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Jobs Multipliers

A jobs multiplier indicates how important an industry is in regional job creation. A jobs multiplier of 3, for example, would mean that for every job created by that industry, 2 other jobs would be created in other industries (for a total of 3 jobs).

Jobs multipliers are easily misinterpreted–jobs multipliers of 17 or higher are sometimes seen–but a high jobs multiplier for a set of one or more industries in an added-jobs scenario does not necessarily mean that attracting businesses in those industries to the region is the best of most viable option for regional economic growth.

Jobs multipliers are primarily tied to the type of industries in the scenario–industries with a high sales/labor ratio typically have a high jobs multiplier, and vice versa. For example, a nuclear power plant might have only 20 workers, but “behind” each of those workers there are millions of dollars of equipment costs and millions of dollars of electricity being generated. Thus, if we bring 20 more nuclear power jobs in to the region, it would involve a huge amount of investment flooding into the region (to build another nuclear power plant or double the size of the current one) and millions of dollars in new sales and profits.

Some of that money would go to the employees’ high salaries, some would go to local construction companies, real estate, janitorial services, etc. The overall jobs multiplier would be impressive–each new job in nuclear power might support 14 other jobs scattered throughout the rest of the economy (i.e. a jobs multiplier of 15). However, the effort it takes to attract 20 jobs in nuclear power (with all the necessary infrastructure) is substantially more than to attract 20 jobs in an industry with a lower jobs multiplier.

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