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Appendix B: Study Multipliers
HSU’s direct economic activity has a multiplier effect on employment, labor income, and industry activity across the Humboldt region. The magnitude of this indirect and induced activity can be summarized through each spending multiplier. Table B1 below shows the activity multipliers for employment, labor income, total value added, and industry activity.
Table B1: Economic Multipliers across Spending Categories
| Spending Category | Employment | Labor Income | Total Value Added | Industry Activity |
|---|---|---|---|---|
| University Operating Expenditure | 1.27 | 1.55 | 1.85 | 1.62 |
| University Auxiliary Expenditure | 1.25 | 1.25 | 1.51 | 1.57 |
| Capital Expenditure | 1.62 | 1.36 | 1.54 | 1.44 |
| Student Spending | 1.32 | 1.44 | 1.33 | 1.38 |
| Average | 1.37 | 1.40 | 1.56 | 1.50 |
HSU can use these industry multipliers to understand the economic impacts of a change in spending. For example, HSU has already spent $5.5 million on capital projects in 2017-18, but the university plans on spending an additional $33 million over the course of the next year and a half. Assuming they spend half of the total $33 million in 2018-19, HSU can estimate the indirect and induced economic impacts of an additional $16.5 million in capital spending.
Looking at the multiplier for capital expenditure, we see that $1 of direct industry activity in Humboldt produces a total effect that is approximately 1.44 times greater than the initial spending. $16.5 million in direct industry activity supports an additional $7.3 million in indirect and induced activity or a total of $23.8 million in industry activity across Humboldt County.
While initial spending and direct output (industry activity) have a one to one ratio, direct output will likely be slightly lower than the input value because some of the initial spending “leaks” out of the Humboldt County region. Direct labor income and value added effects represent the labor income dollars or the total value added per $1,000,000 of production in the industry. For Employment, the direct effect represents the number of jobs per $1,000,000 of production in the Industry.