The Impact of Micron Technology Virginia on the Economies of the ...

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<strong>The</strong> <strong>Impact</strong> <strong>of</strong> <strong>Micron</strong> <strong>Technology</strong> <strong>Virginia</strong> on the Economies <strong>of</strong> the City <strong>of</strong> Manassas, Prince William County, and the Commonwealth <strong>of</strong> <strong>Virginia</strong> in 2005 <strong>The</strong> total economic impacts <strong>of</strong> spending by <strong>Micron</strong> on the City <strong>of</strong> Manassas, Prince William County, and elsewhere across the Commonwealth <strong>of</strong> <strong>Virginia</strong> will reflect the combination <strong>of</strong> direct outlays (capital or operating) and their subsequent monetary effects as these funds are circulated through the economy; that is, the respending <strong>of</strong> these direct outlays will generate additional economic activity that otherwise would not have occurred. <strong>The</strong> total value <strong>of</strong> these combined direct and indirect values can be estimated by the application <strong>of</strong> appropriate multipliers that have been calculated for Prince William County and the Commonwealth <strong>of</strong> <strong>Virginia</strong> by the Bureau <strong>of</strong> Economic Analysis <strong>of</strong> the U.S. Department <strong>of</strong> Commerce, employing its Regional Input-Output Model (RIMS II). <strong>The</strong> results <strong>of</strong> these calculations are estimates <strong>of</strong> output value (total contribution to the economy, personal earnings) new earnings realized by residents <strong>of</strong> the jurisdiction, and the jobs supported by these outlays (full-time year-round jobs). <strong>The</strong> key variables governing the magnitude and significance <strong>of</strong> these economic impacts are their dollar value, the category <strong>of</strong> service or product purchased, the direct employment and payroll associated with the direct spending, and the geographic unit <strong>of</strong> analysis and the complexity <strong>of</strong> its economy. <strong>The</strong>se determine the extent to which the economy can provide the inputs and retain the outputs <strong>of</strong> the economic activities being analyzed. In this analysis, the City <strong>of</strong> Manassas, Prince William County, and the Commonwealth <strong>of</strong> <strong>Virginia</strong> represent well-developed, diverse, and expansive economies that are able to achieve significant indirect benefits from the direct outlays <strong>of</strong> the core industries. <strong>The</strong> following analysis will examine the economic impacts <strong>of</strong> a four-year capital-spending program undertaken by <strong>Micron</strong> to modernize the plant and equipment at its Manassas facility. <strong>The</strong>se capital outlays for construction and equipment totaled $178.2 million in Northern <strong>Virginia</strong> and $179 million in total statewide: vendors located within the Commonwealth and particularly in Northern <strong>Virginia</strong> received contracts to provide these services and equipment. Annual outlays associated with the operation <strong>of</strong> the Manassas plant are analyzed for 2005. <strong>The</strong>se operating outlays and their impacts are annual impacts and recur each year, whereas the capital outlays do not recur annually in the same magnitudes. That the operating outlays and their economic impacts are recurring annually magnifies their importance over time; the impacts identified herein reflect only a one-year slice <strong>of</strong> an ongoing stream <strong>of</strong> benefits. Operating outlays are divided into two categories: payroll and operations. <strong>The</strong>se divisions reflect substantially different economic impact patterns: payroll is spent differently than outlays for operations and therefore have different effects on the local and state economies—payroll fuels consumer spending while operating outlays support other vendors, pay for fringe benefits, support daily business activities, and may result in pr<strong>of</strong>its and new business investment.
Employment <strong>Impact</strong>s <strong>of</strong> <strong>Micron</strong> <strong>Technology</strong> <strong>Virginia</strong> <strong>The</strong> economic contribution <strong>of</strong> any business is frequently judged by the jobs and payroll it generates. While direct job generation is important, a firm’s non-payroll spending usually accounts for far greater job generation than its own workforce. This is true for <strong>Micron</strong>. Still, <strong>Micron</strong> is a major source <strong>of</strong> jobs with a workforce totaling 1,013 statewide, with 524 employees residing within Prince William County, and 120 <strong>of</strong> these employees living in the City <strong>of</strong> Manassas. Additionally, there were 320 <strong>Micron</strong> employees residing in neighboring counties. Combined, 83.3 percent <strong>of</strong> all <strong>Micron</strong>’s workers live locally or in adjacent counties. <strong>The</strong>se are shown in Table 2 along with their mean salaries. Table 2: <strong>Micron</strong> <strong>Technology</strong> <strong>Virginia</strong>: Employment Pr<strong>of</strong>ile, 2005 Place <strong>of</strong> Number Percent Average Annual Residence <strong>of</strong> Jobs Of total Income* City <strong>of</strong> Manassas 120 11.8 $70,895.24 Prince William (1) 524 51.7 $70,895.24 Neighboring Counties (2) 320 31.6 $69,638.96 <strong>Virginia</strong> (3) 1013 100.0 $67,896.56 Source: <strong>Micron</strong> <strong>Technology</strong>, Inc. *includes wages and salary, pr<strong>of</strong>it sharing and bonuses. *includes <strong>Micron</strong>’s workers residing in the City;**this secondary labor market includes Culpepper, Loudoun, Fairfax, Fauquier, Stafford and Warren Counties. ***includes all <strong>Micron</strong> workers residing in <strong>Virginia</strong>. <strong>The</strong> total payroll associated with this workforce totaled $68.8 million in 2005 for a mean salary <strong>of</strong> $67,897. <strong>The</strong> economic impacts associated with these payroll outlays are shown in Table 3. As labor income and consumer spending, these outlays represent a significant revenue base for state income and sale taxes. <strong>The</strong> salary multipliers underlying the calculations in Table 3 illustrate the cumulative impacts associated with <strong>Micron</strong>’s employment base. In Prince William County, for each dollar in payroll (for workers living in the County), the County economy realized a total benefit <strong>of</strong> $1.52; for <strong>Micron</strong> workers residing in the City <strong>of</strong> Manassas their payroll multiplier was estimated at 1.26. Prince William County residents captured an additional $316,410 in new personal income (wages and salaries) for each $1,000,000 <strong>of</strong> <strong>Micron</strong>’s payroll earned by <strong>Micron</strong> workers living in Prince William County. This added personal earnings benefit for the City <strong>of</strong> Manassas was estimated at $158,200 in additional earnings per $1,000,000 <strong>of</strong> <strong>Micron</strong> payroll earned by City residents working at <strong>Micron</strong>. This local spending also supported additional employment in the City and County as well as throughout the state and nation. Since the State’s economy is more complex and self-contained (less leakage to adjacent jurisdictions), its multipliers are larger than those for the City <strong>of</strong> Manassas and Prince William County. <strong>The</strong> State’s payroll multiplier for <strong>Micron</strong>’s workforce is 2.00; that is, for each dollar <strong>of</strong> payroll paid by <strong>Micron</strong> to a state resident worker a total economic benefit <strong>of</strong> $2.00 was generated. This payroll spending in the state generated additional personal earnings at the rate <strong>of</strong> $597,392 per $1,000,000 in direct <strong>Micron</strong> payroll outlay. This payroll effect is significant. For each $1.00 in direct payroll outlay made by <strong>Micron</strong> in the Commonwealth <strong>of</strong> <strong>Virginia</strong>, an additional $0.60 <strong>of</strong> wage income was generated to the benefit <strong>of</strong> workers residing in the state. Lastly, the indirect employment impact <strong>of</strong> this payroll spending in the State (and nation) was greater than the direct employ-
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