What Do We Mean by Economic Output?
Data
The data gathered for this model came from WineAmerica, Data Axle, federal and state government data, IMPLAN, and industry sources. Data Axle is the leading provider of business and consumer data, which includes addresses, business titles and job totals. Since the Data Axle data are adjusted on a continual basis, staff from John Dunham & Associates scanned the data for discrepancies, verifying individual facilities using Google Maps, web searches, and any available online government documents. Each facility has its own employee count; therefore, a company with a wine production facility and a separate tasting room would have two facilities, each with separate employment counts. For facilities for which there were no employment data, median job figures are used. This is how the direct employment totals are calculated.
Model
These employment totals are entered into the IMPLAN Model. The IMPLAN model is based on the input-output accounts published by the US Department of Commerce, Bureau of Economic Analysis and is one of the standard models used to calculate economic impact figures. Input-Output tables representing the economy in 2020 were used in this analysis. The IMPLAN model is designed to run based on the input of specific direct economic factors, like direct jobs or production value, and generates estimates of direct jobs, wages, and outputs.
What is Meant by the Term “Direct”?
Direct Impacts are those jobs, wages, or economic output, solely attributable to the industry defined for the study; in the case of the wine industry this includes wineries, winegrape growers, wholesalers, retailers, trade associations, research and educational organizations, and the impact of tourism spending due to winery and vineyard visits. We like to say that they are the jobs that one can count. If one goes to a wine production facility and counts the number of people working there, that would be the direct employment (although there may be many more people working than there are jobs since many people work only part time). JDA uses direct employment at these facilities that are defined to be part of the industry to calculate all the other effects presented in the study.
What is Meant by the Term “Indirect”?
Indirect is the term used in economic impact studies to define those effects that result from firms in the defined (or direct) industry purchasing goods and services from other industries. JDA defines these as Supplier Impacts in its models. For example, when a winery pays rent on their property to their landlord, or when they hire advisors or consultants to provide their expertise in managing their crops, they are creating indirect effects in the real estate sector or business and personal services sector. In the case of retailers and wholesalers that handle products through a supply chain, the value of the goods moving through a warehouse or liquor store are not counted as indirect impacts; only those goods and services used to provide the wholesaling or retail services are included.
What is Meant by the Term “Induced”?
Induced effects are the response by the economy that occur through re-spending of income received by payments made to employees and business owners measured in the direct and supplier parts of the economy. When people work in the industry, or for firms that supply goods and services to the industry, they receive wages and other payments. This money is recirculated through their household spending inducing further local economic activity. Economists call these induced impacts the multiplier effect of an activity or industry. Examples of induced effects are the jobs created in a diner located outside of a vineyard where people purchase sandwiches for lunch, or at the gas station where they purchase fuel for their commute, or even in neighborhoods, where workers purchase houses, go to restaurants, or visit the movie theater.
What Specifically Do You Mean When You Say a “Job”?
Jobs are a measure of the annual average of monthly jobs in each industry as defined by the Quarterly Census of Employment and Wages put out by the BLS. Jobs in our models are derived independently and do not match jobs reported by government entities. JDA often defines industries differently, and generally include more firms and facilities than are surveyed by the government. Jobs are measured in full-time equivalent units.
What is Meant by the Terms “Economic Output” or “Economic Impact”?
JDA uses output in its models as a general measurement of economic impact because this is the broadest and most comparative measure. In general, output represents the value of industry production for the year calculated in terms of producer prices. Output differs depending on the industry being measured. In the case of the wine industry, output is similar to gross sales for wineries and vineyards. For wholesalers, retailers, associations, research and educational organizations, and many of the businesses where wine tourism spending is happening, output does not represent sales, but rather is similar to the accounting measure of gross margin. The value of wine purchased from wineries flowing through the second and third tiers is not included as part of output, even if they are transformed in some way. One way to look at it is the wholesale and retail output is total sales revenue minus its cost of goods sold. This is similar to the wholesale or retail markup on a product.
