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BRE program calculates the multiplier effect of job losses
Eli Dile   on Friday, April 13, 2018 at 12:00:00 am

The importance of business retention and expansion is implicit to economic developers. However, the full value of a primary employer to the local economy is not always obvious to the public (until it’s gone). After all, it’s not just the closing company’s workforce that’s impacted.

Creating Opportunities for Retention and Expansion (CORE), a statewide BRE network in Illinois, used an economic modeling tool to determine the downstream effects from the closure of a few prototypical Illinois manufacturers. The results show a substantial multiplier effect for job losses realized over five years. In some cases, net job losses were three times greater than the number of jobs immediately displaced.

For example, CORE found the loss of a 100-job agriculture, construction, or mining machinery manufacturer would create a net loss of 334 jobs. Those jobs break down into the following categories:

  • 119 manufacturing jobs,
  • 36 construction jobs,
  • 28 retail jobs,
  • 17 healthcare and social assistance jobs,
  • 15 professional and technical service jobs, and
  • 119 jobs in all other sectors.

Additionally, $24 million in personal income and $43 million in value added would vanish. Although these numbers are specific to Illinois, a substantial multiplier effect can be assumed in any state that loses a similar employer.

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