Combining Resident and Commuter analysis

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    IMPLAN Support
    Hi Melissa, Is there a reason that you are trying to separate out the employees' spending from the Industry activity? You certainly can look at impacts this way, but the structure seems to be a little more difficult to interpret. Based on your description, this is what we are understanding that you are trying to accomplish. Please let us know if we do not understand this correctly. 1. Assess the impact of labor spending of residents based on labor payments (of fully loaded payroll values) on the city economy. 2. Assess the city-wide purchases of non-residents. For 1. By definition all Labor Income Change results are Induced, that is driven by the spending of Households receiving income from industries. The Factor Income Change is the total value of that labor income, so you can talk about that being the local income used to generate the Induced Effects described in the results. There is no harm in summing this to describe a total effect. One question though is around the 32%. We assume that you determined from the SAM that the rate of incommuting to region was 32% and thus you increased your value for the analysis by this amount to account for what the software would remove, because you already had restricted you Labor Income value to residents. Is that correct? That seems like a very high in-commuter rate, but if that is what you are seeing then yes your methodology looks correct in terms of summing the Direct Factor Change reduced to the original Labor Income value for the Direct Labor Income. Note though you won't have Output or Value Added associated to this Direct. For 2. Was your decision to set LPP to less than 100% because you did not know if the expenditure values by non-local employees were actually happening in your study region? LPP or Local Purchase Percentage is a % of the portion of your Direct Effect is occurring in the region. This does not indicate regional availability of commodities (RPC). So for example if your Events were primarily services or Retailers and you know these purchases were local to the city, you would leave LPP at 100% (with Gross Retail Sales as the option on Retail Sectors, unless you knew the exact items being purchased). If you are using LPP because you aren't sure that that Labor Income is spent locally then, you would not want to add back in the LPP Imports back into your results. As those are imports which are a part of the Direct that by definition of LPP did not occur within your study region and therefore does not impact your region. Because you used Industry Change Activities for these definitionally Induced purchases you are correct the results will look a little funny. Probably the easiest way to reconcile it would be to add the Indirect impact into the Induced for your Industry Change Activity. This will make the results have a similar format to what you get out of the Labor Income Change and in this instance is okay definitionally because in both cases we are looking at the impacts of labor spending, and you just get more detail from the Industry Change because it's functioning with different underlying assumptions about what the entered value is. One other thought on this: to make them definitionally identical, you would want to run the impacts as Commodity Change Activities, but if you are working mostly with services and retailers, it may make very little difference in the results. For these types of results where you are working with only a part of the grid, we typically recommend storyboarding the impact results. e.g.: industries in our region typically pay $1MM annually to local workers. Of those workers 68% are local supporting an impact of X dollars in the local economy. The remainig 32% of non-local workers still support some local businesses though. It's estimated they spend Y total dollars in the economy supporting an additional Z dollars of local production. However as long as you are careful not to double-counting any of you Direct values between commuters and non-commuters and total income, you can certainly create new totals based on the Direct being defined as the income made by workers and spent locally (less LPP if you choose to use that field) and the Induced Effects being the results of the spending .
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    gibsongrl
    Thank you for your help (and sorry for taking so long to respond). In response to your question about the reason for splitting employee spending from the industry activity...yes there is a reason. The client wanted the combined effect of resident and non resident employees grouped together separately from university operations for reporting. Yes, it is more difficult to interpret and combine these different scenarios, but I think it worked out well in the end. For item 1: Yes, the commuter rate for the city of Detroit is very high, but is correct for the underlying data. In fact, the commuter rate for my population is much, much higher than that (close to 60%). I know exactly the number that live in the city and the number that are commuting in. You mention that I won't have Output of Value Added associated to this Direct impact. Can't I add back in the loaded payroll (minus my mark-up to adjust for commuting) to the Output Direct effect and Total effect in addition to the Labor income Direct and Total effect? I would then need to re-calculate the Value added if I want to have that value as well. For item 2: Thank you for the clarification on LPP. I made sure all the LPP were set to 100% except for the purchase of gas, which I allowed to be set by the model because they may be purchasing their fuel outside the city. I don't know that ratio, only the total estimated that they spend in a year on fuel for commuting. Thank you for your help. I believe I have removed any potential double counting and am confident in my total effects.
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    IMPLAN Support
    Hi Melissa! Thank you for the clarification of your study. Our thoughts about generating Direct Impacts stem from the following, which is our understanding of your study: The analysis is related to employees spending their wages locally. 1. For resident employees, you are using a Labor Income Change Activity with an upward-adjusted Employee Compensation value to off-set IMPLAN’s commuting rate. 2. For non-resident employees, you are using a spending pattern for those employees spending in the study area. You are running these expenditures as an Industry Change Activity. If we have understood correctly and if those are the only two activities you are trying to capture, then the results from #2 should be interpreted as all Induced Effects. IMPLAN is reporting Direct and Indirect only because you had used the Industry Change Activity type – they are in reality all Induced Effects. The only Direct Effect is the total non-adjusted Employee Compensation for all workers, this can be added to your results. There should be no Direct Output, and Direct Value-Added equals the Direct Employee Compensation. I hope that this explanation is helpful!
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