To Top

Tag Archive: Employment

  1. The Power of Basic Job Announcements

    Comments Off on The Power of Basic Job Announcements

    Location remains the golden rule when making real estate investment and development decisions. Buying and developing in a growing, diversified market heightens the likelihood an investor/developer will make a profitable decision that meets discount rate thresholds. Your 401K and SEP IRA advisors have drilled diversification into your brain. While location, including the importance of a diversified market, is a critical driver of real estate success, there is more to making a profitable real estate investment. Determining whether an investment decision will meet an investor’s discount rate (preferred rate of return) can be a tedious, dynamic, and complicated process. Understanding market dynamics is critical to any successful real estate investment or development. This article will provide a crystal ball on how to decipher market stability while having a tool to help project market growth.

    What is the single biggest impact on a local economic area? Jobs. But – and that is a big BUT – not all jobs are created equal. “Basic employment” is the queen to driving an economy. Basic employment is made up of industries that rely on external factors (beyond the local economic area) to fuel demand. Basic employment produces and/or supplies more goods and services than can be consumed by the local economic area (Ex:  Morgantown MSA) which results in consumption outside of the local community. Examples of basic employers close to BDR’s home base include NIOSH, WVU Medicine and Mitsbuishi. On the other hand, non-basic employment depends almost entirely on local demand. Non-basic employment is defined as goods and services that are solely (or almost solely) consumed by the local economic area. Examples of non-basic employers include dental practices, pediatricians, hair stylists, and restaurants.

    The two types work together. Non-basic employment supports the demand created by basic employment. This inflow of dollar (increased purchasing power) comes from outside the local economic area. The Economic Base Multiplier (EBM) is a measure that provides an estimate of how changes in basic employment will affect total employment, number of households and purchasing power within a local economic area.

    Site To Do Business is an excellent tool for this type of analysis. The bullet points below provide Economic Base Multiplier data for several Multiple Statistical Areas (MSA) within three hours of Morgantown, WV.

    • Morgantown MSA:  4.06
    • Martinsburg, WV/Hagerstown, MD MSA:  6.56
    • Wheeling, WV MSA 3.26
    • Pittsburgh, PA MSA 9.69
    • Parkersburg/Vienna, WV MSA:  2.65
    • Charleston, WV MSA 1.73
    • Huntington, WV/Ashland, KY MSA:  1.80

    Over the past 12 months, West Virginia has enjoyed significant economic momentum. 

    Mitsibishi is in the process of bringing an additional 240 jobs to Harrison County. Another deal is in the works for Morgantown Industrial Park which could bring ~150 jobs with scalability for much greater employment.  Beyond north central WV, Green Energy recently announced their intent to build electric buses in a new South Charleston manufacturing facility. Green Energy plans to hire 200 jobs initially with potential to scale to 900 WV workers within 24 months. Nucor is constructing a $2.7B, state-of-the-art steel making mill in Mason County, WV. Once fully operational, anticipated employment is 800.

    Economic base multiplier theory tells us total job creation is well beyond the job announcements highlighted above. Utilizing the closest MSA’s EBM results in the following jobs created:

    • Mitsubishi:  Utilizing Morgantown MSA’s EBM, 240 basic jobs results in 974 total new employees.
    • Confidential User Utilizing Morgantown MSA’s EMB, 150 basic jobs results in 609 total new employees.
    • Green Energy Utilizing Charleston MSA’s EBM, 200 initial basic jobs results in 346 total new employees.  Assuming the operation scales to projected capacity, 900 basic jobs results in 1,557 total new employees.
    • Nucor Utilizing Parkersburg MSA’s EBM, 800 basic jobs results in 2,120 total new employees.

    Jobs drive an economy. Basic jobs lead to other support jobs, called non-basic, which is calculated via the economic base multiplier.

    There are two final steps to fully understand the total impact of these announcements. Our goal is to understand the total dollars flowing into a community as a result of new basic jobs. The next step in the calculation process is to multiply the total jobs by the average household size to get an estimate on total population. The final step is to multiply total households by the average median household income. West Virginia’s state average household contains 2.4 individuals. As of 2019, West Virginia has the following statistics: Average household income is $63,680. Median household income is $46,711. Per capita income is $26,480.

    The four announcements highlighted in this article result in guaranteed basic employment (could be more as the business scales) of 1,290. The economic base multiplier calculation provided a total new employment calculation of 4,049 new basic and non-basic jobs. The average household size is 2.4 individuals resulting in 9,718 individuals moving to and or being retained in West Virginia. The purchasing power of these individuals is determined by multiplying per capita income by the number of individuals. These four announcements result in a total increase in purchasing power of $257,332,640. For perspective, West Virginia’s 2020 annual budget was $4.495 billion. The four announcements represent purchasing power equal to 5.7% of West Virginia’s annual budget. These are big announcements for Almost Heaven!

    Black Diamond Realty is hopeful this information provides a greater understanding of the dynamic analysis and projections that should be considered when making real estate investment decisions. Economists use many tools, including economic base multiplier, to determine the overall effect on a local economic area. Our team of experts looks forward to working with you on your next project.

     

     

    Article By: David Lorenze, Principal
    Co-Writer: Kim Licciardi, Senior Associate 

  2. 8,000 Jobs Added Within Past Decade in North Central WV

    Comments Off on 8,000 Jobs Added Within Past Decade in North Central WV

    North Central West Virginia continues to lead the state in economic progress, according to local experts.

    Although many other areas of the Mountain State lag behind national averages in most major economic indicators, the North Central region has continued to thrive and grow, according to John Deskins, director of the West Virginia University Bureau of Business and Economic Research.

    “North Central West Virginia is more stable than the nation, it seems. Or, at least, the patterns of the last couple of decades have indicated we have greater stability,” Deskins said. “The region’s economy is very resilient. Part of that depends on the fact that we have some really important federal employment in the region; we have the university in the region; and we have a lot of health care in the region. Those sectors of the economy tend to be really stable,” he said.

    The Bureau of Business and Economic Research recently released a study analyzing the NCWV region’s economy over the past few years and looking ahead to expected economic performance through 2023, Deskins said. Businesses in Monongalia, Marion, Harrison and Preston counties added more than 8,000 jobs between early-2010 and mid-2018, resulting in cumulative growth of more than 7 percent, according to the study.

    In Harrison County, many of the new jobs can be attributed to rebounding natural gas production and natural gas pipeline infrastructure under construction, Deskins said. “That’s actually something that’s creating benefits in other counties in the state as well, not just the North Central region,” he said. “But definitely the construction projects that have been going on have definitely helped employment and a whole host of economic measures here in North Central.,” he said. “There is lots of stuff going on with the pipeline construction. That’s in Harrison County, and it’s affecting other parts of our region, as well.”

    Sherry Rogers, executive director of the Lewis County Chamber of Commerce, said Lewis County has also experienced positive economic gains over the last year, mainly due to increased natural gas pipeline construction in the area. “There are some businesses that have seen an increase in their revenues due to the pipeline and the influx of pipeliners coming to the area and staying in the area,” she said. “Our retail and our restaurants have seen an increase due to that.” Several new businesses have recently opened their doors in and around Weston, Rogers said. “Here in Lewis County we have thriving entrepreneurship,” she said. “We’re comprised mostly of small businesses and we have some exciting new businesses that have opened that have opened this year or are opening.”

    These include a retail shop in downtown Weston, a newly opened restaurant and a distillery, MannCave Distillery, Rodgers said. Patricia Henderson, director of the Taylor County Development Authority, said her county’s economy remains stable, partially do to continued coal mining activity. “Right now we are similar with the other areas in the state,” she said. “We do have a coal mine here, and that’s certainly helping us. Leer Mine still producing and moving a lot of coal through the railroad.” The county hopes to attract more oil and gas related companies to settle in the Taylor County area, Henderson said.

    “We are trying to attract new businesses, and like all the other counties throughout the state, we are trying to recruit some of the oil and gas into our county,” she said. “In 2018, we had some property that the development authority marketed, and we did have an oil and gas company purchase that property to build some of their field offices. So we’re excited about that. That is a three-year plan.”

    Taylor County recently became the recipient of a grant that will be used to perform a broadband internet study, Henderson said. “One of the problems that we hear a lot is the fact that we don’t have high speed internet in a lot of the areas of our county,” she said. “So we’ve got a grant to do a study that will help us to asses our needs and see where our underserved and unserved areas are so we can identify them. Then we can potentially go after some federal funds to help with that.”

     

    Article By: Charles Young, WV News