The highest income category for households is $150k, which is lower than is ideal for me, but this is probably pretty good. Is there a way to see what the software assumes by default is removed for payroll taxes, benefits (you don't mention this, but these are also removed, right?), and commuting? Can I calculate these percentages from data on the Model Overview tab somewhere? Thanks -
Hello, For the Household Spending Pattern, IMPLAN doesn't remove the benefits component because it is part of each Household Spending Pattern purchase distribution. To calculate payroll taxes removed from a household spending pattern: The Social Accounting Matrix (SAM) will show payments from Employee Compensation(column) to all recipients (rows) including State & Local Govt and Federal Non-Defense. You can create an estimate for your household income bracket by finding its percentage of total Employee Compensation, then taking the contribution and dividing it by those? To calculate the in-commuting rate, open up Model Overview>Social Accounts>IxC Social Accounting Matrix. Find the cell for Employee Compensation column and Domestic trade. If this is 0, there is a net out-commuting rate. Divide the Domestic Trade by the Total compensation to obtain the net-commuting ratio. See this article for more information: http://implan.com/index.php?option=com_content&view=article&layout=edit&id=254
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