Rock Products

AUG 2017

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www.rockproducts.com ROCK products • August 2017 • 59 Industry A should result in more jobs being added to Industry A such as managerial, support, or production personnel. The indirect multiplier represents the change that will occur in the industries that supply the industry in which the primary change is occurring. Finally, the induced multiplier is the result of initial, direct, and indirect activity. That is, the new workers from these direct and indirect effects spend their incomes in the region of interest to buy groceries, healthcare, and so forth, and this increase in expenditures affects the sales, employment, and earnings of these industries. The indirect and induced effects are hypothetical in nature based on generally accepted supply chain and increased spending effects. (Table 9 illustrates how these multiplier effects are distributed across industries.) There are many types of multipliers, but here we will focus on multipliers for jobs, earnings, and sales. Jobs multipliers indicate how important an industry is in regional job cre- ation. Often, the types of jobs created outside the industry of interest are spread over many industries, especially those resulting from the induced effects. An earnings multiplier is based on the total amount of employee compensation paid by employers in the industry. If the earnings multiplier is 1.5, then for every $1 of compensation in the industry of interest there is $1.50 of compensation throughout the economy. A large jobs multiplier and a small earnings multiplier implies that many low wage jobs are created (and vice versa). Thus, the relative sizes of the two multipliers says something about the quality of the jobs created. Sales multipliers quantify how total sales in one industry relates to total sales in other industries. Since sales figures are widely available, the sales multiplier has broad applicability. Economic impacts may be quantified at the county, state or national levels. The size of the multipliers will vary by the level of geographic aggregation. Multipliers are larger the larger is the geography of interest. Multipliers calculated at the county level are the smallest because the direct, indi- rect, and induced effects may be realized outside the narrow geographic boundaries of the county. Induced effects are con- sumption-based, and consumption – say a vacation – may occur nearly anywhere. Importantly, the smaller relatively sizes of the county multipliers does not imply the effects of the industry are small, only that the economic impacts may be felt in other counties, states, or even nations. We provide evidence on the multipliers at all three levels of aggregation. At the county level, we compute the economic impacts of the aggregates industry (or parts thereof ) for Larimer County, Colo.; Lancaster County, Pa.; and Talladega County, Ala. Details of the Aggregates Industry Given the nature of the data, our analysis is limited to an analysis of the quarry operations of the aggregates industry. Specifically, the component sectors included in the analysis are listed in Table 3. Employment for these components of the aggregates indus- try included 61,042 workers in 2016, which amounts to just over 60 percent of the reported total employment in the industry. These quarrying jobs represent about 9 percent of the broader mining industry. While mining employment has fallen by 8.1 percent over the past five years, employment in the quarrying industry has increased by about 6 percent, reflecting, in part, the growth in residential housing (see Figure 1). Employment in these components fell sharply between 2006 and 2011 (about 24 percent over the period), coinciding with the collapse of the U.S. housing market and a recession. 25 As shown in Table 1, total employment in aggregates industry has also grown by about 6 percent, so it appears that the industry's employment growth is propor- tional to growth in the quarry component. Average earnings per job in the quarry component are $75,129 in 2016, well above the national average of $61,586, reflecting in part the high-skilled nature of the jobs. Table 4 lists the top 10 occu- pations (by Standard Occupational Classification or SOC) in terms of employment for the quarry industry. 26 The overall size of the aggregates industry for purposes of the Input-Output analysis is summarized in Table 5. Total annual sales (gross receipts) includes sales to both consumers and other industries of production was $27.2 billion in 2016. Of gross sales, earnings – including wages, salaries, supplements (additional employee benefits), and proprietor income – was over $6.1 billion. Property income – sometimes referred to as "non-labor income" or "gross profits" – is equal to gross receipts less payments to labor, taxes on production, and the purchase of produced inputs. Property income for 2016 was $8.2 billion. About $570 million was paid by the aggregates industry in taxes in 2016. Gross Regional Product (GRP) – a type of "value added" – measures the final market value of all goods and services produced in a region. This figure is the sum of earnings, property income, and taxes on production. Aggregates Industry Almanac Economic Impact of the Industry

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