Thursday, February 5, 2009

Question - economic impact of adding an employee

Today a good friend asked a really solid question:

What is the impact of creating a job? Let's say the job pays $50,000 and is located in Indiana.

I did a little research, since it's nuggets like this that really make for policy decisions. The rule of thumb appears to be that wages "echo" through the economy resulting in roughly 3 times the impact of the original wage.

Some of that impact is in tax revenues to local, state and federal government. Some is in housing costs, consumer goods, and household necessities. Sure there would be dramatic regional differences and in some areas of the country a $50,000 wage isn't even enough to own a home and car. But all in all, creating good solid jobs creates a lot of opportunity and activity.

If you happen across this post and have some good links to studies with details, we'd love to continue the conversation.

1 comment:

Cender and Company said...

Thanks to those that emailed and engaged Steve Dalton on twitter on this question.

Current rough estimates look like triple impact ... and that's rough since some were suggesting that all jobs are not created or have equal impact.