THE NEVADA TEST SITE & RELATED DOE ACTIVITY

Transcription

1 THE NEVADA TEST SITE & RELATED DOE ACTIVITY Contributions to the Nye County and Nevada Economies Alternative Patterns of Workforce Assignment and Residency Mercury, at the Nevada Test Site: Perspective View Nye County Economic-Demographic Reports: #4 Nye County Nuclear Waste Repository Project Office 1210 E. Basin Road #6, Pahrump, NV 89048, (775) , FAX, Prepared by James M. Williams, (303) , with Lloyd Levy March, 2000

2 THE NEVADA TEST SITE AND RELATED DOE ACTIVITY Contributions to the Nye County and Nevada Economies Alternative Patterns of Workforce Assignment and Residency The Nye County Nuclear Waste Repository Project Office (NWRPO) conducts studies in order to better understand the potential impacts of the Yucca Mountain Project. Such studies include assessments of current and projected economic and demographic conditions in the site county and its communities, and analyses of the current or projected impacts of specific economic activities, such as the Yucca Mountain Project itself or other activities that may affect the community context which conditions Yucca Mountain Project effects. This report, on the effects of the DOE s Nevada Operations Office (DOE/NV) activities if configured more like DOE flagship sites, documents one such assessment. Subsequent assessments may address related topics. INTRODUCTION The Department of Energy s Nevada Operations Office (DOE/NV) is responsible for the Nevada Test Site (NTS) in Nye County and for other NTS-related activities. DOE/NV s FY 1999 budget was $414 million, 1 of which 61.5% was allocated to defense programs, 4.7% to nonproliferation and national security programs, 22.0% to environmental management (including environmental restoration and waste management), and about 11.9% to work for other agencies. In the six years between the end of the Cold War in 1992 and 1998, the DOE/NV budget dropped by 59% in constant dollar terms, and its defense programs budget dropped by 53.7%. Both the overall DOE/NV budget and its defense programs budget increased somewhat in FY DOE/NV employed 3,389 persons in July 1999, of whom 87.6% were contractor employees, 9.0% were employees of DOE/NV itself, and 3.4% were employees of other federal agencies or national labs. Historical records show that DOE/NV employment increased in the late 1970s through the mid-1980s, but has declined since, particularly since the end of nuclear weapons testing in Total employment was 6,100 in 1975, peaked at 11,500 in 1987, declined gradually through 1992, when employment was 9,300, and more rapidly since 1992 to the July 1999 level of 3,389. Most DOE/NV employment is located at the Nevada Test Site in Nye County or in Las Vegas. Since 1992, DOE/NV employment has declined more rapidly at the 1 This study does not include employment or funding for the Yucca Mountain Site Characterization Project, conducted by DOE s Office of Civilian Radioactive Waste Management. 1

3 Nevada Test Site than in Las Vegas. Between 1992 and 1999, NTS employment dropped by 3,030 (69.8%) and Las Vegas employment dropped by 1,220 (41.4%). In 1992, 47.0% more DOE/NV employees worked at NTS than in Las Vegas; in 1999, 31.8% more employees worked in Las Vegas than at NTS. Though DOE/NV employment has fluctuated, NTS has long been used for field operations. DOE s management and administrative functions have been concentrated in Las Vegas. Subsidized busing services encourage employees to commute to NTS from residences in Las Vegas. In the 1960s, the Atomic Energy Commission (DOE s predecessor agency) considered community development comparable to that at DOE flagship sites (e.g. Hanford, Oak Ridge, and Los Alamos) but did not implement such a policy. A lack of DOE-supported community development has provided little encouragement for employees to reside in Nye County, the site community, but a different policy is possible and could be pursued by DOE in the future. This study, prepared by the NWRPO Economic Assessment Program, asks the question, What might be the contribution of DOE/NV if DOE were to manage the Nevada Test Site as it manages Oak Ridge or Hanford, where DOE policy has led to community and economic development near the DOE work sites? In other words, what shifts would occur in the regional economy in terms of output, Gross Regional Product, jobs, population, and income if policies fostering alternative patterns of workforce assignment, residency, and procurement were to be implemented by DOE? To examine this question, we modified available information describing DOE/NV employment, residency, labor status, and workforce compensation to construct an alternative view of DOE/NV. We then conducted the analysis by entering the alternative project description into REMI, a widely accepted economic and demographic impact assessment model. 2 The REMI model used for this assessment was specifically calibrated to represent the interrelated economies of Nye County, Clark County, and the rest of Nevada. Prior to running the impact assessments, the model also was adjusted to reflect recent employment trends, updated Las Vegas hotel development prospects, and recent Nye County economic and retirement migration trends implied by current population estimates. The results of the impact analysis are expressed in terms of the model s estimates of the effect on key economic values were an alternative DOE/NV scenario to be removed from the region, as compared to estimates of the same values under baseline conditions, with DOE/NV operating as it currently does. The key values used to characterize the economic impacts of the alternative view 2 REMI Policy Insight Version 1.1, Regional Economic Models, Inc., 306 Lincoln Avenue, Amherst, Massachusetts. 2

4 of DOE/NV are regional output, Gross Regional Product, total and secondary employment, resident employment, personal income, resident population, and the relative contribution of the project to Gross Regional Product. (A glossary is provided below to define economic concepts used in this report.) AN ALTERNATIVE VIEW OF DOE/NV The alternative management patterns assessment is intended to depict the DOE/NV in 1999 had DOE made a decision, beginning several years previous, to substantially reconfigure its activity in Nevada, so that it might conform more closely to that of flagship DOE sites. The alternative does not change total employment associated with the DOE/NV; or the mix of union, exempt, and other employees; or the gross pay of those employees; or the number of union employees working onsite. The following summarizes the changes we made in order to simulate reasonable alternative management policies: a) the percentage of exempt (generally professional and managerial) employees working onsite is half that of union employees, b) there is a corresponding increase in other support employees working onsite in response to the increase in exempt employees, and c) equal portions of onsite employees live in Clark and Nye counties. We made no change to other elements of present patterns, namely, the percentage of offsite employees working out-of-state, the portions of onsite employees living in the rest of Nevada or out-of-state, or the residency of offsite employees. FINDINGS AND CONCLUSIONS The alternative view of DOE/NV in which current patterns of management at the Nevada Test Site are modified to shift more of DOE/NV activity to the site county enhances the economic development effects of DOE/NV substantially within Nye County while imposing a smaller fractional penalty on Clark County. This evaluation is best expressed in terms of how shares of DOE/NV s effects shift among areas of the state and in terms of changes in the scale of area impacts relative to baseline levels of regional output, Gross Regional Product, employment, population, and income. Economic and Demographic Impacts Output. Under the alternative patterns hypothesized for this analysis, the DOE/NV workforce would have had a total impact of $345,396,000 on output (or gross sales) within Nevada in 1999, of which $111,494,000 (32.3%) would have occurred in Nye County. The remainder of DOE/NV s impact on output would have occurred in Clark County (64.0%) and in the rest of Nevada (3.7%). Under current patterns, the DOE/NV workforce was estimated to have a total impact of $348,890,000 on output within Nevada in 1999, of which $81,648,000 (23.4%) occurred in Nye County. The bulk of DOE/NV s impact on output occurred in Clark County (73.0%) and in the rest of Nevada (3.6%). 3

5 Gross Regional Product. Under alternative patterns, DOE/NV s total impact on gross regional product (GRP) within Nevada in 1999 would have been $210,376,000, of which $66,009,000 (31.4%) would have occurred in Nye County. The remainder of the office s impact on GRP would have occurred in Clark County (64.8%) and in the rest of Nevada (3.8%). Under current patterns, the DOE/NV workforce was estimated to have a total impact of $212,781,000 on GRP within Nevada in 1999, of which $47,772,000 (22.5%) occurred in Nye County. The bulk of DOE/NV s impact on output occurred in Clark County (74.0%) and in the rest of Nevada (3.6%). Secondary Employment. Under alternative patterns, the DOE/NV workforce would have generated 2,245 secondary jobs within Nevada in This is about 0.72 additional secondary jobs for every direct job. Of these, an estimated 274 (12.2%) would have been in Nye County versus 1,835 (81.7%) in Clark County and 136 (6.1%) in the rest of Nevada. Under current patterns, the DOE/NV workforce was estimated to have generated 2,292 secondary jobs in 1999 or about one additional secondary job for every direct job. Of these an estimated 171 (7.4%) were in Nye County versus 2,000 (87.2%) in Clark County and 121 (5.3%) in the rest of Nevada. Resident Employment. Under alternative patterns, the DOE/NV would have generated resident employment of 5,714 in 1999 in Nevada, of whom 995 (31.8%) would have resided in Nye County, 4,447 (65.1%) in Clark County and 272 (3.1%) in the rest of Nevada. Under current patterns, the DOE/NV generated an estimated 5,609 employed persons in Nevada in 1999, of whom 214 (3.8%) resided in Nye County, 5,193 (92.6%) in Clark County and 202 (3.6%) in the rest of Nevada. Personal Income. Under alternative patterns, total personal income of Nevadans attributable to DOE/NV would have been $319,400,000 in 1999, of which $78,060,000 (24.4%) would have accrued to Nye County residents, $229,900,000 (72.0%) to Clark County residents, and $11,440,000 (3.6%) to other Nevada residents. Under current patterns, total personal income of Nevadans attributable to DOE/NV was estimated to be $318,261,000 in 1999, of which $37,710,000 (11.8%) accrued to Nye County residents, $271,600,000 (85.3%) to Clark County residents, and $8,951,000 (2.8%) to other Nevada residents. Resident Population. Under alternative patterns, the DOE/NV would have generated a total resident population of 6,816 persons statewide in 1999, of whom 2,166 (31.8%) would have been in Nye County, 4,437 (65.1%) in Clark County and 213 (3.1%) in the rest of Nevada. Under current patterns, total resident population associated with DOE/NV was estimated to be 6,406 persons statewide in 1999, of whom 1,035 (16.2%) were in Nye County, 5,200 (81.2%) in Clark County and 171 (2.7%) in the rest of Nevada. 4

6 Contribution to the Region s Economies Under alternative patterns, the contribution to GRP in Nevada as a whole attributable to DOE/NV would have been an estimated $210,376,000, lower by about 1% than the estimated contribution of $212,781,000 under current patterns. At that level, DOE/NV s contribution to GRP statewide in 1999 would have been 0.36% of total GRP statewide, compared to 0.37% under current patterns. Under alternative patterns, the contribution to GRP in Nye County attributable to DOE/NV would have been an estimated $66,009,000, higher by about 38% than the estimated contribution of $47,772,000 under current patterns. At that level, DOE/NV s contribution to GRP in Nye County in 1999 would have been 8.2% of county GRP, compared to 5.9% under current patterns. Under alternative patterns, the contribution to GRP in Clark County attributable to DOE/NV would have been an estimated $136,399,000, lower by about 13% than the estimated contribution of $157,392,000 under current patterns. At that level, DOE/NV s contribution to GRP in Clark County in 1999 would have been 0.36% of county GRP, compared to 0.42% under current patterns. In the rest of Nevada, the contribution to GRP attributable to DOE/NV under alternative patterns would have been an estimated $7,968,000, higher by about 5% than the estimated contribution of $7,617,000 under current patterns. At that level, DOE/NV s contribution to GRP in the rest of Nevada 1999 would have been about 0.4% of GRP, more or less unchanged from its contribution under current patterns. Observations Much like DOE s Yucca Mountain Site Characterization Office, which invested in the 1990s to develop its administrative offices in Summerlin in west Las Vegas, DOE s Nevada Operations Office invested in the 1990s to develop administrative offices in North Las Vegas. This occurred during a period when DOE/NV s budget was declining almost 60% from its 1992 level at the end of the Cold War. This assessment assumes significant but not drastic change in the management of DOE/NV operations. Historically, about 84% of union employees, but only 35% of exempt (professional and managerial) employees have been assigned to worksites at NTS in the site county. The alternative pattern simply assumes that the percentage of professional and managerial employees assigned the Nye County worksites could be at least half the percentage of union workers. The assessment assumes more drastic change in the residency of site county workers. Historically, only about 19% of NTS workers live in the site county; about 79% commute in from Las Vegas. The alternative pattern simply assumes that 49% live in the site county and an equal portion commute from Las Vegas. 5

7 This implies, however, that over 600 workers, including some professional and managerial workers, who now commute from Las Vegas would have to be persuaded to live in the site county. Perhaps, planned community development such as Pahrump s Mountain Falls Resort Community will effect the shift with or without encouragement from DOE. More likely, DOE would need to support the shift as corporate policy, comparable to its policies in development at Hanford and Oak Ridge decades ago. However achieved, alternative patterns would have substantially increased the already significant role of DOE/NV in the Nye County economy, contributing 8.2% to the County s gross regional product, as compared to 5.9% under current patterns. BASELINE ECONOMIC DEVELOPMENT TRENDS As noted above, the REMI economic impact assessment model used here was ordered and calibrated specifically for this type of analysis. The Nye County REMI model represents the economy in terms of 14 broad industry sectors. On a geographical level, the model separates the state of Nevada into three distinct economic regions: Nye County, Clark County and the balance of the state. The economic values and relationships in the model are estimated largely on the basis of actual economic data available through 1995 from the U.S. Bureau of Economic Analysis and other public sources. Because the model s last year of history is 1995, 3 the Nye County economic assessment program has made several adjustments to the out-of-the-box REMI model, comparable to those made by other REMI users in Nevada. These include an adjustment for general economic trends since 1995 and an adjustment for Clark County casino-hotel development that is forecasted by industry observers to occur between 1996 and 2005 but not sufficiently accounted for in REMI s standard forecast for the Clark County model region. Besides these adjustments, the Nye County assessment program adjusted the model to simulate the shutdown of the Barrick-Bullfrog Mine and Mill in Beatty, a process begun after the model s last year of history. The Nye County assessment program also adjusted economic and retiree migration flows until the REMI standard forecast better approximated the recent, known trends in estimated Nye County population. 3 Because the Nye County REMI model s last year of history is 1995, values produced by the model for the years 1996 through 1999 and which are used in this analysis are not actual values but rather are forecasts even though actual values have occurred and may already have been measured or estimated from contemporaneous data by economic analysts. 6

8 The adjusted REMI model projects Nye County population at 53,896 by 2010, up from 33,628 in This projection is very similar to the State Demographer s middle forecast for Nye County (53,720). 4 It is important to note that the Nye County baseline projection reflects underlying economic trends in Nye County, other Nevada counties and the nation, as evidenced in data available through Except as noted above, the baseline does not reflect other economic events. 5 INFORMATION SOURCES FOR THE ASSESSMENT In this analysis, the NWRPO Assessment Program has attempted to describe the YMP configured as it might have been had DOE managed the project as it manages other flagship DOE sites. The assumptions used to modify the current patterns were described above. The description of current management patterns themselves that is, how the project has actually occurred from 1996 through 1999 is based on several separate information sources, all produced by DOE s Yucca Mountain Site Characterization Office (DOE/YMSCO) or Nevada Operations Office (DOE/NV). 6 The assessment of alternative patterns is based on a description of DOE/NV as it actually operated between 1996 and Such a description of DOE/NV requires use of several separate information sources, all produced by DOE/NV or by DOE/NV in cooperation with DOE/YMP. DOE s Nevada Operations Office estimates employment on a monthly basis. The estimates identify onsite employment (at the Nevada Test Site) and "offsite" employment in Las Vegas, other locations in Nevada, and out-ofstate. For this assessment, we used total and onsite employment figures for the month of July (mid-year) in 1996 to Offsite employment was distributed based on the four-year average. DOE/NV employment residency was estimated in employee surveys conducted by DOE/YMSCO in 1994 and Such surveys have not been 4 See Population Estimates (1997) and Forecasts ( ) ; Nevada State Demographer s Office; April, The January 1998 report, 1998 Baseline Economic/Demographic Projections For : Nye County and Nye County Communities describes in greater detail the REMI model, the adjustments for forecasting baseline trends, and the economic and demographic forecast results for communities and for Nye County as a whole. 6 The January 1996 report Monitoring the DOE/OCRWM Program, the Yucca Mountain Project, and Related DOE Activities in Nevada describes the following sources of information and the Nye County monitoring program assessment procedures in greater detail. 7

9 conducted since The surveys identified the residency (by zip code) of employees by worksite (on and offsite) and labor status (union, exempt, nonunion/non-exempt) employees. Union workers are generally craftsmen and equipment operators; exempt workers generally have managerial or professional positions; non-union/non-exempt workers generally have technical or clerical positions. For this assessment we summed zip code survey results by county and averaged the percentage distributions for 1994 and DOE/NV provides employee compensation reports for its major contractors in Nevada. Similar reports are developed for major contractors at other DOE sites and for the entire DOE complex. These reports identify total labor costs, gross pay and benefits for union, exempt and non-union/non-exempt employees. The Nye County monitoring program assessed these reports for several years in the late 1980s and early 1990s. For this assessment we used the assessment findings for the last year the assessment was conducted (1994), summed for the four major DOE/NV contractors. The January 1996 report Monitoring the DOE/OCRWM Program, the Yucca Mountain Project, and Related DOE Activities in Nevada describes the above sources and the Nye monitoring program assessment procedures in greater detail APPLYING REMI TO ASSESS DOE/NV Assessing the economic effects of alternative management patterns at DOE/NV required two rounds of REMI runs to generate a more accurate portrayal of the distribution of the effects of DOE/NV activity in Nevada. This is possible because residency information available for the DOE/NV allows evaluation and adjustment of the first round REMI assessment to more accurately portray the distribution of DOE/NV impacts among the three regions depicted in our REMI model. In the first round, DOE/NV employment by worksite (Nye, Clark, and the rest of Nevada) was subtracted from the economy s services sector. 7 This approach, called a counter-factual scenario, estimates the contribution of an economic activity by simulating its closure and removal from the economy. This round of the assessment also required the subtraction of an additional amount of total wage and salary income. This was to more consistently simulate the impact losing DOE/NV jobs that are known to pay higher wages and salaries than the average for the services sector as reflected in the Nye County REMI model. 7 We input DOE/NV workplace employment in REMI s services sector, and made a wage bill adjustment to reflect the substantially higher average wage of DOE/NV employees compared to service sector employees generally. As mentioned above, 87.6% of DOE/NV employees work for contractors, not federal agencies directly. Most of the contractors are classified in one of two detailed industries, miscellaneous business services or miscellaneous professional services. 8

10 Using these inputs, the first round REMI run estimated secondary employment, total employment by place of residence and resident population and income. However, an examination of first round results suggested that the model s default distribution of impacts among the model regions was inconsistent with survey data available from DOE monitoring that characterizes the residency distribution of DOE/NV employees. These specially gathered data, otherwise not available to the REMI model, were compared to the results of the first round REMI run. Based on that comparison, a residence adjustment was made to better reflect the known, direct portion of resident employment in each county. The residence adjustment was made in the second round REMI run by shifting personal income from one model region to another in amounts consistent with the known residency and gross pay of DOE/NV s direct employees, as reflected in the DOE monitoring data. The impacts presented and discussed above derived from the outputs of the second round REMI run. The specific economic model inputs used to simulate the YMP as currently configured are presented in Table 2. Contributors: Jim Williams, formerly president of Planning Information Corp., has been responsible for numerous economic and demographic analyses, including many in Nye County and the State of Nevada. For over a decade, he has consulted with Nye County on the socioeconomic, financial, and transportation aspects of the DOE high-level nuclear waste program. Lloyd Levy, formerly senior research associate at Planning Information Corp., has conducted numerous economic and demographic analyses, including the Nye County population monitoring program, baseline forecasts for Nye County and the State of Nevada, and an assessment of the effects of electric utility restructuring in the State of Wyoming. The cover photo was kindly provided by the USDOE Nevada Operations Ofiice. 9

11 TABLE 1. ECONOMIC IMPACT ANALYSIS RESULTS DOENV: Alternative Patterns, 1999 Impacts Nye Clark Rest of NV All NV Direct Employment (jobs) 1,788 1, ,139 Secondary Employment (jobs) 274 1, ,245 Total Employment (jobs) 2,062 3, ,384 Resident Employment (persons) 995 4, ,714 Resident Population (persons) 2,166 4, ,816 Personal Income (in 000's of current $) 78, ,900 11, ,400 Output (in 000's of current $) 111, ,988 12, ,396 Gross Regional Product (in 000's of current $) 66, ,399 7, ,376 Baseline Nye Clark Rest of NV All NV Direct Employment (jobs) NA NA NA NA Total Employment (jobs) 11, , ,631 1,141,079 Resident Employment (persons) 10, , ,494 1,107,771 Resident Population (persons) 36,032 1,257, ,293 1,845,283 Personal Income (in 000's of current $) 622,000 36,268,000 16,534,000 53,424,000 Output (in 000's of current $) 1,094,626 58,729,945 28,841,099 88,665,670 Gross Regional Product (in 000's of current $) 806,004 37,738,566 19,727,536 58,272,106 Regional Impact as Percent of All Nevada Nye Clark Rest of NV All NV Direct Employment 57.0% 42.8% 0.2% 100.0% Secondary Employment 12.2% 81.7% 6.1% 100.0% Total Employment 38.3% 59.0% 2.7% 100.0% Resident Employment 17.4% 77.8% 4.8% 100.0% Resident Population 31.8% 65.1% 3.1% 100.0% Personal Income 24.4% 72.0% 3.6% 100.0% Output 32.3% 64.0% 3.7% 100.0% Gross Regional Product 31.4% 64.8% 3.8% 100.0% Regional Impact as Percent of Baseline Nye Clark Rest of NV All NV Direct Employment NA NA NA NA Total Employment 17.23% 0.41% 0.04% 0.47% Resident Employment 9.33% 0.60% 0.08% 0.52% Resident Population 6.01% 0.35% 0.04% 0.37% Personal Income 12.55% 0.63% 0.07% 0.60% Output 10.19% 0.38% 0.04% 0.39% Gross Regional Product 8.19% 0.36% 0.04% 0.36% Indexes Nye Clark Rest of NV All NV Secondary / Direct Employment Resident / Workplace Employment Population / Resident Employee Personal Income / Resident $36,039 $51,814 $53,709 $46,860 Source: REMI Policy Insight Version 1.1 (Regional Economic Models, Inc., 306 Lincoln Avenue, Amherst, Massachusetts). Inputs prepared by NWRPO Economic Assessment Program,

12 TABLE 2. ECONOMIC IMPACT MODEL INPUTS DOE Nevada Test Site: Alternative Patterns Nye County REMI Policy Variable Sector Denomination Employment (number) Services Thousands Wage Bill (amount) Services Nominal $ (000's) Residence Adjustment (amount) Commuters Nominal $ (000's) Clark County REMI Policy Variable Sector Denomination Employment (number) Services Thousands Wage Bill (amount) Services Nominal $ (000's) Residence Adjustment (amount) Commuters Nominal $ (000's) Rest of NV REMI Policy Variable Sector Denomination Employment (number) Services Thousands Wage Bill (amount) Services Nominal $ (000's) Residence Adjustment (amount) Commuters Nominal $ (000's) Source: Inputs prepared by Nye County Nuclear Waste Repository Project Office (NWRPO) for REMI Policy Insight Version 1.1 (Regional Economic Models, Inc., 306 Lincoln Avenue, Amherst, Massachusetts). 11

13 GLOSSARY Demand. Demand is the amount of goods and services demanded, or consumed, by the local region. Some demand is satisfied locally, some by imports. Demand differs from output in that only the proportion of demand that is usually supplied locally is added to local output. Demand is apportioned to local production by using the regional purchase coefficient. Direct Employment. Direct employment means the jobs that are an integral part of a project or other economic activity that is being considered by an economic impact analysis. In the REMI model, changes to direct employment are caused by the policy variables that are entered when running a simulation. Direct changes are also called exogenous changes, meaning that the values are determined outside the economic impact model. Employment. Employment is a Bureau of Economic Analysis (BEA) concept that measures full-time and part-time jobs on a place-of-work basis, that is, in the economic region where the employer is located. Individuals may hold more than one job and, therefore, may be counted twice. Gross Regional Product. Gross Regional Product (GRP) is analogous to the national concept of Gross Domestic Product, or value-added. GRP equals the residual that is left over for compensation and profits after subtracting the value of all intermediate inputs from the gross sales value of an entities production, or output. Indirect Employment. Indirect employment means jobs that are created by the supply requirements and linkages of the project or other economic activity analyzed. Indirect employment is sometimes called intermediate employment. Induced Employment. Induced employment means jobs that are created by the re-spending of wages by employees of the project being analyzed and employees of any secondary economic activity simulated by the project. Investment Spending. Investment Spending converts a single amount into changes in demand by industry using a detailed table of supply linkages. Changes in demand by industry are then apportioned to local industry production, or output, using the regional purchase coefficient. Output. Output represents the amount of production in dollars recorded by economic entities within a region. Output includes purchases of intermediate goods, plus value-added, or compensation and profit. Output can also be thought of as gross sales. Personal Income. Personal income is a Bureau of Economic Analysis (BEA) concept that measures income on a place-of-residence basis, that is, in the 12

14 economic region where the recipient lives. The components of personal income are Labor and Proprietors Income, Personal Contributions to Social Insurance, the Net Residence Adjustment, Dividends, Interest and Rent, and Transfer Payments. In the REMI model, changes to any of the components of personal income will impact real disposable income and, as a result, the induced effects of personal consumption in the economy. Population. Mid-year estimates of population include survivors from the previous year, births, special populations (e.g., military personnel, college students and prisoners), and economic, international and retired migrants. Regional Purchase Coefficient. The Regional Purchase Coefficient is a measure of the percentage of local demand supplied from within the local region. It is the proportion of the regional demand for a good or service that is fulfilled by regional production as opposed to imports from other regions. Residence Adjustment. The Residence Adjustment policy variable changes the residence adjustment component of personal income in a region. It converts place-of-work income to a place-of-residence basis and is used to simulate workforce commuting patterns that differing from the historical patterns embedded in the REMI model. Resident Employment. Also called Residence-Adjusted Employment. The number of employed persons residing within a region, regardless of whether they work within the region or commute to work outside the region. Also known as employment by place of residence. Sales. Sales policy variables directly change the dollar level of production, or output, in a specified industry. Sales policy variables also assume that all of the sales are produced by industries located in the specified region, as well. Secondary Employment. Secondary employment means the jobs created in the economy other than the direct employment created by the project itself. Secondary employment equals the total employment estimated by the model, minus the direct employment integral to the project being analyzed. Secondary employment is composed of indirect employment (sometimes called intermediate employment) and induced employment. The effects that create secondary employment are also known as multiplier effects. Wage Bill. The Wage Bill is the total dollar amount of wage and salary disbursements by industries located within an economic region. Using the Wage Bill policy variable adjusts for employees of the project being simulated having a different wage rate than REMI s calculated industry average wage. 13