EconomicBaseAnalysisNotes:

Wecalculatebasicjobsusingeitheranadhocassumptionapproachoralocation
quotient(oramodifiedLQ)approach.

Assumedbasicsectorsgenerallyfallintothesecategories:allagriculture,
forestry,andfisheries;allmining;allmanufacturing;alltourismrelatedindustry;
federalgovernment;andstategovernment.

LocationQuotientsarecalculatedusingareferenceeconomy,usuallytheU.S.
economy.ALQissimplytheratioofalocaljobinasectortothenationalratioin
thesamesector:
LQ= Employmentinanindustryinaregion/Allregionaljobs
_____________________________________________________
Employmentinanindustrynationally/Allnationaljobs

Whereallregionaljobsorallnationaljobscanbesubstitutedusing
anotherreferencevariableinthedenominator,i.e.,allofthecategorieslisted
inthenextbullet.
LQscanbecalculatedusingthefollowingbases:
Jobs
TotalPersonalIncome
Population
Incomeminustransferpayments
Totalearnings
Plusothervariations

WeusetheLQsifandonlyiftheyaregreaterthan1.0tocalculateexpected
basicemploymentinanindustry,usingemploymentasthebasis,where:
Basicjobsini=(ei/EIet/ET)EIorBasicjobsini=ei(11/LQ)

Oncebasicjobshavebeencalculatedforeachsector,wecansumallofthebasic
jobsandcalculatewhatthetotalbasicjobsareasaratiotothewholeeconomy.

Thebasicmultiplier,then,issimply:Multiplier=TotalJobs/BasicJobs

Basicprocedures:

1. CalculateLQsbythedifferentmethods
2. Calculatebasicemployment(ifLQ>1.0)
3. Sumthebasicemployment
4. Calculatethebasicmultiplier


CalculatinganEconomicImpact

Inthisexample,IamusingthebasicjobscountdeterminedfromthejobsLQinKnox
County,Illinois.
Knox Co. Base Jobs:
U.S. Jobs Jobs LQ Jobs Jobs LQ
335 Electrical eqpt & appliances 492,286 1,702 20.734 1620

IamgoingtoclosetheMaytagrefrigeratorplant,whichhad1,702jobs.

Thisisanoutlandishexample,Iknow,becauseMaytag,thatveritableparagonof
manufacturingstrengthandAmericanindustrialmightwouldneverabandona
profitableplanttothevagariesoftheworldmarketandshorttermquarterlygains.

HereweremypertinentnumbersforKnoxCounty,Illinois:

BaseMultiplier =3.34
Totaljobloss(Maytag) =1,702
MaytagLQ =20.734
Basejobsloss(Maytag) =(11/20.734)*1702=1,620
NonbaseMaytagjobslost: 1,7021,620=82

EconomicImpactCalculation: TotalJobLoss=Nonbasici+(Basici*Multiplier)
TotalJobLoss=82+(1,620*3.34)
TotalJobLoss=5,492

NewBasicJobs:8,2871,620=6,667
NewTotalJobs:27,7195,492=22,227
NewMultiplier:22,227/6,667=3.33