2008-04-15_REVISION - M1980244 (307)

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ECONOMIC EFFECTS ANALYSIS Economic Effects Analysis Methodology To estimate the economic effects, the concept of economic multipliers is used. In this study, both employment multipliers and earnings multipliers are applied. The employment multiplier is an estimation of how many indirect jobs are supported in a local economy as a result of expendi- tures on direct employment. The direct employment in this study is the number of persons em- ployed directly by CC&V in Teller County, the Region, and the State of Colorado. The earnings multiplier is an estimation of how much indirect income is supported in a local economy as a re- sult of direct earnings and expenditures. The multipliers for the Pikes Peak Region and the State of Colorado were produced by the Colo- rado State Demographer's Office, based on data from the Bureau of Economic Analysis, U.S. Department of Commerce. Multipliers prepared for the Pikes Peak Region (Teller, Park, and El Paso Counties) were used for this study to approximate the region of Teller, Fremont, and El Paso County. Because Fremont County has a more well-developed economy than Park County, using the Pikes Peak Region's multipliers for the Region results in a somewhat conservative es- timate. Teller County multipliers are based on the Regional multipliers but have been adjusted downward by the authors of this study. The multipliers are known as the RIMS multipliers (Regional Input-Output Modeling System). The 2002 multipliers are based on inter-industry relationships that existed in 1997 and were up- dated at the State and Regional level using 2005 earnings and employment data compiled by the Bureau of Economic Analysis. They are the most recent multipliers available. The multipliers essentially measure how many times a dollar spent by a company is re-circulated in a local econ- omy before it completely "leaks" outside the area. A word of explanation here will help to illus- trate this concept. For every $100 received as wages by a worker, a portion of it will be spent by the worker outside the community. This is termed "leakage." However, of the portion spent lo- cally, some of it will become wages for another worker or earnings of someone else. An exam- ple would be the wages earned by a restaurant worker when a mining company employee goes out to eat. That portion of the restaurant worker's wages is added to the miner's wages in the total earnings effect, and that portion of the job supported by the miner is added to the employment effect. The restaurant worker then spends a portion of their earnings locally, supporting some other worker, adding to the earnings and employment effect. This process continues until all of the original $100 in wages has leaked out of the community. The total number of workers sup- ported by the initial $100 in wages is summed up to yield an employment multiplier for the min- ing industry. Expenditures made by a company for non-labor items also have the same kind of effect in that those expenditures also support other jobs and earnings. The earnings multiplier therefore simply sums up all the earnings, while the employment multi- plier sums up all the jobs supported by the initial worker. The initial employment is termed "di- rect" employment, while the jobs supported by the direct employment are called the "induced" employment. Because each industry has different pay structures and makes differing levels of company pur- chases in an area, multipliers have been prepared for different employment sectors by the State 13