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sector 535

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cathythomas

Hello,

I have data on federal employee compensation for specific projects and I am trying to determine the best way to model the impacts of these expenditures.

I have been playing around with using sector 535. When I set up the activity, I enter my employee compensation data into employee compensation - the model then estimates an industry sales value based on the entered employee compensation. This value ends up being the direct value added and output values in the results. For example, if I enter $1,000,000 for employee compensation in sector 535, industry sales are estimated to be $1,359,242. In the results, direct labor income is $1,000,000 and value added and output are $1,359,242.

My question is about the industry sales / value added / output value - I can't make sense of what it means and if it makes sense to include these additional dollars ($359,242) in the results. I found from information on your site that these dollars represent other property type income (OPTI). I'm unsure of if this makes sense to include in the impact estimates associated with these projects. By including this piece, I am actually making the modeled cost of the project expenditures greater than the project expenditure data I am using...Specifically, my concern is that if I use sector 535 to estimate the federal employment impacts, direct output often ends up being larger than the project cost, which doesn't make sense.

I am considering using sector 535 and then changing direct value added and direct output to $1,000,000 (removing the OPTI piece). Does this seem like a reasonable approach?

Thank you for your help!

Cathy

 

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    maria_lucas

    Hi Cathy,

    Sector 535 is an administrative payroll sector (see Special Sector Definitions for more information). Other property type income (OPTI) for administrative payroll sectors represents consumption of fixed capital. OPTI does not drive additional impacts, only the $1,000,000 of Employee Compensation generates the induced impacts in your results.

    If you don’t want OPTI represented in your results, you can utilize the approach you mentioned (removing OPTI from your Direct Value Added and Output), though you will also need to remove an equivalent amount from your Total results (if you remove something from the Direct Effect, you’ll also need to remove it from the Total Effect). 

    Thank you,

    IMPLAN Staff

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    cathythomas

    Thank you Maria,

    Follow up....will the OPTI also affect the induced value added and output?

    Would using the labor income column (in the summary results) in place of the reported value added and output columns make sense?

    Thanks!

    Cathy

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    maria_lucas

    Hi Cathy,

    No, OPTI doesn't generate any indirect or induced impacts because IMPLAN doesn't have enough information to determine that the fixed capital expenses were spent in the Study Region. OPTI is only included in the direct and total results. 

    Thank you,

    Maria

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    cathythomas

    Thanks Maria!

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    cathythomas

    An idea...

    Could I accomplish this by editing National Per Worker OPTI to $0 for Sector 535 in the Customize model section?

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    maria_lucas

    Hi Cathy,

    We tend to urge against modifications to the model when other avenues exist, but this is a case where customizing the model is relatively harmless (assuming this is the full extent of your modification).

    To ensure proper adjustment, follow the steps below.

    In the Customize menu with sector 535 selected:

    1. Select “Edit totals then update per worker” from the Edit Options radial menu
    2. Adjust Output Total so that it matches Employee Compensation (EC)
    3. Set Other Property Type Income to $0
    4. Check the lock box next to Intermediate Expenditures
    5. Select Update
    6. Go to Options > Construct > Multipliers

     

    Once completed, you can impact sector 535 with your EC value and your Industry Sales value will match. Your value added results will be equal to your EC (OPTI will no longer be included).

    Thank you,

    Maria

     

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