How 50 New Jobs Would Impact Our Region

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How 50 New Jobs Would Impact Our Region

The promise of getting two of anything for the price of one usually attracts some attention. For many people, it is a surprising claim that the number of new jobs created by a new business will actually spur an equal number of additional jobs in a community. But it can happen.

Recently, the Economics Center at UC was asked by the Cincinnati USA Partnership to estimate the ongoing economic impact to our region of attracting a typical business with 50 new employees. The Partnership is an economic development endeavor staffed by the Cincinnati USA Regional Chamber and largely supported by local businesses. It has the responsibility for recruiting new businesses that will bring new jobs to our area and for helping local businesses expand or retain their employment base.

The Economics Center created a representative business by using a composite of many different types of companies that would employ approximately 50 people. We used detailed data from the U.S. Department of Commerce and their recommended procedures for determining the impact of new businesses and jobs coming into or leaving a region.

The data showed that new employees spend most of their earnings locally. In addition, the business that employs these workers also purchases many of its operational materials and services from local businesses. The impact does not stop with the income from the new jobs and the spending of the newly recruited business. The economic impact continues to multiply. Because of increased demand for entertainment and restaurants, automobiles, appliances, health and social services, food and clothing, and home furnishings, local businesses will hire new employees to meet additional demands.

Using the recommended procedures of the US Department of Commerce, we calculated that the net effect of attracting a business that brings in 50 new employees is that, in addition to the original jobs, 51 new jobs are created. The two for one claim seems to be appropriate.

New residents with new jobs also impact the housing market. Some of these people will buy homes, others will rent, but it doesn’t make much difference because both will increase the demand for homes. Our typical new business also impacts a region’s tax revenues. Sales tax revenues to area counties will increase by $11,100 and payroll taxes will increase by $61,700. Over a short period of time, new homes will be built and property tax revenues will increase by $318,600. All of these estimates will be affected by the location of the business and the place of residence of the employees.

Conversely, one must consider that a business leaving the area and taking 50 people with them will have a negative impact on the economy of the same magnitude as the positive values shown above. Creating the environment for the retention of jobs is as important to an economy as the attraction of new jobs.