2014 Economic Impact Study

Transcription

1 2014 Economic Impact Study Locally funded, financially sound.

2 How IMRF helps Illinois IMRF benefit payments have positive economic effects throughout the state. The pension payments that retirees spend go on to support their local communities. IMRF serves approximately 3,000 units of local government and about 400,000 active, inactive, and retired municipal employees. IMRF members provide vital community services including educational support, road maintenance, and public safety. 2 But the economic impact of IMRF reaches far beyond just those municipal workers who are earning or have earned retirement benefits in the system. After all, IMRF retirees are also consumers and taxpayers. In 2014, IMRF paid $1.37 billion to retirees in Illinois. Those benefit payments ripple through the economy as retirees spend those payments in their local communities, creating income for other households, firms, and even various levels of government. The income received by these households, firms, and governments is, in turn, spent, thus creating additional income effects for other households and firms. Each successive round of spending creates additional economic impacts which can be estimated. This study measures the economic footprint of pension benefits paid by IMRF in the state s economy. Using an input-output model, it analyzes how pension payments made by IMRF to retirees ripple throughout the state. Statewide, in 2014 IMRF pension payments supported the generation of approximately: $2.01 billion in total economic output 14,444 jobs created $553.4 million in additional earnings $1.18 billion added to the Illinois GDP

3 IMRF pension payments: Quick Facts: Positively impacting every county in Illinois The secure income provided to IMRF retirees is recycled in local economies as a stable source of revenue for local businesses and various levels of government. In 2014, IMRF paid $1.37 billion to retirees in Illinois. Statewide, IMRF pension benefits supported over 14,444 jobs and over $553.4 million in additional salaries in These pension benefits further supported the generation of approximately $2.01 billion in total output. Public pension plans like IMRF must be recognized for the important role they play in the state s financial health. Retired workers avoid becoming dependent on public assistance, and as those retired workers spend their benefit payments in their local communities, those payments ripple through the economy creating income for other households, firms, and even various levels of government. 85% OF IMRF RETIREES LIVE IN ILLINOIS $1.37 BILLION OF PENSION IS PAID TO RETIREES IN 2014 RETIREES SPEND MONEY GENERATING JOBS AND INCOME $2.01 BILLION IN TOTAL ECONOMIC OUTPUT 14,444 JOBS CREATED $553.4 MILLION IN ADDITIONAL EARNINGS $1.18 BILLION ADDED TO ILLINOIS GDP 3

4 IMRF annual benefit payments by county $ in millions, based on 2014 Annual Benefit Payments $4.1 $3.5 $7.6 HENRY $10.4 KNOX $1.2 WARREN $8.7 $2.5 HEN - DERSON $26.2 ROCK ISLAND MERCER JO DAVIESS STEPHENSON WINNEBAGO BOONE MCHENRY LAKE CARROLL $2.7 WHITESIDE $11.0 STARK $.6 PEORIA $34.6 OGLE $9.7 LEE $5.6 BUREAU $6.8 $42.2 $.9 PUTNAM MARSHALL $1.9 WOODFORD $4.9 $7.3 DEKALB $16.1 LA SALLE $16.6 $5.1 $42.8 $99.5 KANE $72.8 KENDALL $12.8 GRUNDY $7.1 LIVINGSTON DUPAGE $115.0 WILL $88.5 COOK $242.2 KANKAKEE $14.8 IROQUOIS $4.4 4 $0 $2.0 million $2.1 $5.0 million $5.1 $10.0 million HANCOCK $2.5 ADAMS $10.5 $10.1 $20.0 million $20.1 million+ PIKE $2.8 MCDONOUGH $.9 $4.3 SCHUYLER BROWN $1.6 $1.2 GREENE C $2.3 A L H O JERSEY U $3.5 N $1.0 FULTON $6.4 CASS MORGAN SCOTT $5.9 MONROE $5.2 MASON $3.3 $6.7 MADISON ST. CLAIR MENARD $2.6 MACOUPIN $42.6 $35.4 $18.3 SANGAMON $4.7 $51.8 RANDOLPH TAZEWELL LOGAN $3.8 $4.5 BOND $2.3 CHRISTIAN $5.7 $2.0 $2.8 $6.5 MONTGOMERY CLINTON WASHINGTON PERRY $24.9 $2.6 $17.3 FAYETTE $2.6 MCLEAN DEWITT MACON $2.9 MARION $5.8 $5.9 $5.6 $9.7 SHELBY JEFFERSON FRANKLIN PIATT $3.7 MOULTRIE $1.9 EFFINGHAM $5.4 CLAY $4.1 $1.5 $4.5 $1.9 CUMBERLAND WAYNE $2.3 HAMILTON FORD CHAMPAIGN $26.8 DOUGLAS COLES $8.3 $1.8 JASPER $2.7 VERMILION $12.2 $2.5 RICHLAND LAWRENCE $4.0 $3.0 $.9 ED - WA - WARDS BASH $.9 $1.5 WHITE $3.1 JACKSON $9.0 WILLIAMSON SALINE GALLATIN EDGAR CLARK CRAWFORD UNION $3.4 JOHNSON $2.2 POPE $.6 HARDIN $.7 ALEXAN- DER PULASKI $1.6 $1.1 MASSAC

5 The Multiplier Effect How Spending Ripples Through the Economy, Supporting Jobs and Incomes in the Process from the National Institute on Retirement Security Study: Pensionomics: Measuring the Economic Impact of State and Local Pension Plans PENSION BENEFIT A retired IMRF member 5 DIRECT IMPACT...uses her pension money to buy a car INDIRECT IMPACT As a result of that purchase, the owner of the car dealership, the car salesman, and each of the companies involved in the production of the car all see an increase in income, and spend that additional income. INDUCED IMPACT These companies hire additional employees as a result of this increased business and those new employees spend their paychecks in the local economy.

6 Economic Impact Using economic multipliers, this report measures the direct and indirect effects that payments made to IMRF benefit recipients have on the Illinois economy. Multipliers used in this report come from the Bureau of Economic Analysis, U.S. Department of Commerce. Region: Illinois Industry: Households 6 It is important to remember that such benefit payments have a ripple effect throughout the Illinois economy. The Illinois economy benefits when IMRF retirees spend their pension dollars on goods and services. The IMRF data used in this study: 2014 benefits paid to 105,918 benefit recipients residing in Illinois (85% of all benefit recipients) Annual benefits of $1.37 billion paid to Illinois residents (87% of total benefits paid) Economic Impact Study ($ in millions, based on 2014 monthly benefits) Measurement Impact on Illinois economy Total output (total economic activity) $2.01 billion Jobs created 14,444 Additional earnings (due to jobs created) $553.4 million Value added (effect on Illinois GDP) $1.18 billion

7 Total output: $2.01 Billion Earnings: $553.4 Million The definition of economic activity includes: IMRF benefit payments All additional economic activity in Illinois generated by those payments Total output is based on IMRF benefit payments, times the U.S. Bureau of Economic Analysis Total Output Multiplier of IMRF s total output exceeds the value of coal mined in Illinois (almost $1 billion). (Source: Illinois Department of Commerce and Economic Opportunity) Jobs created: 14,444 The definition of jobs created means additional Illinois jobs that are due to IMRF benefit payments. The jobs created figure is based on IMRF benefit payments in millions of dollars times the U.S. Bureau of Economic Analysis Jobs Multiplier of The number of jobs created is greater than the number of persons employed by: McDonalds: 9,000 (in IL) Allstate Insurance Company: 10,000 (in IL) (Source: Illinois Department of Employment Security, Dun & Bradstreet) The definition of earnings includes additional salaries earned by persons employed in Illinois jobs that are due to IMRF benefit payments. Earnings are also based on IMRF benefit payments, times the U.S. Bureau of Economic Analysis Earnings Multiplier of The average annual salary for new jobs equals $34,865 (full-time). Value added: $1.18 Billion The definition of value added equals the amount added to the Illinois Gross Domestic Product (total value of new goods and services produced within Illinois borders) which is due to IMRF benefit payments. The value added amount is based on IMRF benefit payments times the Value Added Multiplier of

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