Understanding the Outputs of the Economic Impact Report

SupplierGateway's Economic Impact Report uses the United States Bureau of Economic Analysis' Regional Input-Output Modeling System II model to estimate the regional economic impact of supplier spending. The report measures how spending supports jobs, wages, business activity, and overall economic value.

Purpose

This article explains the data used by the Regional Input-Output Modeling System II model and describes the key metrics included in the Economic Impact Report.

Regional Input-Output Modeling System II Inputs

The Economic Impact Report is generated using three required inputs:

• Spend amount
• Geographic region
• North American Industry Classification System code

If any of these elements, especially the NAICS code are missing, that supplier is excluded from the calculation.

Here is more information about the RIMS II model:

About the Regional Input-Output Modeling System II Model

The Regional Input-Output Modeling System II is an economic impact model developed by the United States Bureau of Economic Analysis.

The model estimates how spending in one industry affects related industries throughout a region by calculating economic multipliers for:

• Employment
• Earnings
• Economic output

Regional Input-Output Modeling System II combines national economic data with regional purchasing patterns to estimate how spending circulates through the local economy. The model is based on the Bureau of Economic Analysis (BEA) national supply-use tables, which describe how industries produce goods and services and how those goods and services flow throughout the United States economy.

Jobs Supported

Jobs Supported represents the total number of jobs created or sustained by spending within a specific region.

The calculation is based on:

Jobs Supported = Spending × Employment Multiplier

Where:

• Spending is the amount spent on suppliers, projects, or services.
• Employment Multiplier is the Regional Input-Output Modeling System II estimate of jobs supported for each one million dollars spent.

Total Value Added

Total Value Added represents the new economic value created as a result of spending.

It includes:

• Employee wages and benefits
• Taxes
• Profits
• Interest

Unlike Total Output, Value Added excludes intermediate goods and services used during production.

Total Output

Total Output represents the total economic activity generated by spending.

It includes:

• Direct spending
• Supplier purchases
• Spending by supplier vendors
• Raw materials
• Equipment
• Rent
• Wages
• Profits

Total Output measures the complete economic activity generated throughout the supply chain.

Total Compensation

Total Compensation represents the portion of economic impact paid directly to workers.

It includes:

• Wages
• Salaries
• Employee benefits

Because Regional Input-Output Modeling System II measures economic activity across multiple levels of the economy, Total Compensation may be greater than the original supplier payment, particularly in labor-intensive industries.

Why Wages Might Look Bigger Than Your Supplier Spend

It can be surprising to see Compensation (wages) reported as higher than what you paid suppliers, but that’s because:

• RIMS II is measuring multiple tiers of job creation,
• Each level has its own wages,
• And many industries (especially services) are labor-intensive.

You’re not just seeing what you spent, but the jobs and income it created across the economy.

Summary

Term	What It Tells You	Includes
Output	Total economic activity	All spending
Value Added	New value created	Wages, taxes, profits
Compensation	What went to workers	Wages + benefits

 Additional Economic Impact Resources:

1. ABOUT: Economic Impact Report
2. HOW TO: Generate an Economic Impact Report
3. Economic Impact Report: FAQ