Economic Contribution of the LaSalle County Mining Industry

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Brian Harger Research Associate Crystal Lake, Illinois October 28, 2015 Presented to the McHenry County Council of Governments

Transcript of Economic Contribution of the LaSalle County Mining Industry

Page 1: Economic Contribution of the LaSalle County Mining Industry

Brian Harger

Research Associate

Crystal Lake, IllinoisOctober 28, 2015

Presented to the

McHenry County Council of Governments

Page 2: Economic Contribution of the LaSalle County Mining Industry

Project Overview: What We Did

• Demonstrated the contribution of the mining industry to the economy of LaSalle County.

• This included impacts of mining industry employment, output (sales or revenue), and value-added (contribution to GDP).

• The impacts were calculated for business-to-business spending (indirect impacts), as well as the household spending of employees (induced impacts).

• A written report of the results was prepared that also included an overview and brief history of the mining industry in LaSalle County.

• Results of the analysis were presented in a private briefing of elected officials and a press conference that included local media, representatives of the Mining Alliance and the public.

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Methodology: How We Did It

• The mining industry was defined as companies whose primary business activity is:

• Crushed and Broken Limestone Mining and Quarrying • Construction Sand and Gravel Mining• Industrial Sand Mining• Cement Manufacturing

• Based on a survey of 6 companies operating in the County in 2013 (Data was estimated for the 3 companies that declined to participate).

• The impacts were calculated with IMPLAN, a popular Input-Output statistical model.

• Information was also collected on local property tax contributions of mining companies, as well as the industry’s contribution to local civic groups and causes (community service hours by employees and a list of groups and projects).

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Key Concepts• Employment (Jobs) – An employee is a person that enters into an

agreement formal or informal, to perform work in return for compensation in cash or in kind.

• Output is the value of an industry’s production. For the mining industry this is sales plus or minus any change in inventory.

• Value-Added measures of LaSalle County’s economic output similar to “Gross Domestic Product” or “GDP”. It represents the difference between the value of goods and services purchased as production inputs and the value of the goods and services produced.

• Employee Compensation represents the total payroll cost of the employee paid by the employer. It includes wage and salary; all benefits and employer paid payroll taxes.

• The Multiplier Effect estimates the magnitude of the economic response in a geographic area associated with a change in business activity, either in terms of jobs or spending.

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MULTIPLIER EFFECT

For every 10 jobs created or retained by local mining companies…

… another 14 jobs are supported in other industries like healthcare, transportation, financial and business services and wholesale and retail trade.

A multiplier effect of 2.4

Employment Impacts

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DIRECT EMPLOYMENTPersons employed directly by LaSalle County mining companies

INDIRECT EMPLOYMENTJobs supported by mining industry suppliers and vendors

INDUCED EMPLOYMENTJobs supported by the household spending of mining industry employees

TOTAL EMPLOYMENTSum of direct, indirect and induced impacts

+

820

766

393

1,979

+

=

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Where Mining Employees Live

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Based on a survey of the mining companies, 83% of theindustry’s employees live in LaSalle County with much ofthe rest residing in nearby counties.

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Output Impacts

MULTIPLIER EFFECT

For every $1 million in output generated by local mining companies…

…an additional $184,000 in output is generated in other industries in LaSalle County

A multiplier effect of 1.18

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DIRECT OUTPUTOutput (sales or revenue) generated by LaSalle County mining companies

INDIRECT OUTPUTOutput generated by mining industry suppliers and vendors

INDUCED OUTPUTOutput generated by the household spending of mining industry employees

TOTAL OUTPUT ($ Millions)Sum of direct, indirect and induced impacts

+

$1,051.1

$148.1

$45.0

$1,244.2

+

=

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Value-Added Impacts• The Industry's contribution to local

economy (GDP) in 2013 was over $400 million; 8.4% of total the GDP of LaSalle County.

• The business sectors most affected by the mining industry spending are electric utilities, financial services, trucking and engineering and other technical services.

• For every $1 million increase in value-added created by local mining companies, an additional $390,000 in value-added is generated in other industries for a total impact of $1.39 million — a multiplier effect of 1.39

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TOTAL8.4%

DIRECT 6.1%($290.9 million)

INDIRECT 1.7%($84.4 million)

INDUCED 0.6%($28.9 million)

Source: LaSalle County Mining Coalition; IMPLAN; and the Center for Governmental Studies.

Economic Output as a Share of County GDP, 2013

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MULTIPLIER EFFECT

For every $1 million in employee compensation paid by local mining companies…

…an additional $741,000 in employee compensation is paid by other businesses in LaSalle County

A multiplier effect of 1.74

DIRECT COMPENSATIONOutput (sales or revenue) generated by LaSalle County mining companies

INDIRECT COMPENSATIONOutput generated by mining industry suppliers and vendors

INDUCED COMPENSATIONOutput generated by the household spending of mining industry employees

TOTAL COMPENSATION ($ Millions)Sum of direct, indirect and induced impacts

+

$61.8

$33.9

$11.9

$107.6

Employee Compensation Impacts

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+

=

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Summary of Economic Impacts

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DIRECTJobs, wages and output (sales or revenue) sourced directly to the

mining industry

INDIRECTImpact of mining industry suppliers

and vendors

INDUCEDImpact of mining industry

employee spending in the local economy

TOTALSum of direct, indirect and induced

impacts

+

Source: LaSalle County Mining Coalition; IMPLAN; and the Center for Governmental Studies.

Estimated Impacts of the Mining Industry (2013)

LaSalle County, Illinois Direct Indirect Induced Total Multiplier

Employment 820 766 393 1,979 2.41

Output ($millions) $1,051.1 $148.1 $45.0 $1,244.2 1.18

Value-added ($ millions) $290.9 $84.4 $28.9 $404.2 1.39

Employee Compensation

($ millions)$61.8 $33.9 $11.9 $107.6 1.74

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Other Findings

• Average annual wages of mining industry workers in the LaSalle County are $75,331 (82% higher than the average for all workers).

• Local mining companies paid $2.5 million in property taxes in LaSalle County in the 2013-2014 tax year.

• In 2013, local mining companies provided summer employment for 38 high school and college students, paying over $271,000 in wages and benefits.

• LaSalle County mining company employees contributed 6,793 hours to local volunteer service activities.

• Mining companies and their employees have also contributed their time, talent and money to over 50 community organizations, projects and causes in LaSalle County.

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Page 12: Economic Contribution of the LaSalle County Mining Industry

Brian Harger, M.S., EDFPResearch Associate

Center for Governmental Studies

Northern Illinois University

DeKalb, Illinois 60115

Phone: 815.753.0934

E-Mail: [email protected]

LinkedIn: https://www.linkedin.com/pub/brian-harger/2/a47/705

Copies of the LaSalle County Mining Industry study may be viewed or downloaded at:

http://www.slideshare.net/BrianHarger/la-salle-il-mining-impact-final-report-3-2015

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