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Economic contribution is defined as the gross change to an economy resulting from an organization or industry — in this case, The Jackson Laboratory (JAX). It is calculated as the sum of three factors: direct spending on employees, goods, and services; indirect spending by vendors on the inputs to those goods and services; and induced spending within the local economy by employees of JAX and employees of its vendors. Spending includes both spending on operations and capital projects like new buildings and equipment. The sum of these three contributions constitutes JAX's total economic contribution and is presented in terms of total economic output, earnings, employment, and value-added economic activities in the regional economy.
Core Definitions
Direct Contribution: The initial round of spending from JAX institutional operations and capital expenditures.
Indirect Contribution: Economic activity resulting from recurring rounds of business-to-business spending from JAX's supply chain.
Induced Contribution: The "household" impact resulting from local consumption, including spending by JAX employees and the employees of their suppliers who spend their earnings on local goods and services like food, housing, and entertainment.
Economic Output: The total value of all goods and services produced as a result of JAX's economic activity. It represents total industry sales, including payroll, intermediate inputs, and value-added production.
Value Added: JAX's contribution to the Gross State Product (GSP). It is calculated as Total Output minus the cost of intermediate inputs. This is the most accurate measure of the "new" economic value created within the state.
Earnings: All pre-tax wages, salary-related compensation, and employee benefits. Earnings are a subset of total output and represent the labor income associated with the jobs supported.
Employment: A count of the total number of jobs supported, inclusive of both full-time and part-time positions.
Assumptions
The analysis assumes Type II multipliers as JAX services are assumed to be of an "export" nature and household spending is assumed to be spent in the region.
The geographic region of focus is the state.
The analysis assumes that JAX vendor spending patterns are represented in the economic model and similar to other organizations in the same industry. The analysis does not incorporate vendor-specific spending data, which was not available.
Data provided by JAX include operational revenue, earnings (salaries and benefits), employee end-of-year headcount, capital expenditure (building, equipment, software), and the number of facility visitors, among other descriptive data.
Estimating Contributions on Economic Output
Operational expenditures on labor and other business expenditures are assumed to be total operating expenditures. Indirect and induced effects for operational spending are estimated by applying RIMS final demand output multipliers for the scientific research and development services sector (541700).
Estimating Contributions Using Direct Earnings and Direct Jobs
JAX provided detail on payroll salaries and benefits and employment year-end headcounts. These data points are applied to RIMS direct-effect earnings and employment multipliers to calculate total contributions. The indirect and induced portion is calculated as the net of total effect earnings or job contributions and the direct-effect for earnings and employment.
Capital Expenditure Contributions
Capital expenditures across three core categories — buildings, equipment, and software — made at vendors located in the state and originating from all JAX campus locations are used to quantify the direct, indirect, and induced spending contributions. Direct output is assumed to be total state-level capital expenditures. Effects are estimated by applying RIMS final demand output multipliers by state for nonresidential structures (2332CO), analytical laboratory instrument manufacturing (334516), and custom computer programming services (541511).
State and Local Taxes
Estimates for state and local tax generation were derived using Tax Incidence Tables from the Institute on Taxation and Economic Policy (ITEP) "Who Pays?" Report (7th Edition). The analysis calculated effective tax rates for Sales, Income, Property, and Other taxes specific to each state, then applied these rates to 80% of total earnings to exclude employer and employee retirement contributions not available for current spending.