Employee compensation for transmission line

Good morning,


Our office is completing an economic impact analysis for a new transmission line. We have detailed spending data from the client that includes internal labor (from two partner electric companies), materials, and subcontractors.

I'm unsure of how best to model the internal labor. On one hand, the money is being spent by the electric power companies, so impacting sector 47 (electric power transmission and distribution) makes sense to me. But the fact that the money is specifically designated for internal labor makes me wonder if it would be better to model using a labor income change activity (5001 - employee compensation). 



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  • It really depends on what that labor cost represents. If the internal labor expense is a one-time expense for the company to invest in a new transmission line, then I would recommend a Labor Income Event. However, if the expense is an on-going impact to the company's operational expenses to operate the new transmission line year after year, then I would use an Industry EC Event to capture the labor as a portion of the increased operational revenue from the new transmission line.

  • Hi Sean,


    I have another question related to this project. From past analyses I seem to recall that all construction spending (and employment) is considered local, as it is happening at the project site, is that correct? But while this particular project would be considered a very large construction project, there are spending categories in engineering, permitting, surveying, and others. If the company is using contractors from outside of the study area to complete those tasks would the spending still be included in the study area? Or would some of those things be removed from the model?



  • Hi Monica!

    While the construction activity itself is considered to be happening locally, workers, and Intermediate Inputs can still be sourced from outside of the area and either commuted (workers) or imported (intermediate inputs) into the Region for the construction activity. If contractors from outside the study area are being used they could be included in the study area but they would be seen as leakages within the model. In this case they would be labeled as in-commuting. Commuting is defined as the inflow of residents from outside the Region who are employed by firms in the Study Area (in-commuting), or the outflow of residents in the Region employed by firms outside of it. Any imports are considered leakages in the IMPLAN model as they are economic activity associated with the modeled Event that does not generate additional effects in the defined Region. For more information about commuting, please reference our article here. Hope this helps!

  • Thanks, that's very helpful.


    One final question: a significant portion of the spending on the project is for materials. All of those materials are manufactured outside of the study area, but the company often uses local sales reps to purchase the products. From what I understand, the sales reps are local employees who work for local branches of the national or international manufacturing firms. Given that, would any of those dollars be included in the model? Or should all materials purchases be excluded?




  • If the materials are purchased from outside the regions included in your Project, those would not be a part of the model as they are considered a leakage. However, there is another option to model these purchases if you are unsure of if any of the dollars will impact the local Region, which would be to use a Commodity Output Event for wholesalers instead. If you don't have an exact percentage of purchases made from local wholesalers, you could use a Commodity Event with the Local Purchase Percentage set to SAM, which would allow IMPLAN to estimate which portion of this purchase will be kept local. Hope this helps!


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