Loyola University New Orleans Economic Impact Report 2016

LOYOLA UNIVERSITY NEW ORLEANS

ECONOMIC IMPACT REPORT

2016

ECONOMIC IMPACT REPORT 2016 LOYOLA UNIVERSITY NEW ORLEANS

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AUTHORS JOHN D. LEVENDIS, PH.D. John Levendis is an associate professor of economics at Loyola University New Orleans. He received M.A. and M.S. degrees in economics and mathematics and a Ph.D. in economics from the University of Iowa. He has taught at the Economics University of Prague, Cornell College, the University of Iowa, and Southeastern Louisiana University. He has published econometric research on labor markets, real estate, and economic development.

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DISCLAIMER MEHMET F. DICLE, PH.D. Mehmet F. Dicle is an associate professor of finance at Loyola University New Orleans He received his Ph.D. in financial economics from the University of New Orleans. He has taught at University of New Orleans and Yeditepe University, Istanbul. His research interests include market efficiency, international financial markets, political finance, and econometrics.

LOYOLA UNIVERSITY NEW ORLEANS ECONOMIC IMPACT REPORT 2016

RESEARCH BY THE NUMBERS LLC is a research consultancy founded by professors John D. Levendis and Mehmet F. Dicle. Although they are also professors at Loyola University New Orleans, Research by the Numbers is in no way affiliated with Loyola University New Orleans. The work contained in this document is a product of Research by the Numbers, which bears sole responsibility for the content herein.

Report accurate as of January 31, 2017.

EXECUTIVE SUMMARY Loyola University New Orleans has a much larger local economic impact than its size might indicate.

Loyola’s large impact is due predominately to the fact that it brings in so many new residents and visitors to the area who otherwise would not come to New Orleans.

• Spending by Loyola sustains 2,800 jobs in the metro New Orleans area.

• Loyola’s economic impact generates $128 million in labor income for the New Orleans metro area.

• Loyola adds $203 million in value-added activity.

• Loyola’s economic activity

and all its spillover effects increases metro-area output by $329 million.

602

LOYOLA’S ESTIMATED REGIONAL ECONOMIC IMPACT

INDUCED EFFECT INDIRECT EFFECT DIRECT EFFECT

397

This estimate of Loyola’s regional economic impact is a conservative one, focusing only on the effects of spending and employment induced by Loyola’s business activities.

Not included in this estimate is the sheer increase in productivity that is associated with earning a college degree. A recent study by the U.S. Federal Reserve1 calculated that average wages of college graduates are approximately 50 percent higher than those without college degrees.

$26,836,000

1,825

2,824

EMPLOYMENT

$18,720,000

Abel, Jason R. and Richard Deitz (2014). Do the Benefits of College Still Outweigh the Costs? Federal Reserve Bank of New York: Current issues in economics and finance, v20(3): http://www.newyorkfed.org/research/current_ issues/ci20-3.pdf 1

$47,657,000

$82,050,000

$127,606,000 LABOR INCOME

$36,573,000

$80,518,000

$118,787,000

$203,016,000 VALUE ADDED

$61,853,000

$186,608,000

$328,979,000 OUTPUT

ECONOMIC IMPACT REPORT 2016 LOYOLA UNIVERSITY NEW ORLEANS

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What Is an Economic Impact Analysis?

An economic impact analysis estimates how spending in one area of the economy impacts the other areas.

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LOYOLA UNIVERSITY NEW ORLEANS ECONOMIC IMPACT REPORT 2016

Our task is to estimate Loyola University New Orleans’ effect on the total amount of economic activity (income, employment, and so forth) that flows through the New Orleans economy.

To calculate Loyola’s economic impact, we consider that Loyola brings students, faculty, and visitors from outside the area. These people directly and indirectly support jobs and income in the area. We also consider Loyola’s expenditures, which raise incomes and provide employment to residents in the construction and construction-support industries.

The tourism industry provides a useful analogy for the present impact study.

If a tourist visits New Orleans, they may spend $1,000 on food and lodging. These dollars become income for waiters and hotel owners, for example, who spend some of their money locally on clothing and additional food and lodging. The challenge for the economist is tracing the ripple effects of such spending as it circulates through the local economy. We explain how we estimate those effects below.

When income is spent, it becomes income for other people, many of them locals.

The locals, in turn, spend a portion of their money locally, providing additional income for more locals. Similarly, when a business makes a product, it must purchase materials from another business and so forth. The process is one of a circular flow of income. Income leaks from the system whenever it is spent outside of the region. The task of the economist is to estimate how spending in one sector of the economy spills over into other interconnected sectors.

To examine the interconnections within the local economy, we use input/output (IO) tables. IO tables were invented by economist Wassily Leontieff: an accomplishment for which he was awarded the 1973 Nobel Prize in Economics. An IO table shows how the various sectors provide inputs for and

demand outputs from all of the other sectors in the economy. For example, a local restaurant might buy its seafood from a local fisherman and its bread from a local bakery. The baker might buy milk from a local supermarket and so forth.

Detailed IO tables can be constructed at the national level, relying on rough national averages, or at the local level, providing more precise analysis. In our analysis, we use local IO tables.

To analyze the local economy’s many interconnections in the IO tables, economists use specialized software. The software system that we use is IMPLAN (IMpact alalysis for PLANning), arguably the industry standard for such analyses.

IMPLAN’s IO tables are constructed using the most recently available data from the federal government, including the Bureau of Economic Analysis, the Bureau of Labor Statistics, the U.S. Census Bureau, and the Department of Agriculture. IMPLAN has 528 sectors, of which 272 exist in New Orleans.

The total economic impact is the sum of three components: the direct, indirect, and induced effects.

The direct effect of tourism spending is the dollar amount that tourists spent in New Orleans. That is, in other words, the additional amount of dollars that they spent that New Orleans would not have received without those visitors.

To provide food for the tourists, for example, local restaurants often purchase locally sourced food. Sectors that are linked in the supply chain must be included in the impact analysis. This is the indirect effect, the income of all of those local industries that are linked to the tourism industry through the supply chain. Ultimately, every industry is linked to every other industry. The challenge is to quantify the sum of all of these linkages and arrive at an aggregate indirect effect. Imports from outside the region are not included in the economic impact report, as they represent income in other regions.

food, lodging, entertainment, family expenses, and so forth. The spending by these employees represents the induced effects that resulted, ultimately, from the increased tourism dollars. Worker-spending is “induced,” and supply-chain spending is “indirect.”

“Employment,” in this analysis, is equivalent to “jobs.” It includes full- and part-time jobs for wage and salary workers, as well as self-employed proprietors. It is not “full-time equivalents.”

“Labor income” is equal to total wages and benefits plus income from sole proprietors. Thus, it is greater than “take-home pay.”

“Value added” is the sum of (a) employee compensation, (b) proprietor’s income, (c) other propertytype income, and (d) taxes paid on production and imports.

Each of the affected sectors must also pay for labor. The restaurant must pay for waiters; the farm must pay for agricultural workers. Waiters, for example, spend money for their own

ECONOMIC IMPACT REPORT 2016 LOYOLA UNIVERSITY NEW ORLEANS

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Sources of Loyola’s Economic Impact ENROLLMENT

1,107

EMPLOYMENT

LOCAL REAL ESTATE RENTAL MARKET

315

STUDENTS FROM NEW ORLEANS

3,166

STUDENTS FROM OUTSIDE NEW ORLEANS

4,273

LOYOLA ENROLLMENT

INSTRUCTIONAL FACULTY

538 STAFF

1,361

853

LOYOLA EMPLOYEES

1,805 4

LOYOLA UNIVERSITY NEW ORLEANS ECONOMIC IMPACT REPORT 2016

LOYOLA STUDENTS WHO LIVE IN RESIDENCE HALLS

LOYOLA STUDENTS FROM OUTSIDE NEW ORLEANS WHO DO NOT LIVE IN RESIDENCE HALLS

2015-2016 CONSTRUCTION

VISITORS

51,664

TOTAL NUMBER OF VISITATION DAYS TO NEW ORLEANS BECAUSE OF LOYOLA

Estimated using approximations of length-of-stay for commencement and occasional visitors.

$2,065,000 8,195 SPENT BY LOYOLA ON CONSTRUCTION AND RENOVATION PROJECTS

TOTAL UNDERGRADUATE COMMENCEMENT ATTENDANCE

2,122 Attendees from New Orleans 6,073 Attendees from outside New Orleans

2,316

TOTAL LAW SCHOOL COMMENCEMENT ATTENDANCE

600 Attendees from New Orleans 1,716 Attendees from outside New Orleans

OCCASIONAL VISITORS: Parents visiting from outside Greater New Orleans bring

new money into the region, directly benefiting the local economy, primarily in the hotel, restaurant, and tourism industries.

ECONOMIC IMPACT REPORT 2016 LOYOLA UNIVERSITY NEW ORLEANS

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DETAILED RESULTS:

EMPLOYMENT

Loyola University New Orleans provides direct employment for the area. More important, however, is that employed people spend money that sustains other people’s employment.

A proper accounting of this dynamic reveals that over

2,800 jobs in New Orleans are sustained by spending initiated

by Loyola. Of course, most of these jobs are in higher education.

The food industry is the secondlargest employment beneficiary, enjoying 273 jobs in full-service restaurants, 185 jobs in “other food and drinking places,” and 110 jobs in retail food and beverage stores.

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LOYOLA UNIVERSITY NEW ORLEANS ECONOMIC IMPACT REPORT 2016

sorted by Direct

DESCRIPTION

DIRECT

INDIRECT

INDUCED

TOTAL

Colleges and Universities

964

0

11

975

Full-Service Restaurants

227

15

32

273

All Other Food and Drinking Places

165

4

16

185

93

0

18

111

Real Estate

85

88

29

202

Museums, Historical Sites, Zoos, etc.

84

0

1

85

Hotels and Motels (including Casino Hotels)

71

2

1

74

Retail: General Merchandise Stores

69

1

19

88

Transit and Ground Passenger Transportation

Retail: Food and Beverage Stores

50

4

4

58

Construction of New Educational Buildings

11

0

0

11

Other Amusement and Recreation Industries

8

2

4

14

Others

0

281

468

749

1,825

397

602

2,824

Total

LOYOLA’S IMPACT ON LOCAL EMPLOYMENT: 2,824 JOBS 3000

2500

2000

1500

1000

500

0 DIRECT EMPLOYMENT 1,825

INDIRECT EMPLOYMENT 397

INDUCED EMPLOYMENT 602

ECONOMIC IMPACT REPORT 2016 LOYOLA UNIVERSITY NEW ORLEANS

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DETAILED RESULTS:

OUTPUT

Loyola University New Orleans generates over $300 million in output for the New Orleans economy.

Of course, not all local industries are affected equally. The bulk of the impact is centered around higher education. The second largest beneficiary is the local real estate industry, which enjoys an additional $38 million in output thanks primarily to outof-town students who rent or purchase housing during their stay in the city. Restaurants are also big beneficiaries of Loyola’s economic impact; over $13 million

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LOYOLA UNIVERSITY NEW ORLEANS ECONOMIC IMPACT REPORT 2016

DESCRIPTION

DIRECT $

INDIRECT $

INDUCED $

TOTAL $

Colleges and Universities

117,417,000

12,000

1,346,000

118,775,000

Real Estate

16,204,000

16,796,000

5,616,000

38,616,000

Full-Service Restaurants

11,229,000

726,000

1,591,000

13,546,000

Hotels and Motels (including Casino Hotels)

8,983,000

306,000

113,000

9,402,000

Museums, Historical Sites, Zoos, etc.

7,860,000

0

91,000

7,951,000

All Other Food and Drinking Places

6,945,000

189,000

653,000

7,787,000

Retail: Food and Beverage Stores

6,546,000

9,000

1,281,000

7,836,000

Retail: General Merchandise Stores

5,240,000

45,000

1,421,000

6,706,000

Transit and Ground Passenger Transportation

3,743,000

313,000

287,000

4,342,000

Construction of New Educational Buildings

2,065,000

0

0

2,065,000

374,000

84,000

187,000

645,000

0

43,374,000

67,933,000

111,306,000

186,608,000

61,853,000

80,518,000

328,979,000

Other Amusement and Recreation Industries Others Total

in restaurant output can be traced back to Loyola’s economic footprint. Hotels are the fifthlargest beneficiary, enjoying over

$9 million in output, primarily due to parents and prospective students who visit Loyola and stay in New Orleans hotels.

DETAILED RESULTS:

VALUE ADDED

Spending and employment by

Loyola University New Orleans and its students and visitors increased New Orleans’ total value added by over $204 million.

The real estate sector enjoyed an additional $28 million in value added. This is due primarily to increased rental demand from students. The hotel lodging and full-service restaurant industries enjoyed the next most value added.

DESCRIPTION

DIRECT $

INDIRECT $

INDUCED $

TOTAL $

Colleges and Universities

74,874,000

8,000

858,000

75,740,000

Real Estate

11,793,000

12,223,000

4,087,000

28,103,000

Hotels and Motels (including Casino Hotels)

6,167,000

210,000

77,000

6,455,000

Full-Service Restaurants

6,128,000

396,000

868,000

7,393,000

Retail: Food and Beverage Stores

4,528,000

6,000

886,000

5,420,000

Museums, Historical Sites, Zoos, etc.

4,303,000

0

50,000

4,353,000

All Other Food and Drinking Places

4,213,000

115,000

396,000

4,724,000

Retail: General Merchandise Stores

3,507,000

30,000

951,000

4,488,000

Transit and Ground Passenger Transportation

2,321,000

194,000

178,000

2,693,000

Construction of New Educational Buildings

791,000

0

0

791,000

Other Amusement and Recreation Industries

161,000

36,000

81,000

279,000

0

23,355,000

39,224,000

62,579,000

118,787,000

36,573,000

47,657,000

203,016,000

Others Total

“Value added” is the sum of (a) employee compensation, (b) proprietor’s income, (c) other property type income, and (d) taxes paid on production and imports.

ECONOMIC IMPACT REPORT 2016 LOYOLA UNIVERSITY NEW ORLEANS

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DETAILED RESULTS:

LABOR INCOME

We estimate that

Loyola University New Orleans sustains over $127 million in labor income.

As with the employment estimates, the increased labor income is primarily enjoyed in the higher education sector. Employees at full-service restaurants enjoy an additional $7 million in labor income, traceable ultimately to spending

by Loyola. Likewise, employees at “other food and drinking places” enjoy an additional $5 million in increased labor income due to Loyola’s regional economic impact.

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LOYOLA UNIVERSITY NEW ORLEANS ECONOMIC IMPACT REPORT 2016

DESCRIPTION

DIRECT $

INDIRECT $

INDUCED $

TOTAL $

Colleges and Universities Full-Service Restaurants

55,614,000

6,000

638,000

56,257,000

5,846,000

378,000

828,000

7,052,000

All Other Food and Drinking Places

4,804,000

131,000

451,000

5,387,000

Museums, Historical Sites, Zoos, etc.

3,830,000

0

44,000

3,875,000

Hotels and Motels (including Casino Hotels)

2,812,000

96,000

35,000

2,943,000

Retail: Food and Beverage Stores

2,811,000

4,000

550,000

3,365,000

Real Estate

2,029,000

2,103,000

703,000

4,836,000

Retail: General Merchandise Stores

1,859,000

16,000

504,000

2,378,000

Transit and Ground Passenger Transportation

1,632,000

136,000

125,000

1,893,000

Construction of New Educational Buildings

688,000

0

0

688,000

Other Amusement and Recreation Industries

125,000

28,000

63,000

216,000

0

15,823,000

22,893,482

38,716,344

82,050,000

18,720,000

26,836,000

127,606,000

Others Total

LOYOLA’S IMPACT ON LOCAL LABOR INCOME: $127,606,000 $140M

$120M

$100M

$80M

$60M

$40M

$20M

0 DIRECT EMPLOYMENT $82,050,000

INDIRECT EMPLOYMENT $18,720,000

INDUCED EMPLOYMENT $26,836,000

ECONOMIC IMPACT REPORT 2016 LOYOLA UNIVERSITY NEW ORLEANS

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TOTAL INDUSTRY-LEVEL EFFECTS

602

397

$26,836,000

1,825

2,824

EMPLOYMENT

12

$18,720,000

$47,657,000

$82,050,000

$127,606,000 LABOR INCOME

LOYOLA UNIVERSITY NEW ORLEANS ECONOMIC IMPACT REPORT 2016

$36,573,000

INDUCED EFFECT INDIRECT EFFECT DIRECT EFFECT

$80,518,000

$118,787,000

$203,016,000 VALUE ADDED

$61,853,000

$186,608,000

$328,979,000 OUTPUT

The following table summarizes the estimates from the previous tables and shows Loyola University New Orleans’ total effect on employment, labor income, value added, and output for the Greater New Orleans area by industry.

DESCRIPTION

EMPLOYMENT

LABOR INCOME $

VALUE ADDED $

OUTPUT $

Colleges and Universities

975

56,257,000

75,740,000

118,775,000

Full-Service Restaurants

273

7,052,000

7,393,000

13,546,000

All Other Food and Drinking Places

185

5,387,000

4,724,000

7,787,000

Real Estate

202

4,836,000

28,103,000

38,616,000

Retail: Food and Beverage Stores

111

3,365,000

5,420,000

7,836,000

Retail: General Merchandise Stores

88

2,378,000

4,488,000

6,706,000

Museums, Historical Sites, Zoos, etc.

85

3,875,000

4,353,000

7,951,000

Hotels and Motels (including Casino Hotels)

74

2,943,000

6,455,000

9,402,000

Transit and Ground Passenger Transportation

58

1,893,000

2,693,000

4,342,000

Limited-Service Restaurants

37

723,000

1,735,000

3,011,000

Services to Buildings

34

751,000

835,000

1,335,000

Hospitals

33

2,693,000

2,994,000

5,148,000

Employment Services

32

1,361,000

2,015,000

2,512,000

Wholesale Trade

25

2,367,000

4,415,000

6,743,000

Other Educational Services

25

409,000

415,000

801,000

Offices of Physicians

22

1,781,000

1,718,000

2,750,000

Maintenance and Repair Con

19

1,141,000

1,304,000

2,909,000

Management of Companies and En

14

1,270,000

1,668,000

2,974,000

Other Financial Investment Activities

14

148,000

251,000

1,806,000

Individual and Family Services

14

365,000

352,000

500,000

504

26,611,000

45,944,000

83,528,000

2,824

127,606,000

203,016,000

328,979,000

Others Total

ECONOMIC IMPACT REPORT 2016 LOYOLA UNIVERSITY NEW ORLEANS

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OFFICE OF ACADEMIC AFFAIRS 6363 St. Charles Avenue New Orleans, LA 70118 academicaffairs.loyno.edu