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TECHNICAL REPORT UCED 2013/14-10 ECONOMIC STRUCTURE IN HUMBOLDT COUNTY: A SOCIO-ECONOMIC and INPUT-OUTPUT ANALYSIS 1 Economic Structure in Humboldt County: A Socio-Economic and Input-Output Analysis Report Prepared by: Thomas R. Harris Jeffrey Stroup Florina Salaghe and Malieka Landis Thomas R. Harris is a Professor in the Department of Economics and Director of the University Center for Economic Development at the University of Nevada, Reno. Jeffrey Stroup is a Graduate Research Assistant in the Department of Economics at the University of Nevada, Reno. Florina Stroup is a Graduate Research Assistant in the Department of Economics at the University of Nevada, Reno. Malieka Landis is a Research Associate in the University Center for Economic Development at the University of Nevada, Reno. University Center for Economic Development Department of Economics University of Nevada, Reno Reno, Nevada (775) 784-1681 June 2014 The University of Nevada, Reno is an equal opportunity, affirmative action employer and does not discriminate on the basis of race, color, religion, sex, age, creed, national origin, veteran status, physical or mental disability or sexual orientation in any program or activity it operates. The University of Nevada employs only United States citizens and aliens lawfully authorized to work in the United States. 2 This publication, “Economic Structure in Humboldt County: A SocioEconomic and Input-Output Analysis” was published by the University of Nevada Economic Development Center. Funds for the publication were provided by the Humboldt County Commissioners and the United States Department of Commerce Economic Development Administration under University Centers Program contract #07-6606883-01. This publication's statements, findings, conclusions, recommendations, and/or data represent solely the findings and views of the author and do not necessarily represent the views of the Humboldt County Commissioners or the United States Department of Commerce, the Economic Development Administration, University of Nevada, or any reference sources used or quoted by this study. Reference to research projects, programs, books, magazines, or newspaper articles does not imply an endorsement or recommendation by the author unless otherwise stated. Correspondence regarding this document should be sent to: Thomas R. Harris, Director University Center for Economic Development University of Nevada, Reno Department of Economics Mail Stop 204 Reno, Nevada 89557 UCED University of Nevada, Reno College of Business Department of Economics University of Nevada Cooperative Extension 3 Introduction The University Center for Economic Development conducted a study of socioeconomic trends and developed an input-output model for Humboldt County. The results of this study can be used as background material for Humboldt County for economic development targeting and grants. The analysis in this publication provides an understanding of past and future socioeconomic trends at the county, state, and national level. The study also estimates the export-base of the county, provides an overview of the Humboldt County Input-Output model, uses hypothetical economic change to demonstrate how the input-output model can be used to estimate economic impacts, and, finally, suggests some areas that Humboldt County might consider as it works to increase the resilience of the county’s economy. Section I: Socio-Economic Trends for Humboldt County analyzes trends in the U.S., state and Humboldt County. Data from the U.S. Census, the State Demographer, and U.S. Bureau of Economic Analysis for the state of Nevada are used. Section II: Leading-Slipping-Gaining-Lagging Analysis provides a versatile way to compare, portray and classify the patterns of total economic growth across all of Nevada’s seventeen counties. Data from the Regional Economic Analysis Project is used. Section III: Employment Analysis for Humboldt County examines the trends in employment in Humboldt County and identifies export-base sectoral employment in the county. Section IV: Input-Output Model and Analysis for Humboldt County provides an overview of the Humboldt County input-output model and example uses of the more to determine export-dependent economic sectors and hypothetical changes in the local economy. Section V: Summary provides a review of the paper with additional economic development and diversification strategies are suggested. Additional in-depth county-level socioeconomic data and trends can be found on a University Center-sponsored web site. The web address is: http://www.reaproject.org/ 4 Also, additional socioeconomic data and analyses are available upon request by the University Center for Economic Development. The socioeconomic data used in this study can be used as data input for economic development targeting and grants. 5 SECTION I: SOCIO-ECONOMIC TRENDS FOR HUMBOLDT COUNTY Humboldt County is located in northern Nevada. The county is bordered by Elko County to the east, Pershing County to the south, Lander County to the southeast, and Washoe County to the west. The community of Winnemucca is the county seat and population center for Humboldt County. According to the U.S. Census in 2010, the population for Humboldt County increased from 16,106 in 2000 to 16,528 in 2010. During this timeframe the population rank in the state for Humboldt County remained as the ninth highest (Table 1). Also of interest is the growth of Nevada’s urban counties (Clark, Carson City and Washoe Counties), which grew from 1,767,708 in 2000 to 2,424,950 in 2010. The urban share of Nevada’s total population increased from 88.46% in 2000 to 89.79% in 2010. The rural counties of Nevada have also realized a population increase from 230,549 in 2000 to 272,601 in 2010; however the rural share decreased from 11.54% in 2000 to 10.09% in 2010. Former professor Gary Smith of Washington State University notes in the Nevada Regional Economic Analysis Project (NV-REAP) website (Smith, 2014): “Attracting and retaining people to live, work, raise a family, and retire underlies the economic growth of any region. Population growth is both a cause – and a consequence – of economic growth.” With this basic understanding, a comparative trend analysis of major economic indicators is presented below using data, graphs, and discussion from the NV-REAP website. 6 Table 1. County Population, Rank of Population, and Change in Population Rank, State of Nevada, 2000 to 2010. 2010 2000 Change in County Population Rank Population Rank Rank Clark 1,951,269 1 1,375,765 1 0 Washoe 421,407 2 339,486 2 0 Carson City 55,274 3 52,457 3 0 Lyon 51,980 4 34,501 6 -2 Elko 48,818 5 45,291 4 1 Douglas 46,997 6 41,259 5 1 Nye 43,946 7 32,485 7 0 Churchill 24,877 8 23,982 8 0 Humboldt 16,528 9 16,106 9 0 White Pine 10,030 10 9,181 10 0 Pershing 6,753 11 6,693 11 0 Lander 5,775 12 5,794 12 0 Lincoln 5,345 13 4,165 14 -1 Mineral 4,772 14 5,071 13 1 Storey 4,010 15 3,399 15 0 Eureka 1,987 16 1,651 16 0 Esmeralda 783 17 971 17 0 Urban1 2,424,950 1,767,708 2 Rural 272,601 230,549 TOTAL 2,700,551 1,998,257 Source: U.S. Census Bureau, Census 2000 Redistricting Data (Public Law 94-171) Summary File, Table PL1, and 2010 Census Redistricting Data (Public Law 94-171) Summary File, Table P1. 1 Urban counties of Nevada are Carson City, Clark, and Washoe Counties. 2 Rural counties are the remaining 14 of Nevada’s 17 counties. Comparative Trend Analysis, 1969-2012 Population Patterns of population growth and change reflect differences among regions to attract and retain people both as producers and consumers in their economy. Figure 1 shows Humboldt County's population growth compared with Nevada and the nation in a more long-term context. Growth indices express each region's population in 1969 as 100, and the populations in later years as a percentage of 1969. They allow for a 7 direct comparison of the differences in population growth between regions although they may differ vastly in size. Humboldt County's overall population growth of 164.2% over 1969-2012 trailed Nevada's increase of 474.8% but outpaced the national increase of 55.9%. Figure 1. Population Indices, Humboldt County, State of Nevada, and the United States, 1969 to 2012. 8 Figure 2. Annual Percentage Change in Humboldt County Population, 1970 to 2012. Figure 2 highlights the short-run pattern of Humboldt County’s population growth by tracking the year-to-year percentage change from 1970 to 2012. The average annual percentage change for the entire 42 years is also traced on Figure 2 to provide a benchmark for gauging periods of relatively high and relatively low growth against the long-term trend. Humboldt County's population grew on average at an annual rate of 2.35% over 19702012. Since 1999, Humboldt County’s annual population growth rate has been below the 40-year average except in 2003 and in 2012, when Humboldt County's population grew by 2.37%. Employment Employment numbers remain the most popular and frequently cited statistics used for tracking local area economic conditions and trends. The employment estimates measure the number of full- and part-time wage and salary employees, plus the number of proprietors of unincorporated businesses. People holding more than one job are counted in the employment estimates for each job they hold. This means employment estimates represent a job count, not a people count. Also, employment is by place-of-work, rather than by place-of-residence. Jobs 9 held by neighboring county residents who commute to Humboldt County to work are included in the employment count for Humboldt County. The cumulative growth indices displayed in Figure 3 are for comparing the long-term growth of Humboldt County's employment over 1969-2012 with Nevada and the nation. The indices express each region's employment in 1969 as 100, and the employment in subsequent years as a percentage of 1969. Although they differ in size, one can directly compare the long-term employment growth of Humboldt County with that of Nevada and the nation. Humboldt County's employment posted a 229% gain over 1969-2012. This outpaced the national increase of 97.2%; however, it trailed the growth of Nevada of 530.8%. Figure 3. Employment Indices (1969 = 100) for Humboldt County, State of Nevada, and the United States, 1969 to 2012 10 Figure 4. Annual Percentage Change in Humboldt County Employment, 1970 to 2012. Figure 4 highlights the short-run pattern of Humboldt County's employment growth by tracking the year-to-year percentage change over 1970-2012. The average annual percentage change for the entire 42-year period is also traced on this chart to provide a benchmark for gauging period of relative high—and relative low—growth against the long-term trend. Humboldt County's employment grew on average at an annual rate of 2.98% over 1970-2012. Jobs Ratio The job ratios shown in Figure 5 for Humboldt County, Nevada, and the nation not only portray a number of important trends, they also serve as a thumbnail guide to evaluating an economy's capacity to generate enough jobs fast enough to absorb the increasing number of workers attendant to a growing population. The job ratio is the number of full-time and part-time jobs by place of work, divided by population. Nationally, the job ratio rose from 0.45 to 0.57 between 1969 and 2012. Humboldt County's job ratio registered a similar national pattern increasing from 0.51 in 1969 to 0.63 in 2012. Underlying the rising job ratio over the past several decades have been the increases in the labor force participation rates, with the number and proportion of women 11 in the labor market playing a leading role. However after the “Great Recession”, labor force participation rates have fallen nationally. An assortment of other factors can contribute to regional differences in the job ratio. They include differences in the proportion of elderly and retirees who no longer work and participate in the labor force, differences in the number and proportion of part-time vs. full-time workers, differences in industry composition, and differences in age and sex distribution and degree of urbanization. Also, a disproportionate number of workers commuting to work outside the county tend to lower the local job ratio, while a net inflow of workers commuting to work inside the county tends to augment the local job ratio. Humboldt has experience greater fluctuations in job ratio than the U.S. or Nevada. Between 1997 and 2002, the decrease in employment (-25.3%) was greater than the decrease in population (-3.0%), causing the job ratio to decline substantially. A net outflow of Humboldt residents commuting to work outside the county could also be a contributing factor to the lower ratio. However, since 2008, Humboldt County’s job ratio is higher than the state and national ratios. 12 Figure 5. Job Ratios for Humboldt County, the State of Nevada, and the United States, 1969 to 2012. Jobs Ratio 0.740 0.690 0.640 Humboldt County 0.590 Nevada U.S. 0.540 0.490 0.440 1969 1975 1981 1987 1993 1999 2005 2011 Earnings Per Job Regions vary greatly in the make-up of their labor force, in their industry composition of employment, and their economic experience. Reviewing and examining recent development in average earnings per job locally with comparison to a secondary state and the nation is an important first step in understanding the economic forces at play in Humboldt County. Industry earnings are incomes received by people who are directly involved with producing goods and services. Earnings include (1) wage and salary disbursements, (2) other labor income such as employer contributions to private retirement and medical insurance programs, and (3) the net incomes of proprietors (i.e., the owners of unincorporated enterprises). Just like the employment data, earnings data are reported on a place-of-work basis. Average annual earnings per job are computed by dividing total industry earnings estimates by total fulltime and part-time job estimates. There is no adequate way to convert the job estimate to fulltime equivalents. Figure 6 traces Humboldt County's and Nevada's annual real average earnings per job for the period 1969-2012 in constant (2009) dollars. Constant dollar measurements 13 remove the effects of inflation. This allows for comparison of changes in the real purchasing power of average earnings per job over time. During this period, Humboldt County's real average earnings per job rose from $30,270 in 1969 to $54,857 in 2012 (an increase of 81.2%). In comparison, Nevada's real average earnings per job increased from $36,976 in 1969 to $45,404 in 2012 (an increase of 22.8%). Since 2010, Humboldt County’s earnings per job have been higher than the national average. In 2012, earnings per job in Humboldt County were $58,153 while the Nevada and national figures were $48,132 and $54,681, respectively. Figure 6. Average Earnings Per Job (2009 Dollars) Humboldt County and the State of Nevada 1969 to 2012. 14 Figure 7 tracks the changes in real average earnings per job in Humboldt County, relative to the state and the nation, indexed to the initial year of 1969. Humboldt County’s growth of 81.2% in real average earnings per job over the 42 years surpassed the state at 22.8% and that of the nation at 54.3%. Figure 7. Average Earnings Per Job Indices (1969 = 100): Humboldt County, State of Nevada and the United States, 1969 to 2012. Figure 8 highlights the short-run pattern of growth in Humboldt County's real average earnings per job by tracking its percentage change year-to-year since 1969. The overall average annual percentage change for the 40-year period is plotted to serve as a reference for identifying periods of relative high--and relative low--growth against the long-term trend. 15 Humboldt County's real average earnings per job grew on average at an annual rate of 1.55% over 1969-2012. In 2012, Humboldt County’s real average Earnings per Job declined by -2.01%. Figure 8. Humboldt County Average Earnings per Job: Annual Percentage Change, 1970 to 2012. Per Capita Income Per capita income is one of the most widely used indicators for gauging the economic performance and changing fortunes of local economies. It is used as a yardstick to assess the economic well-being of a region’s residents and the quality of consumer markers. It serves as a barometer for calibrating the economic performance of a county over time and to judge differences in relative economic prosperity between regions. Personal income is the sum of earnings, capital returns (dividends, interest, and net rent), and transfer payments. Examples of transfer payments are Social Security payments, Medicare payments, unemployment insurance payments and veterans' pensions. Personal income is measured before the deduction of personal income taxes and other personal 16 taxes. Per capita income is the total personal income of an area divided by its resident population as of July 1. Per capita income also grew in Humboldt County from $18,265 in 1969 in constant (2009) dollars to $ 43,100 in 2012. Constant dollar measurements remove the effects of inflation. This allows for comparison of changes in the real purchasing power of average earnings per job over time. Figure 9 demonstrates the per capita income (expressed in 2009 dollars) of Humboldt County and the state. Humboldt County's real per capita personal income rose from $18,265 in 1969 to $43,100 in 2012, for a net gain of $24,836, or 136.0%. In comparison, Nevada's real per capita personal income advanced from $21,254 in 1969 to $36,055 in 2012, for a net advance of $14,801, or 69.6%. Since 2009, Humboldt County’s real per capita income has been higher than the state’s value. Figure 9. Per Capita Income Levels (2009 Dollars) for Humboldt County and State of Nevada from 1969 to 2012. The long-term growth of Humboldt County's real per capita income is compared with that of Nevada and the nation in Figure 10. Cumulative growth indices express each region's real per capita income as 100 for the base year 1969, and the per capita income of subsequent years as a percentage of 1969. These indices allow a direct comparison of the differences in cumulative growth in per capita income for Humboldt County, Nevada, and the nation. 17 From figure 10, Humboldt County's real per capita income climbed 136.0% over 19692012, surpassing the gain by Nevada of 69.6% and outpacing the national increase of 129.2%. Figure 10. Per Capita Income Indices (1969 = 100) for Humboldt County, State of Nevada, and the United States, 1969 to 2012. Figure 11 highlights the short-run pattern of growth in Humboldt County's real per capita income by tracking its percentage change year-to-year since 1969. The overall average annual percentage change for the 40-year period is plotted to serve as a reference for identifying periods of relative high—and relative low—growth against the long-term trend. 18 Figure 11. Humboldt County Per Capita Income: Annual Percentage Change, 1970 to 2012 Humboldt County's real per capita income grew on average at an annual rate of 2.13% over 1970-2012. In 2012, Humboldt County's real per capita personal income grew by 0.48%, dropping below the 42 year average. Comparison between Earnings Per Job and Per Capita Income Figure 12 provides a comparison of average earnings per job and per capita income in Humboldt County. Average earnings per job have continuously been higher that than per capita income. 19 Figure 12. Earnings Per Job and Per Capita Income, Humboldt County, 1969 to 2012. Earnings Per Job and Real Per Capita Income 60000 50000 40000 Earnings per Job 30000 Real Per Capita Income 20000 10000 0 1969 1975 1981 1987 1993 1999 2005 2011 There are several factors that contribute to the differences between the two indicators: Earnings per job measures the average amount earned at the place of work in Humboldt County, while per capita income measures the average amount of income of area residents, no matter where they earned their income. A large number of workers living in other counties commuting to Humboldt for work can increase earnings per job relative to per capita income. Per capita income is based on the total population, not the number of wage earners or income recipients. The presence of large institutional populations—such as residents attending a local college or the residents of a local prison or state mental institution— can significantly lower the per capita income estimates of an area. Likewise, a larger number of children in the population will dilute per capita income. “Income” includes other sources of income besides wages and salaries, such as rents or transfer payments. Thus a larger level of transfer payments due to a high population of senior citizens can increase per capita income relative to earnings per job. 20 The next section explores the different sources of personal income in Humboldt County and compares them to Nevada and the U.S. Composition of Personal Income In 2012, Humboldt County residents received approximately $778.9 million in personal income, which includes net earnings of Humboldt residents, non-earned income, and transfer payments. Total place-of-work earnings in Humboldt, which are comprised of wages and salaries, other labor income, and proprietor’s income, were approximately $627.9 million. This number is adjusted for social security contributions and commuting adjustments to derive net earnings of Humboldt County residents. Social security contributions are subtracted from total earnings in order to better measure income available to Humboldt County residents before income taxes (a concept called personal income by economists). Approximately $55.4 million of contributions to social insurance programs such as Social Security, Medicare, unemployment, etc. were paid by residents of Humboldt County. A net residence/commuting adjustment are also made to total earnings. Some people commute to the county to work and take their paycheck back to their county of residence. Likewise, some Humboldt County residents work outside the county and bring income back to Humboldt. Humboldt County residents who work outside the county earn approximately $7.8 million more in income than non-residents who work in Humboldt County. These out-of-county incomes are an injection to the Humboldt economy. The $7.8 million is added to the total placeof-work earnings in Humboldt County to derive net earnings of Humboldt County residents. Total net earnings of Humboldt residents were approximately $580.3 million. Approximately $110.1 million of personal income was in the form of unearned income from dividends, interest and rents. An additional $88.6 million came from transfer payments such as social security, food stamps, unemployment payments, and veteran’s benefits. Total personal income is divided by population to yield per capita income of $45,690. These income figures are shown in Table 2. 21 Table 2. Personal Income of Humboldt County Residents, 2012. Income Category Wages and Salaries Other Labor Income Proprietor’s Income Total Earnings in Humboldt County (millions of $) $439.2 $115.4 $73.3 (millions of $) $627.9 Less Personal Social Security Contributions Plus Residence/Commuting Adjustment Net Earnings of Humboldt County Residents $55.4 $7.8 Dividends, Interest and Rents Transfer Payment Total Personal Income, Humboldt County Residents $110.1 $88.6 $580.3 $778.9 $45,690 Per Capita Personal Income (dollars) Source: U.S. Department of Commerce. “Regional Economic Information System.” Bureau of Economic Analysis: Washington, D.C., 2014. Table 3 gives the percentage breakdown of Humboldt County’s income by source and presents similar data for the state and nation. Net earnings by Humboldt County residents are approximately 74.5% of total personal income compared to 70.2%, and 71.5% for the state and nation, respectively. Dividends, interest and rents, and transfer payments in Humboldt County account for a smaller percentage of total personal income than in the state or nation. Dividends, interest and rents in Humboldt County are a smaller share (14.1%) than in the state (20.8%) and the nation (18.2%). Transfer payments in Humboldt County (11.4%) are a slightly smaller share than the state (16.2%) and the nation (17.2%). The last line of Table 3 shows that Humboldt County’s per capita income is higher than the nation’s and the state’s. At $45,690, Humboldt County’s 2012 income per capita was approximately 19.5% more than the state’s $38,221 and approximately 4.4% more than the nation’s average of $43,735. 22 Table 3. Comparison of Personal Income Sources, Humboldt County, State of Nevada and the United States, 2012. Personal Income Source Humboldt County Nevada U.S. (%) (%) (%) Wages and Salaries 56.4% 50.3% 50.4% Other Labor Income 14.8% 12.7% 12.2% Proprietor’s Income 9.4% 7.2% 8.9% Less Personal Social Insurance Contributions 7.1% 6.8% 6.9% Plus Residence/Commuting Adjustments 1.0% -0.3% 0.0% Net Earnings of Residents 74.5% 70.2% 71.5% Dividends, Interest and Rents 14.1% 20.8% 18.2% Transfer Payments 11.4% 16.2% 17.2% Total 100.0% 100.0% 100.0% Per Capita Personal Income $45,690 $38,221 $43,735 Source: U.S. Department of Commerce, “Regional Economic Information System.” Bureau of Economic Analysis, Washington, D.C., 2014. Humboldt County income can be summarized as follows: Per capita income for Humboldt County in 2012 was $45,690 which led the state’s and nation’s averages. Total 2012 place-of-work earnings for Humboldt County were $627.9 million. Place-ofwork earnings are adjusted by subtracting personal social security contributions of $55.4 million, and adding the net residence/commuting adjustment of $7.8 million to derive resident earnings for Humboldt County of $580.3 million. The net resident/commuting adjustment means $7.8 million more was earned by Humboldt residents who work outside the county than non-county residents who work inside Humboldt. These out-ofcounty incomes are an injection to the Humboldt County economy. Proportionate share of total personal income from dividends, interest and rents is 14.1% in Humboldt County, which is lower than the state and national values. Proportionate share of total personal income from transfer payments is 11.4% in Humboldt County, which is lower than the state and national values. This might mean a lower retiree population base for Humboldt County. 23 SECTION II: LEADING-SLIPPING-GAINING-LAGGING ANALYSIS (LSGL): ASSESSING ECONOMIC GROWTH OF HUMBOLDT COUNTY LSGL analysis is a handy and versatile way to compare, portray and classify the patterns of total economic growth across all of Nevada's 17 counties. LSGL is used to compare the total population, employment, per person capita income, total personal income, and total industry revenue growth rates of Nevada's 17 counties over the past year (2012) against the backdrop of their growth over the past decade (2003 to 2012). In so doing we classify their growth and performance into 4 broad categories: Leading, Slipping, Gaining and Lagging: Leading counties...are counties whose average annual growth rate surpassed the statewide average both long-term and near-term. Slipping counties...are counties whose long-term average annual growth rate exceeded the statewide average, but whose near-term growth has "slipped" by falling below the states average. Gaining counties...are counties whose long-term average annual growth rate fell below the statewide average, but whose near-term growth has "gained" by registering above the average statewide. Lagging counties...are counties whose average annual growth rate fell under the statewide average both long-term and near-term. 24 Population Growth Humboldt County is classified among those Nevada counties whose population growth was Gaining in 2012 (Figure 13). Figure 13. Population Growth by County; County vs Statewide Average: 2003-2012 and 2012 Figure 14 displays the 17 counties of Nevada as dots on a scatter gram, with the vertical axis representing the average annual population growth rate over the past decade (2003 to 2012), and the horizontal axis representing the population growth rate for the near-term (2012). Figure 14 sets apart those counties whose long-term population growth exceeded the statewide average of 2.42% by portraying them in the top two quadrants demarcated at 2.42% on the vertical axis. Counties whose long-term average annual population growth rate trailed the statewide average (2.42%) are distributed in the bottom two quadrants. In all, 2 counties surpassed the statewide average during 2003 to 2012, while 15 counties fell below. Similarly, the two quadrants on the right of Figure 14 present the positions of the 7 counties whose most recent (2012) population growth rate exceeded the statewide average 25 (1.43%).The two quadrants on the left feature those 10 counties whose population growth over 2012 trailed the statewide average. Accordingly, each quadrant portrays the performance of all 17 counties corresponding with their long-term (2003 to 2012) and near-term (2012) performance relative to their respective statewide averages of 2.42% from 2003 to 2012 and 1.43% in 2012: Humboldt County's population growth rate of 1.45% trailed the statewide overall average of 2.42% from 2003-2012, while its 2.37% growth rate exceeded Nevada's statewide average of 1.43% in 2012. Accordingly, Humboldt County is classified as "Gaining." These counties trailed the statewide average annual population growth in the long-term (2003-2012 = 2.42%), but outpaced the statewide average in the near-term (2012 = 1.43%). Humboldt County is among 6 of 17 Nevada counties whose population growth was classified as Gaining in 2012. In 2012, it ranked 3rd out of the 17, while from 2003 to 2012 it ranked 10th. Figure 14. Scatter Gram Population Growth. 26 Employment Growth Humboldt County is classified among those Nevada counties whose employment growth was Leading in 2012 (Figure 15). Figure 15. Employment Growth by County; County vs Statewide Average: 2003-2012 and 2012. Figure 16 displays the 17 counties of Nevada as dots on a scatter gram, with the vertical axis representing the average annual total employment growth rate from 2003 to 2012, and the horizontal axis representing the total employment growth rate for the near-term (2012). Figure 16 sets apart those counties whose long-term total employment growth exceeded the statewide average of 1.76%, by portraying them in the top two quadrants demarcated at 1.76% on the vertical axis. Counties whose long-term average annual total employment growth rate trailed the statewide average (1.76%) are distributed in the bottom two quadrants. In all, 10 counties surpassed the statewide average over 2003-2012, while 7 counties fell below. Similarly, the two quadrants on the right of Figure 4 present the positions of the 8 counties whose most recent (2012) employment growth rate exceeded the statewide average 27 (1.90%). The two quadrants on the left feature the 9 counties whose employment growth in 2012 trailed the statewide average. Accordingly, each quadrant portrays the performance of all 17 counties corresponding with their long-term (2003-2012) and near-term (2012) performance relative to their respective statewide averages of 1.76% over 2003-2012 and 1.90% over 2012. Humboldt County's total employment growth rate of 2.89% exceeded the statewide overall average of 1.76%from 2003-2012, while its 4.30% growth rate exceeded Nevada's statewide average of 1.90% in 2012. Accordingly, Humboldt County is classified as "Leading" in that Humboldt surpassed Nevada's average annual employment growth both long-term (2003-2012 = 1.71%) as well as near-term (2012 = 0.99%) Humboldt County is among 7 of 17 (41%) Nevada counties whose total employment growth was classified as Leading in 2012. In 2012, it ranked 6th out of the 17, while from 2003 to 2012 it ranked 7th. Figure 16. Scatter Gram Employment Growth. 28 Real Per Capita Income Growth Humboldt County is classified among those Nevada counties whose real per capita income growth was Leading in 2012 (Figure 17). Figure 17. Real Per Capita Income Growth by County; County vs Statewide Average: 2003-2012 and 2012. Figure 18 displays the 17 counties of Nevada as dots on a scatter gram, with the vertical axis representing the average annual real per capita income growth rate over the long-term period (2003-2012), and the horizontal axis representing the real per capita income growth rate for the near-term (2012). Figure 18 sets apart those counties whose long-term real per capita income growth exceeded the statewide average of -0.22%, by portraying them in the top two quadrants demarcated at -0.22% on the vertical axis. Counties whose long-term average annual real per capita income growth rate trailed the statewide average (-0.22%) are distributed in the bottom two quadrants. In all, 14 counties surpassed the statewide average over 2003-2012, while 3 counties fell below. Similarly, the two quadrants on the right of Figure 18 present the positions of the 14 counties whose most recent (2012) real per capita income growth rate exceeded the statewide 29 average (0.35%). The two quadrants on the left feature those 9 counties whose real per capita income growth over 2012 trailed the statewide average. Accordingly, each quadrant portrays the performance of all 17 counties corresponding with their long-term (2003-2012) and near-term (2012) performance relative to their respective statewide averages of -0.22% over 2003-2012 and 0.35% over 2012. Humboldt County's real per capita income growth rate of 3.98% surpassed the statewide overall average of -0.22% over 2003-2012, and its 0.48% growth rate also exceeded Nevada's statewide average of 0.35% over 2012. Accordingly, Humboldt County is classified as "Leading" in that its real per capita income growth recorded above the Nevada average in 2012 and its longer-term average also posted above that of the average statewide over 2003-2012. Humboldt County is among 8 of 17 (47%) Nevada counties whose real per capita income growth was classified as Leading in 2012. In 2012, it ranked 8th out of the 17, while from 2003 to 2012 it ranked 2nd. Figure 18. Scatter Gram Real Per Capita Income Growth. 30 Real Personal Income Growth Humboldt County is classified among those Nevada counties whose real personal income growth was Leading in 2012 (Figure 19). Figure 19. Real Total Personal Income Growth by County; County vs Statewide Average: 2003-2012 and 2012. Figure 20 displays the 17 counties of Nevada as dots on a scatter gram, with the vertical axis representing the average annual real total personal income growth rate over the long-term period (2003-2012), and the horizontal axis representing the real total personal income growth rate for the near-term (2012). Figure 20 sets apart those counties whose long-term real total personal income growth exceeded the statewide average of 2.23%, by portraying them in the top two quadrants demarcated at 2.23% on the vertical axis. County whose long-term average annual real total personal income growth rate trailed the statewide average (2.23%) are distributed in the bottom two quadrants. In all, 10 counties surpassed the statewide average over 2003-2012, while 7 counties fell below. Similarly, the two quadrants on the right of this figure present the positions of the 7 counties whose most recent (2012) real total personal income growth rate exceeded the statewide 31 average (1.79%). The two quadrants on the left feature those 10 counties whose real total personal income growth over 2012 trailed the statewide average. Accordingly, each quadrant portrays the performance of all 17 counties corresponding with their long-term (2003-2012) and near-term (2012) performance relative to their respective statewide averages of 2.23% over 2003-2012 and 1.79% over 2012. Humboldt County's real total personal income growth rate of 5.47% surpassed the statewide overall average of 2.23% over 2003-2012, and its 2.86% growth rate also exceeded Nevada's statewide average of 1.79%over 2012. Accordingly, Humboldt County is classified as "Leading" in that its real total personal income growth recorded above the Nevada average in 2012 and its longer-term average also posted above that of the average statewide over 2003-2012. Humboldt County is among 7 of 17 (41%) Nevada counties whose real total personal income growth was classified as Leading in 2012. In 2012, it ranked 5th out of the 17, while from 2003 to 2012 it ranked 2nd. Figure 20. Scatter Gram Real Total Personal Income Growth. 32 Real Total Industry Earnings Growth Humboldt County is classified among those Nevada counties whose real total industry earnings growth was Leading in 2012 (Figure 21). Figure 21. Real Total Industry Earnings Growth by County; County vs Statewide Average: 2003-2012 and 2012. Figure 22 displays the 17 counties of Nevada as dots on a scatter gram, with the vertical axis representing the average annual real total industry earnings growth rate over the long-term period (2003-2012), and the horizontal axis representing the real total industry earnings growth rate for the near-term (2012) Figure 22 apart those counties whose long-term real total industry earnings growth exceeded the statewide average of 1.32%, by portraying them in the top two quadrants demarcated at 1.32% on the vertical axis. County whose long-term average annual real total industry earnings growth rate trailed the statewide average (1.32%) are distributed in the bottom two quadrants. In all, 12 counties surpassed the statewide average over 2003-2012, while 5 counties fell below. Similarly, the two quadrants on the right of Figure 22 present the positions of the 13 counties whose most recent (2012) real total industry earnings growth rate exceeded the statewide average (1.70%). The two quadrants on the left feature those 7 counties whose real total industry earnings growth over 2012 trailed the statewide average. 33 Accordingly, each quadrant portrays the performance of all 17 counties corresponding with their long-term (2003-2012) and near-term (2012) performance relative to their respective statewide averages of 1.32% over 2003-2012 and 1.70% over 2012. Humboldt County's real total industry earnings growth rate of 6.44% surpassed the statewide overall average of 1.32% over 2003-2012, and its 2.20% growth rate also exceeded Nevada's statewide average of 1.70%over 2012. Accordingly, Humboldt County is classified as "Leading" in that its real total industry earnings growth recorded above the Nevada average in 2012 and its longer-term average also posted above that of the average statewide over 2003-2012. Humboldt County is among 10 of 17 (59%) Nevada counties whose real total industry earnings growth was classified as Leading in 2012. In 2012, it ranked 9th out of the 17, while from 2003 to 2012 it ranked 3rd. Figure 22. Scatter Gram Real Total Industry Earnings Growth. 34 Table 4 shows the status for all 17 Nevada counties for 2012 as compared to the 20032012 timeframe. Table 4. Status for All Counties in Nevada 2012 Real Per Real Total Capita Personal Real Total Population Employment Income Income Industry Growth Growth Growth Growth Earnings Lagging Lagging Leading Lagging Lagging Carson City Lagging Slipping Leading Leading Leading Churchill Leading Leading Lagging Leading Leading Clark Lagging Lagging Leading Lagging Lagging Douglas Gaining Leading Slipping Leading Leading Elko Gaining Leading Slipping Lagging Leading Esmeralda Lagging Leading Slipping Slipping Leading Eureka Gaining Leading Leading Leading Leading Humboldt Gaining Leading Leading Leading Leading Lander Gaining Slipping Slipping Lagging Lagging Lincoln Slipping Lagging Leading Slipping Slipping Lyon Lagging Lagging Slipping Lagging Lagging Mineral Lagging Lagging Leading Slipping Slipping Nye Gaining Gaining Slipping Leading Leading Pershing Lagging Leading Lagging Lagging Leading Storey Lagging Lagging Lagging Lagging Lagging Washoe Lagging Slipping Leading Leading Leading White Pine Source: Center for Economic Development. "Regional Economic Analysis Project." University of Nevada, Reno, 2014. 35 SECTION III: EMPLOYMENT ANALYSIS FOR HUMBOLDT COUNTY Analysis of employment data is essential in explaining the structure of the Humboldt County economy and identifying key industries of the county. Employment data can be used to help determine which economic sectors are growing and which are declining, how competitive these industries are, and the importance of an industry to Humboldt County’s economy. Humboldt County Employment Analysis Comparing employment changes on a sectoral basis between Humboldt County and the nation can indicate how the county’s employment has changed over the past ten years and where its changes may differ from the nation. As a percentage of total employment Wage and Salary employment in Humboldt County increased by 32.5% during the last ten years and its proportionate share of total Humboldt County employment increased from 78.12% in 2003 to 81.15% in 2012. Nationally Wage and Salary employment increased 2.5% during the last ten years but realized a decrease in proportionate share of total employment decreasing from 81.96% in 2003 to 77.63% in 2012. For Humboldt County, Non-Farm Proprietorship increased by 12.00% but Non-Farm Proprietorship’s proportionate share of total Humboldt County employment declined from 19.36% in 2003 to 17.00% in 2012. Nationally Non-Farm Proprietorship increased by 36.9% from 2003 to 2012 and its proportionate share of total national employment increased from 16.87% in 2003 to 21.34% in 2012. As a percentage of total employment in the nation, the Mining Sector has grown from 0.48% in 2003 to 0.74% in 2012. In contrast, the Mining Sector as a percentage of total employment in Humboldt County has grown from 10.95% in 2003 to 20.39% in 2012 which translates into a 137.1% increase in Humboldt County Mining Sector employment from 2003 to 2012. During the same time period, the proportion of Humboldt County jobs in the Accommodations and Food Service Sector decreased from 13.64% in 2003 to 9.97% in 2012. However for the nation, the proportionate share of total national jobs in the Accommodations and Food Service Sector increased slightly from 6.72% in 2003 to 7.13% in 2012. The decrease in proportionate share of total Humboldt County employment in the Accommodations and Food service Sector in Humboldt County may reflect the expansion in legalized gaming in other states of the nation and Native American Reservations. Also employment in the Accommodations and Food Service Sector in Humboldt County declined by 6.8% from 2003 to 2012. More moderate 36 proportionate declines in the Humboldt County economy were realized by the Manufacturing Sector, the Retail Trade Sector and the Government Sectors. Table 5. Sectoral Employment and Employment Shares for Humboldt County and the United States, 2003 and 2012. SECTOR Employment by place of work (number of jobs) Total employment By type Wage and salary employment Proprietors employment Farm proprietors employment Nonfarm proprietors employment 2/ By industry Farm employment Nonfarm employment Private nonfarm employment Mining Utilities Construction Manufacturing Wholesale trade Retail trade Transportation and warehousing Information Finance and insurance Real estate and rental and leasing Administrative and waste management services Arts, entertainment, and recreation Accommodation and food services Other services, except public administration Aggregated Sectors Government and government enterprises Federal, civilian Military State and local State government Local government 2003 HUMBOLDT COUNTY 2012 (%) (%) 2003 UNITED STATE 2012 (%) (%) 100.00% 166,026,500 100.00% 179,613,300 100.00% 8,467 100.00% 10,797 6,614 1,853 214 1,639 78.12% 21.88% 2.53% 19.36% 8,762 2,035 200 1,835 81.15% 18.85% 1.85% 17.00% 136,072,000 29,954,500 1,953,000 28,001,500 81.96% 18.04% 1.18% 16.87% 139,425,000 40,188,300 1,865,000 38,323,300 77.63% 22.37% 1.04% 21.34% 477 7,990 6,620 927 153 400 342 194 1,179 347 93 119 238 279 159 1,155 429 606 1,370 201 29 1,140 220 920 5.63% 94.37% 78.19% 10.95% 1.81% 4.72% 4.04% 2.29% 13.92% 4.10% 1.10% 1.41% 2.81% 3.30% 1.88% 13.64% 5.07% 7.16% 16.18% 2.37% 0.34% 13.46% 2.60% 10.87% 440 10,357 8,846 2,201 136 617 307 200 1,223 397 97 157 249 562 182 1,076 470 972 1,511 162 46 1,303 243 1,060 4.08% 95.92% 81.93% 20.39% 1.26% 5.71% 2.84% 1.85% 11.33% 3.68% 0.90% 1.45% 2.31% 5.21% 1.69% 9.97% 4.35% 9.00% 13.99% 1.50% 0.43% 12.07% 2.25% 9.82% 2,838,000 163,188,500 139,498,500 800,200 583,200 9,920,300 14,982,000 6,066,500 18,233,100 5,316,500 3,590,400 7,954,500 6,010,500 9,757,400 3,289,800 11,157,700 9,550,400 32,286,000 23,690,000 2,823,000 2,110,000 18,757,000 5,070,000 13,687,000 1.71% 98.29% 84.02% 0.48% 0.35% 5.98% 9.02% 3.65% 10.98% 3.20% 2.16% 4.79% 3.62% 5.88% 1.98% 6.72% 5.75% 19.45% 14.27% 1.70% 1.27% 11.30% 3.05% 8.24% 2,616,000 176,997,300 152,896,300 1,328,700 575,200 8,830,900 12,596,500 6,300,100 18,184,800 5,838,400 3,257,900 9,985,200 8,243,200 11,087,500 3,997,600 12,798,500 10,544,200 39,327,600 24,101,000 2,875,000 2,055,000 19,171,000 5,246,000 13,925,000 1.46% 98.54% 85.13% 0.74% 0.32% 4.92% 7.01% 3.51% 10.12% 3.25% 1.81% 5.56% 4.59% 6.17% 2.23% 7.13% 5.87% 21.90% 13.42% 1.60% 1.14% 10.67% 2.92% 7.75% Aggregate Sector is sectors that were unreported because of disclosure problems. The Forestry, Fishing, and Related Activities Sector; the Professional, Scientific, and Technical Services Sector; the Management of Companies and Enterprises Sector; the Educational Services Sector; and the Health Care and Social Assistance Sector make up this sector. Economic Base Analysis for Humboldt County The economic base of a region refers to the relative size of its industries. A region or county is said to have a diversified economic base if sectoral employment or value of output is somewhat equally dispersed among county sectors. Conversely, if only a few industries dominate a local economy, the economy is said to have a concentrated economic base. A technique used to measure economic base and changes in economic base is location quotient analysis. 37 Location Quotient Analysis The degree of concentration of Humboldt County’s economic sectors is determined by calculating location quotients (LQ) for individual economic sectors. Location quotients indicate the economic importance of each regional industry relative to the same economic sector at the national level. The primary focus of location quotients is to identify the economic sectors that are either more important or less important locally, than nationally. The more economic sectors in a county economy that have higher location quotients, the more diverse are the county’s economy. On the other hand, very low location quotients represent industries that are underdeveloped and may offer an opportunity for future development. A location quotient is calculated by dividing the local share of employment in a particular industry by the national share of employment in that same industry. Algebraically, local employment in the industry total local employment LQ = state or national employment in the industry total state or national employment Sectors with location quotients greater than 1.0 are sectors in which the county is specialized. When the location quotient for a given sector is greater than 1.0, the relative concentration of employment in that sector in Humboldt County is greater than in the national economy. Location quotients are used to determine a county’s degree of self-sufficiency in a particular sector: 1) if a location quotients for a sector of an economy is equal to one then the economy is self-sufficient in that particular sector, 2) if location quotient is less than one for a particular sector, goods and services are imported to satisfy local demand, 3) if location quotient for a sector of an economy is greater than one, then the region is an exporting sector. Also determining changes in sectoral location quotients through time yields information if the county is becoming more specialized in that sector through time. Also like the Stronger Economies Together (SET) program (Harris, et al., 2012), sectoral location quotients and their changes through time can classify economic sector specialization for a county economy. For this study, economic sectors will be identified as: STARS, MATURE, EMERGING, and TRANSFORMING. 38 A STAR sector is a sector whose location quotient in 2012 is greater than one with a positive percentage change in location quotient value from 2003 to 2012. STAR sectors are specialized compared to the nation and from 2003 to 2012 their sectoral location quotient value has been increasing. A MATURE sector is a sector whose location quotient in 2012 is greater than one and whose percentage change in location quotient value is negative or decreasing. MATURE sectors are still specialized compared to the nation but during the past ten years their sectoral location quotient value has been decreasing. An EMERGING sector is a sector whose location quotient value in 2012 is less than one but with a positive percentage change in location quotient value from 2003 to 2012. EMERGING economic sectors are less specialized compared to the nation and during the past ten years their specialization has been increasing. Some of the EMERGING sectors may become specialized in the future. A TRANFORMING economic sector is a sector whose location quotient in 2012 is less than one with a negative change in location quotient value from 2003 to 2012. These economic sectors are less specialized in Humboldt County and their location quotient value has decreased over the past ten years. The TRANFORMING economic sector is unlikely to become specialized in the future. Results of Location Quotient Analysis for Humboldt County As Weber and Holland (2002) state that location quotients can be used as an indicator of economic diversity; having several sectors with location quotient values greater than one indicate multiple specializations that are the key to economic diversity. Maki and Lichty (2000) also state that location quotients are (also) quite useful as rough approximations of the local economic base. When the location quotient value for a sector is greater than one, it may indicate that this sector is a basic economic sector, which exports beyond the county boundaries. From table 6, differences in Humboldt County’s economy and the nations can be observed. Humboldt County’s wage and salary employment increased from a location quotient value of 0.95 in 2003 to 1.05 in 2012. This indicates that Humboldt County’s wage and salary percentage share is somewhat similar to the nation. It also indicates that by employment type, wage and salary employment is a STAR economic sector with a location quotient value greater than one in 20012 and location quotient value increasing from 2003 to 2012. The change in wage and salary employment was accompanied by a decline in Humboldt County’s proprietor 39 employment which was higher in 2003 but declined in 2012. Farm Proprietor employment had a location quotient value in 2003 and 2012 greater than one but that specialization has declined from 2003 to 2012. As for Non-Farm Proprietorship, its location quotient has declined from 1.15 in 2003 to 0.85 in 2012. This location quotient decline could be a residual of the rapid expansion of gold mining operations in the county and the impact of being a “boom-bust” economy. From table 6, the leading export sector is the Mining Sector whose location quotient is quite large and has increased from 2003 to 2012. The Construction sector has also realized increased location quotient values with a location quotient value in 2012 above one. This would indicate impacts from the expansion of the local gold mining industry. The Agricultural sector is a basic sector for Humboldt County but its location quotient value has decreased from 2003 to 2012. This decrease could be due to the on-going drought and changes in public grazing activities. In addition, the Accommodations and Food service Sector is a basic sector for Humboldt County but whose location quotient value has been declining. The legalized casino gaming industries are within the Accommodations and Food Service Sector. This Nevada industry has been impacted by the expansion of legalized gaming in other states and Native American reservations. The Utilities Sector is impacted by the Valmy Plant and any changes in operation will impact the basic sector nature of the Utilities Sector for Humboldt County. While location quotients provide information of Humboldt County’s economic structure, location quotients are imperfect indicators of the economic base. As Cornelius et al. (2000) state that the economic base of a county or region is better captured with an input-output model, which directly estimates exports from each economic sector and, using multipliers for each economic sector, generates estimates of the dependence of a county or regional economy on exports from each sector. 40 Table 6. Humboldt County Location Quotient Values for 2003 and 2012 with Sector Classification. SECTOR Employment by place of work (number of jobs) Total employment By type Wage and salary employment Proprietors employment Farm proprietors employment Nonfarm proprietors employment 2/ By industry Farm employment Nonfarm employment Private nonfarm employment Mining Utilities Construction Manufacturing Wholesale trade Retail trade Transportation and warehousing Information Finance and insurance Real estate and rental and leasing Administrative and waste management services Arts, entertainment, and recreation Accommodation and food services Other services, except public administration Aggregated Sectors Government and government enterprises Federal, civilian Military State and local State government Local government Location Quotient Location Quotient Change in 2003 2012 Location Quotient Value Sector Classification 1.00 1.00 0.00% N.A. 0.95 1.21 2.15 1.15 1.05 0.84 1.78 0.80 9.69% -30.56% -16.97% -30.60% STAR TRANSFORMING MATURE TRANSFORMING 3.30 0.96 0.93 22.72 5.14 0.79 0.45 0.63 1.27 1.28 0.51 0.29 0.78 0.56 0.95 2.03 0.88 0.37 1.13 1.40 0.27 1.19 0.85 1.32 2.80 0.97 0.96 27.56 3.93 1.16 0.41 0.53 1.12 1.13 0.50 0.26 0.50 0.84 0.76 1.40 0.74 0.41 1.04 0.94 0.37 1.13 0.77 1.27 -15.10% 1.39% 3.43% 21.31% -23.54% 47.01% -9.42% -15.78% -11.76% -11.61% -2.48% -10.83% -35.28% 50.39% -20.08% -31.10% -15.81% 11.71% -8.03% -32.86% 38.17% -5.13% -9.44% -3.92% MATURE EMERGING EMERGING STAR MATURE STAR TRANSFORMING TRANSFORMING MATURE MATURE TRANSFORMING TRANSFORMING TRANSFORMING EMERGING TRANSFORMING MATURE TRANSFORMING EMERGING MATURE TRANSFORMING EMERGING MATURE TRANSFORMING MATURE Aggregate Sector is sectors that were unreported because of disclosure problems. The Forestry, Fishing, and Related Activities Sector; the Professional, Scientific, and Technical Services Sector; the Management of Companies and Enterprises Sector; the Educational Services Sector; and the Health Care and Social Assistance Sector make up this sector. 41 SECTION IV: INPUT-OUTPUT MODEL AND ANANLYSIS FOR HUMBOLDT COUNTY An economic model that provides a framework to derive economic impacts, economic linkages between economic sectors, and potential economic diversification possibilities is a county-wide input-output model. As Tiebout (1962) states that at the local level, thousands of decisions are made regularly by public officials and by businessmen. In the aggregate, these decisions have a great impact on economic growth and the quality of living standards of the American people. Yet such local decisions are usually based on much less detailed economic information than is available at the national level. A regular flow of sound economic information about each local economy and its economic base would contribute to the quality of decisions made at the local level by public officials and business leaders. Input-output analysis provides an effective way of organizing and using the detailed economic information, for which Tiebout was advocating (Sorte and Campbell, 2004). After the input-output model and tables are developed, an economic event can be introduced into the economy and a set of impacts projected. A previous input-output model for Humboldt County was developed and published in 1993 (Harris et al., 1993). This model is based on data that is over twenty years old; thus, the reliability of this model is questionable given the economic changes that have occurred in the nation, state of Nevada, and Humboldt County. Updating the Humboldt County input-output model would provide Humboldt County decision maker s with a model to more adequately address economic development, public land management, and other county-wide issues. Input-output analysis traces the economic linkages between local economic sectors and as such, can derive total economic impacts from changes in public lands management policies or economic development diversification plans in Humboldt County. With development of the microcomputer software system, IMPLAN, applications of input-output analysis have increased. IMPLAN was developed by the U.S. Forest Service and is a model that can be used to derive county-wide economic, income, and employment impacts (Olson and Lindall, 1999). However, the IMPLAN model uses secondary data procedures to create county level input-output models from a national model. These secondary procedures have been adopted because the time and money required to develop a primary survey-based model is too expensive. However, Schaffer and Chu (1969) and Round (1983) found that errors occurred with secondary data and that these secondary models should be evaluated. 42 IMPLAN can be used to develop an initial input-output model for Humboldt County. However, the initial model needs to be validated and, in some cases, modified to fit realities of the Humboldt County economy. Once the IMPLAN out-of-the-box model has been built, it was customized to provide a more accurate representation of the Humboldt County economy. As Holland et al. (1997) stated that before any attempt is made to use IMPLAN to identify development opportunities for a county, the IMPLAN model employed must accurately reflect the county economy. Following procedures suggested by Holland et al. (1997) and Sorte and Campbell (2004), the IMPLAN database was verified and validated. The sectoral employment was validated by comparing sectoral employment values from IMPLAN with the Nevada department of Employment, Training, and Rehabilitation data. From a previous study by (Anderson et al., 2012), the agricultural sector from IMPLAN has been found wanting for the Western Mountain States. For the Humboldt County study, University of Nevada Cooperative Extension budgets were used to verify, validate, and develop input-output vectors for the Range cattle Sector and the Alfalfa Hay sector. Also gold mine firms were interview as to linkages of electric power and the degree of export. In addition, selected firms in the hotel and casino industries were interviewed as to the percentage of sales that were exports or sales from out of county consumers. The information from such groundtruthing was incorporated into a spreadsheet and a verified and validated input-output model of Humboldt County was produced. Analysis of Humboldt County Economy Using the Input-Output Model Table 7 shows a depiction of Humboldt County economy. The original Humboldt County input-output model has 99 sectors but for this paper, the economic sectors are aggregated into eight (8) sectors for discussion. Humboldt County in 2011 was a $2,249.9 million economy in terms of value of output. Approximately 64.9% or $1,459.2 million of that output comes from value added (employee compensation, proprietor income, other property income, and indirect business taxes) that is added within the county. The remainder or $790.7 million is from intermediate goods and services that are purchased by each sector and used to produce the output. In measuring the local economy or estimating impacts using value of output, one must be aware that values of output estimates often include double counting. For example, when an alfalfa hay farmer grows and sells alfalfa hay, the sale of that alfalfa hay is added to the 43 Agricultural Sector; however, if a local rancher buys that alfalfa hay to produce cattle for market, the value of the alfalfa hay is once again added to output and if the cattle are slaughtered by a local meat processing plant, that cow is purchased by the Manufacturing Sector an is valued once again. Value added is a better measure because it includes only the net additions to the output that are provided by each production process. Employment is also a useful measure of economic activity and shows how the local economy changes through time or from an impact. Employment also has the added benefit that its annual values do not have to inflated or deflated through time in order to make time series comparisons. Table 7. Aggregated Humboldt County Sectoral Output, Employment, and Value Added, 2011. Sector Agriculture Mining Construction Manufacturing TIPU Trade Service Government TOTAL Sectoral Output* 88.791 1,104.914 113.140 107.251 168.210 118.052 425.370 124.131 2,249.859 Employment 547 2,016 781 280 436 1,366 3,592 1,478 10,497 Total Value Added 29.357 780.009 71.944 22.365 88.336 86.455 260.410 120.312 1,459.188 *Millions of Dollars Copyright MIG 2014 Analysis of Export-Base of Humboldt County As Maki and Lichty (2000) and Sorte and Campbell (2004) stated that central to the study of regional economies is a region’s economic base, commonly represented by its exports to markets outside the region. The term “exports” for this study is used to include any activities that bring dollars into the Humboldt County economy, which could be agricultural, and gold export sales, tourism expenditures, federal transfer payments, and dividends, interest and rent. As Weber (1995) points out that tourism expenditures, federal transfer payments, and dividends, interest, and rents are considered part of the export base. The Humboldt County input-output model can directly estimate exports from each industry, and, using the multipliers for each sector, generate estimates of the dependence of a regional economy on exports from each sector. A sector’s contribution to a regional economy is determined by the exogenous demand of that sector and the subsequent respending associated with meeting that demand. The contribution of that industry to the region’s employment is the 44 number of employees in all industries whose jobs are dependent—directly, indirectly (through interindustry linkages), and through household spending (induced effects)—on the exports of that industry (Cornelius et al. 2000; Waters, Weber, and Holland 1999). Specifically, the procedure followed to calculate Humboldt County’s export base was to individually remove each sector’s exports as a separate event within the IMPLAN I-O model and note the job impact as that event ripples throughout the economy (Waters, Weber, and Holland 1999; Sorte and Campbell, 2002). These impacts are summarized in a spreadsheet, which shows the jobs that are dependent on the exports from each sector or as Waters, Weber, and Holland (1999) and Sorte and Campbell (2002) put it as the “export-dependency index”. However, by just removing the exports from the industrial sectors, the resulting estimate of the number of jobs in the economy will be less than the total jobs in the economy. The key missing elements are federal and state transfer payments, dividends, interest, and rent payments to households. Using a Social Accounting Matrix (SAM) of IMPLAN and procedures suggested by Waters, Weber, and Holland (1999) and Sorte and Campbell (2002), the impacts of these federal transfers and dividends, interest, and rents can be estimated. In Humboldt County, these payments totaled $191.0 million. A table 8 show export dependency by sector and compares the sectoral employment with the export–base dependent employment for each sector. As noted above, the export-dependent jobs for each sector include all the jobs across all sectors that are dependent on the particular sector’s exported products. For example, the Mining Sector has 2,886 export-dependent jobs. Reviewing this export-dependency information, one can distinguish the significant basic or exporting sectors such as the Agricultural Sector, the Mining Sector, and the manufacturing sector. Economic sectors such as the Trade Sector and the Service Sector primarily provide services to the export sectors and whose jobs are primarily included as indirect effects in those sectors. However, these sectors increase the quality of life in a local economy and do have some export sales. One can also see that transfer payments and dividends, interest, and rents play a large role in Humboldt County which reflects the aging of the county and the nation as a whole. 45 Table 8. Humboldt County Sectoral and Export-Based Dependent Employment, 2011. SECTOR Agriculture Mining Construction Manufacturing T&PU Trade Service Government Household Payments TOTAL SECTORAL Jobs (%) 548 5.2% 2016 19.2% 781 7.4% 280 2.7% 436 4.2% 1366 13.0% 3592 34.2% 1478 14.1% 10497 100.0% EXPORT-DEPENDENT Jobs (%) 614 5.8% 2,886 27.5% 28 0.3% 338 3.2% 392 3.7% 629 6.0% 1,762 16.8% 64 0.6% 3,785 36.1% 10,497 100.0% Copyright MIG 2014 Example Use of Humboldt County Input-Output Model for Impact Analysis Input-output analysis can be used to analyze the local economy, identify potential clustering opportunities, and derive impacts from changes in the local economy. For this paper two hypothetical applications of the Humboldt County input-output model will be presented. The first hypothetical example will be a new manufacturing firm that will hire 25 employees. The second hypothetical application will be examination of possible development opportunities focusing on local populace spending their transfer payments and dividends, interests, and rents locally. Manufacturing Sector Hypothetical Expansion Humboldt County like most Northern Nevada rural counties still has a comparative advantage in agriculture and manufacturing. Development of value-added production can have a high multiplier, as locally produced goods and services are used to create final products rather than importing the intermediate or raw production materials. A hypothetical example would be the development of a manufacturing plant within the county. In this example, a plant is assumed built that creates 25 full- or part-time jobs. 46 Using the Humboldt County input-output model, the impacts of a positive economic event such as expansion of the local manufacturing sector can be estimated and the results shown throughout the affected sectors in Table 9 Table 9. Economic Impact Scenario of New Manufacturing Plant. Description Agriculture Mining Construction Manufacturing T&PU Trade Service Government TOTAL Direct 0.0 0.0 0.0 25.0 0.0 0.0 0.0 0.0 25.0 Indirect 0.3 0.8 0.4 0.0 1.2 0.9 3.2 0.2 7.0 Induced 0.0 0.0 0.0 0.0 0.1 1.3 2.3 0.1 3.8 Total 0.3 0.8 0.4 25.0 1.3 2.2 5.5 0.3 35.8 Copyright MIG 2014 In Table 9, one can see the employment impacts in Humboldt County from the 150 jobs from the new manufacturing industry. An estimated 3.2 jobs in the Service Sector would be required to supply service products to the plant. Also, a number of other sectors also would supply the plant or the other suppliers, for a total indirect effect of 7.0 indirect jobs. The households that receive income from the plant or the suppliers would spend those dollars throughout the county, and those induced effects would create an estimated 3.8 jobs. So the effects of the original 150 jobs would be multiplied (35.8/25)1.4 times. This type of expansion from within the county, or recruitment that builds on the other goods and services, know-how, and infrastructure that is already available within the county, can reinforce the Humboldt County economy with much less investment and disruption than attempting to recruit an entirely new type of industry. This is a simplified example with aggregated economic sectors. Some of the jobs at the plant, suppliers, and service businesses could be taken by commuters, which would reduce the net impacts to the county. If the plant were newly built or required a major renovation, there could be in addition significant one-time construction impacts. If other manufacturers begin viewing Humboldt County as a place where suppliers and the labor force are already prepared to support their operations, they may move to the county. Many different scenarios, positive and negative, may play out. 47 Example Hypothetical Strategy of Capturing Household Payments Another possible economic development initiative would be to focus on increasing the extent to which people in the county spend their transfer payments (e.g., Social Security), dividends, interest, and rent within the county. Figure 23 shows the personal income sources for people in Humboldt County, State of Nevada, and the U.S. in 2012. While Humboldt County derives 25.5 percent of its income from transfer payments, dividends, interest, and rent or what is sometimes designated as “passive income”, the State of Nevada and the nation derive 37.0 percent and 35.4 percent, respectively, of their total personal income from “passive income” sources. Figure 23. Major Components as a Percentage of Total Personal Income: Humboldt County, State of Nevada, and U.S., 2012. Table 10 shows the current estimated job impacts of spending from transfer payments, dividends, interest, and rents in Humboldt County. As the table shows, the spending of transfer payments, dividends, interest, and rent extensively impacts the Trade Sector and the Service Sector. A more disaggregated sector analysis will identify specific sectors that are impacted by “passive income” expenditures. 48 Table 10. Passive Income Impacts in Humboldt County, 2011. SECTOR Agriculture Mining Construction Manufacturing T&PU Trade Service Government TOTAL JOBS 1 1 3 0 18 145 286 11 466 Copyright MIG 2014 There are probably two reasons why Humboldt County is less economically dependent on transfer payments, dividends, interest, and rent than many rural counties—one favorable and one more of a concern: 1) Humboldt County has an expansive agricultural and mining industry so it is more dependent on those sectors and less dependent on transfer payments, dividends, interest, and rent, and 2) people from Humboldt County tend to do a great deal of purchasing outside the county, in the nearby Reno metro area. By spending time visiting with individuals or groups of retirees and people who own second homes in Humboldt County, it may be possible to identify what it would take for the retirees or “weekend residents” to make more of their purchases in Humboldt County. This possible opportunity may become more important if current trends continue. In 1969, only 21.9 percent of Humboldt County’s personal income was derived from transfer payments, dividends, interest, and rent (Smith, 2014), and that amount has more than increased to the 25.5 percent mentioned above. Also if there is a reduction in Mining Sector activities, “passive Income” sources will be a larger segment of the Humboldt County economy. The trend of “passive Income” increasing is likely to increase as the baby boomers retire at an increasing rate. 49 SECTION V: SUMMARY Living through the “Great Recession” and “boom-bust” economic cycles, counties have realized that economic resilience, or bending with economic shocks and then quickly bouncing back to a similar or new equilibrium, can be a useful concept for rural communities to study and pursue. A key factor determining a community’s success in building economic resilience can be how the community plans and prepares for economic changes. This needs to be a coordinated public and private effort that focuses on a number of factors, including how the community manages information. Humboldt County through its economic development authority has an effective community organization, which takes responsibility for maintaining community resources and processes which may significantly improve economic resilience. As Humboldt County considers economic development alternatives, information—both descriptive and predictive—that is unbiased, regularly monitored and analyzed, and presented in clear and concise ways will be essential to focus and evaluate the community’s economic planning efforts. Understandable, credible, and timely information also is very important to present convincing ideas or recommendations to decision makers at all levels of government. Developing information of this quality often requires a specific assignment of this responsibility for the community (with accompanying resources), some technical background by the people involved, computer software and hardware sufficient to gather and work with the data, and community-wide commitment to support and rely on the responsible entity. The input-output model that was developed for Humboldt County can continue to play a role in informing policy and developing that information. Humboldt County and other rural counties are still more remote, smaller, and have less diverse economies than metropolitan areas, yet they must survive in the same global market with metropolitan areas. Humboldt County along Interstate Highway 80 is more accessible than many rural counties, so its challenge will be to anticipate the changes that globalization will bring in the next few years and use that accessibility—and its relatively strong basic industries—to craft a resilient economy capable of retaining and recruiting people to the county, even as they age and their disposable income may decline. At the same time, Humboldt County will need to balance regional economic cooperation with the western Nevada development district and the Governor’s Office for Economic Development while maintaining its own economic identity. It is hopeful that the Humboldt County input-output model can play a 50 significant role in current and future economic development and diversification plans for Humboldt County. 51 SECTION VI: REFERENCES Anderson, S., J. McLain, D. Henderson, T. Harris, R. Fletcher, D. Taylor, A. Rieber, and D. Rush. 2012. 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