I'm looking at Study Area data for a 4-county region in Maryland. Sector 56 (construction of other new nonresidential structures) has about $1.2B in output and -$644M in OPI in this region (2018 Implan data).
The analysis I'm running includes a significant amount of spending in sector 56, and the results show that the negative OPI is large enough that Value Added ends up being smaller than Labor Income.
Can you help me understand why OPI is negative for that sector?
Thanks!
Hi Elizabeth!
You are correct that the OPI is negative for Maryland in Industry 56 in Data Year 2018. This isn't uncommon. It just means that overall that year the Industry spent more money than it brought in for revenue.
If you are modeling an Event that you know will not have a negative OPI and you know what the value for OPI will be, you can use the Industry Impact Analysis Event Type and enter the value.
If you want to create a version of Maryland 2018 with a $0 or any positive value for OPI, you can Customize the Region.
Thanks so much for the reply. I looked at Industry 56 in Maryland from 2015-2021, and 2018 seems to be a real outlier in terms of OPI relative to Output.
I reran my analysis using 2019 Implan data instead of 2018 data, and got very different results. The bulk of the spending (~80%) is in Industry 56, and comparing the 2018 and 2019 results shows that Direct employment impacts in 2018 are about double those in 2019. Can you help me understand why having a significantly negative OPI in this industry would lead to higher employment impacts? Thank you!
Forgot to attach picture...
Hello Elizabeth!
Whenever we have a negative component of Value Added, this can lead to some confusing Results. Remember, Value added is = Labor Income + TOPI + OPI and that Output = Value Added + Intermediate Inputs. As you can see in the Results for your Projects, the Value Added component of Output is relatively constant, give or take a few percentage points. As you noted in 2018, this Industry 56 has a negative OPI value, leading to Direct Labor Income + Direct TOPI being greater than Direct Value Added. You can see this is evident as the Direct Labor Income by itself is larger than Direct Value Added, which results in a larger level of Direct Employment all else equal.
Hope this helps!
Michael Nealy
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