The Economic Impact of Arts & Culture

Arts Alliance Illinois has estimated the State-wide monetary impact of the nonprofits Arts & Culture industry to be $2.75 billion. In Bloomington-Normal the 16 largest Arts & Culture organizations (the McLean County Museum of History, the Illinois Shakespeare Festival, the Illinois Symphony Orchestra, among others) have an estimated $8.5 million annual economic impact.

Associate Professor of Economics Diego Mendez-Carbajo and Eckley Scholar student Michelle Riechers '16. Photo by Robert Frank III

Associate Professor of Economics Diego Mendez-Carbajo and Eckley Scholar student Michelle Riechers ’16. Photo by Robert Frank III

According to IMPLAN, the implicit regional output multiplier of Arts & Culture in McLean County is 1.38, meaning that for each $1.00 of economic activity generated by an Arts & Culture organization the region receives an additional $0.38 in indirect and induced economic activity. In terms of employment opportunities, the $8.5 million in economic activity supports 221 full-time-equivalent jobs. The complete report is available here. A brief GLT news segment on these estimates is available here.

The Economic Impact of Social Assistance

Habitat for Humanity of McLean County (HFHMC) is celebrating its 30 years of service in the community. Even though it is a nonprofit organization its focus on eliminating substandard housing yields a substantial economic impact. The Center for Housing Policy has reviewed the literature studying how affordable housing promotes local economic development by boosting spending, decreasing foreclosures, increasing the local tax base, and strengthening labor markets.

hfh_il_mclean_logoSince 2005 HFHMC has built 66 homes. When first appraised the average market value of each new home was $124,000. According to IMPLAN, the $9.9 million in new residential construction completed by HFHMC since 2005 resulted in $14.6 million in total economic activity and supported, on average, 24.7 jobs in the County each year. We also estimate that HFHMC volunteers contributed time worth, on average, $26,488 to the construction of each new home and that each new HFHMC home generates $1,800 in additional local tax revenue per year. The complete report is available here.

 

Policy Responses to a Factory Closure

On July 24th different local media outlets confirmed that Mitsubishi Motors will end production in its Normal facility by November. The economic impact of this 1,200 job loss to manufacturing was discussed on two earlier postings (here and here) and was referenced on several occasions when discussing the economic development outlook for McLean County during a GLT interview with the County Board Chair, Matt Sorenson. That piece is a thorough review of all the main issues driving our local economy and thus worth listening in its entirety.

Economic Impact of Nonprofit Organizations

This summer I will work with two junior students on estimating the economic impact of two different sets of local nonprofit organizations. Michelle Riechers, double degree in Music and Economics, was awarded an Eckley Scholars and Artists Program fellowship for the project “The Economic Impact of Cultural Enterprises in Bloomington-Normal”. Landon Hoffman, Economics, was selected to participate in the Action Research Center’s Community Partnership Program and will work on “The Economic Impact of Habitat for Humanity in McLean County”. Data collection is under way. Yay!

Temporary and Permanent Impacts

Signet Development recently announced the construction of a new $35 million Center for Integrated Wellness healthcare facility in Bloomington. The Center will house about 100 professionals currently working in four different facilities. How can we compare the economic impact of new non-residential construction to the economic impact of the healthcare service industry?

BroMennMedical

IMPLAN allows us to separate the non-recurring impact of building a $35 million healthcare facility from the recurring impact of employing 100 healthcare professionals. According to IMPLAN, the new construction will increase aggregate regional economic output by $45 million once and the healthcare professionals’ work will generate an aggregate regional economic output of $22.6 million every year.

The impact of healthcare jobs on the regional economy is remarkable. In approximately two years the direct economic impact of the labor force housed in this new facility will match its construction expense. A brief report is available here.

Comparing Losses to Manufacturing Labor

Up until 2011 Bloomington used to be the headquarters of the Home Care Products division of Electrolux. The Pantagraph.com reports that more than a decade before moving their corporate offices for the vacuum cleaner business to Charlotte, N.C., the company closed their Normal manufacturing plant. This plant employed 360 workers. How would that labor loss to small appliance manufacturing in 2000 compare to the loss of 1,200 jobs to car manufacturing at Mitsubishi in 2004?

electrolux_4581The up-to-date version of IMPLAN that we are using cannot explicitly model the small appliance manufacturing industry in McLean county because it no longer exists in our region. Thus, we turn to the RIMS II multipliers to compare the economic impact of these two losses to manufacturing labor.

Labor losses to electrical equipment and appliance manufacturing have a 6.77% larger impact on the size of the regional labor force than labor losses to motor vehicle, body, trailer, and parts manufacturing. At the same time, the impact on regional earnings from the relocation of Electrolux was, dollar for dollar, -6.44% smaller than the impact on regional earnings from the scaling-down of Mitsubishi operations. A discussion of those figures is posted here.

Benchmarking Labor Force Losses

State Farm Insurance Companies is the single largest employer in McLean County. It recently announced the relocation of part of its roughly 15,000-strong labor force to new facilities in the U.S. South and Southwest. Although no precise figures have been disclosed The Pantagraph.com reports that the unit affected, the Illinois Claims Operations Center employs 1,600 people in Bloomington. What would be the economic impact of such as loss to the local labor force?

state-farm-logo

In order to benchmark that impact we could compare it to the loss of 1,200 jobs at the Mitsubishi Motors North America plant that occurred in 2004 when a whole production shift was eliminated. At that time Mitsubishi was the third largest local employer.

Mitsubishi_Logo_Red

According to IMPLAN, although the direct loss to local labor from a potential relocation of 1,600 State Farm jobs is 33% larger than the direct loss to local labor from the elimination of 1,200 Mitsubishi jobs the total impact to the regional labor force is 4% smaller.

That is so because the indirect and induced effects of a labor loss to the financial services industry are much smaller than the indirect and induced effects of a labor loss to manufacturing. Also, the sectoral composition of the impact is different. The IWU student Dominique Castle has written an economic letter about these scenarios. A brief GLT news segment on these estimates is available here.

Visitor Center at the McLean County Museum of History

The McLean County Museum of History expects 20,000 visitors a year to its soon-to-be-open Visitor Center. According to the Bloomington-Normal Area Convention and Visitors Bureau the average out-of-town tourist spends $41 a day in food and recreation. Other estimates, like this one from the Department of Community, Agriculture, Recreation and Resource Studies at Michigan State University, place even higher values on out-of-town visitor spending.

McLeanHistoryMuseum_logo

According to IMPLAN the $820,000 in food and recreation spending would generate a direct regional impact of $241,000, plus an additional $86,000 in indirect and induced activity. That would translate into 4.5 new jobs and $38,000 in additional state and local tax revenue. A brief GLT radio segment on this estimate is available here.

Unrealized Hotel Stays Related to the U.S. Cellular Coliseum

The Bloomington-Normal Area Convention and Visitors Bureau has estimated that due to the lack of enough accommodations for potential users of the U.S. Cellular Coliseum in downtown Bloomington in 2013 the area did not welcome 43,400 visitors or accrue $1.9 million in overnight hotel stays.

Visit_BNAccording to IMPLAN the $1.9 million in unrealized hotel stays would have generated an additional $672,000 in business activity. Thus, by missing on all those conventions and events the County forego a total of $2.6 million in economic output. That would have translated into 26 new jobs and $200,000 in additional state and local tax revenue.

Tools to Estimate Regional Economic Impacts

The Economic Development Council of Bloomington-Normal has lent us their copy of the IMPLAN software from MIG Inc.

EDC_logoIMPLAN is a well-established program for economic modeling that can be used to estimate the impact of a variety of business activities through a series of regional economic multipliers. Through the support of Illinois Wesleyan University’s Action Research Center we will purchase a copy of IMPLAN tailored to McLean County, lL. IMPLAN_logoAdditionally, the Ames Library will add a copy of the Bureau of Economic Analysis Regional Input-Output Modeling System (RIMS II) tables to its repository of databases and resources.