Stability And Resilience
The total economic impact of all 35 institutions of the University System of Georgia on their host communities was $12.1 billion for the fiscal year that ended in June 2008.
The output impact of each institution is the change in regional output due to spending by the institution and its students.
Of the $12.1 billion total, $8 billion (66 percent) is initial spending by the institutions and students; $4.1 billion (34 percent) is the multiplier impact. Dividing the total impact figure by the initial spending figure yields an average multiplier value of 1.51. So every dollar of initial spending generates an additional 51 cents for the host region’s economy.
For FY 2008, value added represents $7.3 billion (61 percent) of the $12.1 billion output impact, with domestic and foreign trade accounting for the remaining $4.8 billion (39 percent). The $7.3 billion value-added impact equals 1.8 percent of Georgia’s state GDP in 2008. Labor income received by the communities that host one or more institutions equals $5.3 billion, and represents 72 percent of the value-added impact.
The collective employment impact of all 35 institutions on their host communities in FY 2008, including multiplier effects, is 108,405 full- and part-time jobs. Some 39 percent of these positions are on campus and 61 percent are off-campus in the private or public sectors. On average, for each job created on campus, 1.6 off-campus jobs exist because of spending related to the institution. The 108,405 jobs generated by the University System account for 2.6 percent of all the jobs in Georgia in 2008, or about one of every 38 jobs.
The FY 2008 employment impact of the University System’s 35 institutions exceeds the previous year’s by 2 percent, or 2,138 jobs. The system’s output impact rose by an even more remarkable 9.7 percent. Given the overall economy, those are impressive gains. But keep in mind that the gains represent economic activity for FY 2008, which ended about 10 weeks before the recession really began to bite.
As the overall employment impact of the state’s colleges and universities increased by 2 percent, the number of people actually working on the institutions’ 35 campuses declined by 5.4 percent, from 44,140 jobs to 41,770.
Nearly 2,400 on-campus jobs were eliminated, even as many institutions’ enrollments and deliverables increased. The bottom line is that Georgia’s state-funded colleges and universities generated considerably more economic activity with far fewer workers. More precisely, the higher economic impacts generated by the state’s public colleges and universities were due to higher enrollments, higher spending by students and higher outlays by the institutions in categories unrelated to employee compensation.
In addition to recurring economic impacts, large construction projects generate one-time benefits for many of Georgia’s college towns. In FY 2008, the economic impact of capital outlays rose to $1.8 billion from $517 million in the previous year. This surge in capital projects boosted the economic impacts received by the schools’ host communities from 4,738 jobs to 16,267 jobs. Although these are one-time employment impacts, the timing is nearly ideal in terms of offsetting jobs lost due to the accelerating downturn in private-sector spending on nonresidential construction.
This doesn’t mean that Georgia’s college towns are recession proof. Since the global financial markets panicked in mid-September, there have been few, if any, safe harbors from the worst recession since the Great Depression. Indeed, over the last 18 months or so, we have seen that Georgia’s college towns are quite vulnerable to the budget cutting that has been going on in Atlanta.
Yet even as on-campus jobs decline, enrollments at many institutions will continue to rise. Students will continue to spend significantly more money in Georgia’s college towns. Georgia’s public colleges and universities will continue to do more with less, providing considerable resilience to their host communities’ economies during this and future recessions.
When the business cycle is on the upswing, the higher education industry often tends to grow more slowly than the overall economy. Over time, the net effect is to temper the ups and downs to produce a more stable – and less risky – local economy.