LOYOLA UNIVERSITY NEW ORLEANS
ECONOMIC IMPACT REPORT
2016
ECONOMIC IMPACT REPORT 2016 LOYOLA UNIVERSITY NEW ORLEANS
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AUTHORS JOHN D. LEVENDIS, PH.D. John Levendis is an associate professor of economics at Loyola University New Orleans. He received M.A. and M.S. degrees in economics and mathematics and a Ph.D. in economics from the University of Iowa. He has taught at the Economics University of Prague, Cornell College, the University of Iowa, and Southeastern Louisiana University. He has published econometric research on labor markets, real estate, and economic development. 2
DISCLAIMER MEHMET F. DICLE, PH.D. Mehmet F. Dicle is an associate professor of finance at Loyola University New Orleans He received his Ph.D. in financial economics from the University of New Orleans. He has taught at University of New Orleans and Yeditepe University, Istanbul. His research interests include market efficiency, international financial markets, political finance, and econometrics.
LOYOLA UNIVERSITY NEW ORLEANS ECONOMIC IMPACT REPORT 2016
RESEARCH BY THE NUMBERS LLC is a research consultancy founded by professors John D. Levendis and Mehmet F. Dicle. Although they are also professors at Loyola University New Orleans, Research by the Numbers is in no way affiliated with Loyola University New Orleans. The work contained in this document is a product of Research by the Numbers, which bears sole responsibility for the content herein. Report accurate as of January 31, 2017.
EXECUTIVE SUMMARY Loyola University New Orleans has a much larger local economic impact than its size might indicate.
Loyola’s large impact is due predominately to the fact that it brings in so many new residents and visitors to the area who otherwise would not come to New Orleans.
• Spending by Loyola sustains 2,800 jobs in the metro New Orleans area.
• Loyola’s economic impact generates $128 million in labor income for the New Orleans metro area.
• Loyola adds $203 million in value-added activity.
• Loyola’s economic activity
and all its spillover effects increases metro-area output by $329 million.
602
LOYOLA’S ESTIMATED REGIONAL ECONOMIC IMPACT
INDUCED EFFECT INDIRECT EFFECT DIRECT EFFECT
397
This estimate of Loyola’s regional economic impact is a conservative one, focusing only on the effects of spending and employment induced by Loyola’s business activities. Not included in this estimate is the sheer increase in productivity that is associated with earning a college degree. A recent study by the U.S. Federal Reserve1 calculated that average wages of college graduates are approximately 50 percent higher than those without college degrees.
$26,836,000
1,825
2,824
EMPLOYMENT
$18,720,000
Abel, Jason R. and Richard Deitz (2014). Do the Benefits of College Still Outweigh the Costs? Federal Reserve Bank of New York: Current issues in economics and finance, v20(3): http://www.newyorkfed.org/research/current_ issues/ci20-3.pdf 1
$47,657,000
$82,050,000
$127,606,000 LABOR INCOME
$36,573,000
$80,518,000
$118,787,000
$203,016,000 VALUE ADDED
$61,853,000
$186,608,000
$328,979,000 OUTPUT
ECONOMIC IMPACT REPORT 2016 LOYOLA UNIVERSITY NEW ORLEANS
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What Is an Economic Impact Analysis? An economic impact analysis estimates how spending in one area of the economy impacts the other areas.
2
LOYOLA UNIVERSITY NEW ORLEANS ECONOMIC IMPACT REPORT 2016
Our task is to estimate Loyola University New Orleans’ effect on the total amount of economic activity (income, employment, and so forth) that flows through the New Orleans economy. To calculate Loyola’s economic impact, we consider that Loyola brings students, faculty, and visitors from outside the area. These people directly and indirectly support jobs and income in the area. We also consider Loyola’s expenditures, which raise incomes and provide employment to residents in the construction and construction-support industries. The tourism industry provides a useful analogy for the present impact study. If a tourist visits New Orleans, they may spend $1,000 on food and lodging. These dollars become income for waiters and hotel owners, for example, who spend some of their money locally on clothing and additional food and lodging. The challenge for the economist is tracing the ripple effects of such spending as it circulates through the local economy. We explain how we estimate those effects below.
When income is spent, it becomes income for other people, many of them locals. The locals, in turn, spend a portion of their money locally, providing additional income for more locals. Similarly, when a business makes a product, it must purchase materials from another business and so forth. The process is one of a circular flow of income. Income leaks from the system whenever it is spent outside of the region. The task of the economist is to estimate how spending in one sector of the economy spills over into other interconnected sectors. To examine the interconnections within the local economy, we use input/output (IO) tables. IO tables were invented by economist Wassily Leontieff: an accomplishment for which he was awarded the 1973 Nobel Prize in Economics. An IO table shows how the various sectors provide inputs for and
demand outputs from all of the other sectors in the economy. For example, a local restaurant might buy its seafood from a local fisherman and its bread from a local bakery. The baker might buy milk from a local supermarket and so forth. Detailed IO tables can be constructed at the national level, relying on rough national averages, or at the local level, providing more precise analysis. In our analysis, we use local IO tables. To analyze the local economy’s many interconnections in the IO tables, economists use specialized software. The software system that we use is IMPLAN (IMpact alalysis for PLANning), arguably the industry standard for such analyses. IMPLAN’s IO tables are constructed using the most recently available data from the federal government, including the Bureau of Economic Analysis, the Bureau of Labor Statistics, the U.S. Census Bureau, and the Department of Agriculture. IMPLAN has 528 sectors, of which 272 exist in New Orleans. The total economic impact is the sum of three components: the direct, indirect, and induced effects.
The direct effect of tourism spending is the dollar amount that tourists spent in New Orleans. That is, in other words, the additional amount of dollars that they spent that New Orleans would not have received without those visitors. To provide food for the tourists, for example, local restaurants often purchase locally sourced food. Sectors that are linked in the supply chain must be included in the impact analysis. This is the indirect effect, the income of all of those local industries that are linked to the tourism industry through the supply chain. Ultimately, every industry is linked to every other industry. The challenge is to quantify the sum of all of these linkages and arrive at an aggregate indirect effect. Imports from outside the region are not included in the economic impact report, as they represent income in other regions.
food, lodging, entertainment, family expenses, and so forth. The spending by these employees represents the induced effects that resulted, ultimately, from the increased tourism dollars. Worker-spending is “induced,” and supply-chain spending is “indirect.”
“Employment,” in this analysis, is equivalent to “jobs.” It includes full- and part-time jobs for wage and salary workers, as well as self-employed proprietors. It is not “full-time equivalents.”
“Labor income” is equal to total wages and benefits plus income from sole proprietors. Thus, it is greater than “take-home pay.”
“Value added” is the sum of (a) employee compensation, (b) proprietor’s income, (c) other propertytype income, and (d) taxes paid on production and imports.
Each of the affected sectors must also pay for labor. The restaurant must pay for waiters; the farm must pay for agricultural workers. Waiters, for example, spend money for their own
ECONOMIC IMPACT REPORT 2016 LOYOLA UNIVERSITY NEW ORLEANS
3
Sources of Loyola’s Economic Impact ENROLLMENT
1,107
EMPLOYMENT
LOCAL REAL ESTATE RENTAL MARKET
315
STUDENTS FROM NEW ORLEANS
3,166
STUDENTS FROM OUTSIDE NEW ORLEANS
4,273
LOYOLA ENROLLMENT
INSTRUCTIONAL FACULTY
538 STAFF
1,361
853
LOYOLA EMPLOYEES
1,805 4
LOYOLA UNIVERSITY NEW ORLEANS ECONOMIC IMPACT REPORT 2016
LOYOLA STUDENTS WHO LIVE IN RESIDENCE HALLS
LOYOLA STUDENTS FROM OUTSIDE NEW ORLEANS WHO DO NOT LIVE IN RESIDENCE HALLS
2015-2016 CONSTRUCTION
VISITORS
51,664
TOTAL NUMBER OF VISITATION DAYS TO NEW ORLEANS BECAUSE OF LOYOLA
Estimated using approximations of length-of-stay for commencement and occasional visitors.
$2,065,000 8,195 SPENT BY LOYOLA ON CONSTRUCTION AND RENOVATION PROJECTS
TOTAL UNDERGRADUATE COMMENCEMENT ATTENDANCE
2,122 Attendees from New Orleans 6,073 Attendees from outside New Orleans
2,316
TOTAL LAW SCHOOL COMMENCEMENT ATTENDANCE
600 Attendees from New Orleans 1,716 Attendees from outside New Orleans
OCCASIONAL VISITORS: Parents visiting from outside Greater New Orleans bring
new money into the region, directly benefiting the local economy, primarily in the hotel, restaurant, and tourism industries.
ECONOMIC IMPACT REPORT 2016 LOYOLA UNIVERSITY NEW ORLEANS
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DETAILED RESULTS:
EMPLOYMENT
Loyola University New Orleans provides direct employment for the area. More important, however, is that employed people spend money that sustains other people’s employment. A proper accounting of this dynamic reveals that over
2,800 jobs in New Orleans are sustained by spending initiated by Loyola. Of course, most of these jobs are in higher education. The food industry is the secondlargest employment beneficiary, enjoying 273 jobs in full-service restaurants, 185 jobs in “other food and drinking places,” and 110 jobs in retail food and beverage stores.
6
LOYOLA UNIVERSITY NEW ORLEANS ECONOMIC IMPACT REPORT 2016
sorted by Direct
DESCRIPTION
DIRECT
INDIRECT
INDUCED
TOTAL
Colleges and Universities
964
0
11
975
Full-Service Restaurants
227
15
32
273
All Other Food and Drinking Places
165
4
16
185
93
0
18
111
Real Estate
85
88
29
202
Museums, Historical Sites, Zoos, etc.
84
0
1
85
Hotels and Motels (including Casino Hotels)
71
2
1
74
Retail: General Merchandise Stores
69
1
19
88
Transit and Ground Passenger Transportation
Retail: Food and Beverage Stores
50
4
4
58
Construction of New Educational Buildings
11
0
0
11
Other Amusement and Recreation Industries
8
2
4
14
Others
0
281
468
749
1,825
397
602
2,824
Total
LOYOLA’S IMPACT ON LOCAL EMPLOYMENT: 2,824 JOBS 3000
2500
2000
1500
1000
500
0 DIRECT EMPLOYMENT 1,825
INDIRECT EMPLOYMENT 397
INDUCED EMPLOYMENT 602
ECONOMIC IMPACT REPORT 2016 LOYOLA UNIVERSITY NEW ORLEANS
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DETAILED RESULTS:
OUTPUT
Loyola University New Orleans generates over $300 million in output for the New Orleans economy. Of course, not all local industries are affected equally. The bulk of the impact is centered around higher education. The second largest beneficiary is the local real estate industry, which enjoys an additional $38 million in output thanks primarily to outof-town students who rent or purchase housing during their stay in the city. Restaurants are also big beneficiaries of Loyola’s economic impact; over $13 million
8
LOYOLA UNIVERSITY NEW ORLEANS ECONOMIC IMPACT REPORT 2016
DESCRIPTION
DIRECT $
INDIRECT $
INDUCED $
TOTAL $
Colleges and Universities
117,417,000
12,000
1,346,000
118,775,000
Real Estate
16,204,000
16,796,000
5,616,000
38,616,000
Full-Service Restaurants
11,229,000
726,000
1,591,000
13,546,000
Hotels and Motels (including Casino Hotels)
8,983,000
306,000
113,000
9,402,000
Museums, Historical Sites, Zoos, etc.
7,860,000
0
91,000
7,951,000
All Other Food and Drinking Places
6,945,000
189,000
653,000
7,787,000
Retail: Food and Beverage Stores
6,546,000
9,000
1,281,000
7,836,000
Retail: General Merchandise Stores
5,240,000
45,000
1,421,000
6,706,000
Transit and Ground Passenger Transportation
3,743,000
313,000
287,000
4,342,000
Construction of New Educational Buildings
2,065,000
0
0
2,065,000
374,000
84,000
187,000
645,000
0
43,374,000
67,933,000
111,306,000
186,608,000
61,853,000
80,518,000
328,979,000
Other Amusement and Recreation Industries Others Total
in restaurant output can be traced back to Loyola’s economic footprint. Hotels are the fifthlargest beneficiary, enjoying over
$9 million in output, primarily due to parents and prospective students who visit Loyola and stay in New Orleans hotels.
DETAILED RESULTS:
VALUE ADDED
Spending and employment by
Loyola University New Orleans and its students and visitors increased New Orleans’ total value added by over $204 million. The real estate sector enjoyed an additional $28 million in value added. This is due primarily to increased rental demand from students. The hotel lodging and full-service restaurant industries enjoyed the next most value added.
DESCRIPTION
DIRECT $
INDIRECT $
INDUCED $
TOTAL $
Colleges and Universities
74,874,000
8,000
858,000
75,740,000
Real Estate
11,793,000
12,223,000
4,087,000
28,103,000
Hotels and Motels (including Casino Hotels)
6,167,000
210,000
77,000
6,455,000
Full-Service Restaurants
6,128,000
396,000
868,000
7,393,000
Retail: Food and Beverage Stores
4,528,000
6,000
886,000
5,420,000
Museums, Historical Sites, Zoos, etc.
4,303,000
0
50,000
4,353,000
All Other Food and Drinking Places
4,213,000
115,000
396,000
4,724,000
Retail: General Merchandise Stores
3,507,000
30,000
951,000
4,488,000
Transit and Ground Passenger Transportation
2,321,000
194,000
178,000
2,693,000
Construction of New Educational Buildings
791,000
0
0
791,000
Other Amusement and Recreation Industries
161,000
36,000
81,000
279,000
0
23,355,000
39,224,000
62,579,000
118,787,000
36,573,000
47,657,000
203,016,000
Others Total
“Value added” is the sum of (a) employee compensation, (b) proprietor’s income, (c) other property type income, and (d) taxes paid on production and imports.
ECONOMIC IMPACT REPORT 2016 LOYOLA UNIVERSITY NEW ORLEANS
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DETAILED RESULTS:
LABOR INCOME
We estimate that
Loyola University New Orleans sustains over $127 million in labor income. As with the employment estimates, the increased labor income is primarily enjoyed in the higher education sector. Employees at full-service restaurants enjoy an additional $7 million in labor income, traceable ultimately to spending by Loyola. Likewise, employees at “other food and drinking places” enjoy an additional $5 million in increased labor income due to Loyola’s regional economic impact.
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LOYOLA UNIVERSITY NEW ORLEANS ECONOMIC IMPACT REPORT 2016
DESCRIPTION
DIRECT $
INDIRECT $
INDUCED $
TOTAL $
Colleges and Universities Full-Service Restaurants
55,614,000
6,000
638,000
56,257,000
5,846,000
378,000
828,000
7,052,000
All Other Food and Drinking Places
4,804,000
131,000
451,000
5,387,000
Museums, Historical Sites, Zoos, etc.
3,830,000
0
44,000
3,875,000
Hotels and Motels (including Casino Hotels)
2,812,000
96,000
35,000
2,943,000
Retail: Food and Beverage Stores
2,811,000
4,000
550,000
3,365,000
Real Estate
2,029,000
2,103,000
703,000
4,836,000
Retail: General Merchandise Stores
1,859,000
16,000
504,000
2,378,000
Transit and Ground Passenger Transportation
1,632,000
136,000
125,000
1,893,000
Construction of New Educational Buildings
688,000
0
0
688,000
Other Amusement and Recreation Industries
125,000
28,000
63,000
216,000
0
15,823,000
22,893,482
38,716,344
82,050,000
18,720,000
26,836,000
127,606,000
Others Total
LOYOLA’S IMPACT ON LOCAL LABOR INCOME: $127,606,000 $140M
$120M
$100M
$80M
$60M
$40M
$20M
0 DIRECT EMPLOYMENT $82,050,000
INDIRECT EMPLOYMENT $18,720,000
INDUCED EMPLOYMENT $26,836,000
ECONOMIC IMPACT REPORT 2016 LOYOLA UNIVERSITY NEW ORLEANS
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TOTAL INDUSTRY-LEVEL EFFECTS
602
397
$26,836,000
1,825
2,824
EMPLOYMENT
12
$18,720,000
$47,657,000
$82,050,000
$127,606,000 LABOR INCOME
LOYOLA UNIVERSITY NEW ORLEANS ECONOMIC IMPACT REPORT 2016
$36,573,000
INDUCED EFFECT INDIRECT EFFECT DIRECT EFFECT
$80,518,000
$118,787,000
$203,016,000 VALUE ADDED
$61,853,000
$186,608,000
$328,979,000 OUTPUT
The following table summarizes the estimates from the previous tables and shows Loyola University New Orleans’ total effect on employment, labor income, value added, and output for the Greater New Orleans area by industry. DESCRIPTION
EMPLOYMENT
LABOR INCOME $
VALUE ADDED $
OUTPUT $
Colleges and Universities
975
56,257,000
75,740,000
118,775,000
Full-Service Restaurants
273
7,052,000
7,393,000
13,546,000
All Other Food and Drinking Places
185
5,387,000
4,724,000
7,787,000
Real Estate
202
4,836,000
28,103,000
38,616,000
Retail: Food and Beverage Stores
111
3,365,000
5,420,000
7,836,000
Retail: General Merchandise Stores
88
2,378,000
4,488,000
6,706,000
Museums, Historical Sites, Zoos, etc.
85
3,875,000
4,353,000
7,951,000
Hotels and Motels (including Casino Hotels)
74
2,943,000
6,455,000
9,402,000
Transit and Ground Passenger Transportation
58
1,893,000
2,693,000
4,342,000
Limited-Service Restaurants
37
723,000
1,735,000
3,011,000
Services to Buildings
34
751,000
835,000
1,335,000
Hospitals
33
2,693,000
2,994,000
5,148,000
Employment Services
32
1,361,000
2,015,000
2,512,000
Wholesale Trade
25
2,367,000
4,415,000
6,743,000
Other Educational Services
25
409,000
415,000
801,000
Offices of Physicians
22
1,781,000
1,718,000
2,750,000
Maintenance and Repair Con
19
1,141,000
1,304,000
2,909,000
Management of Companies and En
14
1,270,000
1,668,000
2,974,000
Other Financial Investment Activities
14
148,000
251,000
1,806,000
Individual and Family Services
14
365,000
352,000
500,000
504
26,611,000
45,944,000
83,528,000
2,824
127,606,000
203,016,000
328,979,000
Others Total
ECONOMIC IMPACT REPORT 2016 LOYOLA UNIVERSITY NEW ORLEANS
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OFFICE OF ACADEMIC AFFAIRS 6363 St. Charles Avenue New Orleans, LA 70118 academicaffairs.loyno.edu