Economic Impact FAQ (RIMS II Edition)

1. Why is Total Compensation (wages) higher than what we spent?

Your spending supports more than just your own operations. It generates jobs and wages across multiple levels of the economy. A single payment can contribute to wages for many people — including your supplier's employees and their own vendors and service providers.

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2. Is "Value Added" the same as "Output"?

Not exactly.

• Total Output refers to the full amount of economic activity generated, including resold goods.

• Value Added includes only the new value created, such as wages, taxes, and profits.

Think of Output as the whole sandwich. Value Added is just the ingredients you provided.

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3. How can the numbers be larger than what we actually spent?

RIMS II tracks both indirect and induced impacts. This means your spending creates a multiplier effect. The dollars you spend are re-spent throughout the economy, which amplifies the total impact.

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4. Isn't that double counting if we look at multiple tiers?

It can be, if not handled correctly.

That’s why economic impact models are designed to track the ripple once. They use multipliers that already include upstream/downstream effects. Adding separate tier-level impacts together manually can lead to overstatement.

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5. What is the difference between Indirect and Induced impacts?

• Indirect impact comes from your suppliers’ business spending, such as raw materials or logistics.

• Induced impact comes from household spending by employees, such as groceries, rent, or transportation.

In simple terms,

• Indirect = business-to-business spending

• Induced = people spending their paychecks

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6. Are these actual dollars or estimates?

These are model-based estimates, not actual transactions. They represent what typically occurs in your region and industry when dollars are spent, based on data from the U.S. Bureau of Economic Analysis.

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7. Can I use these numbers in a business case or funding request?

Yes, but they should be used carefully. RIMS II is a trusted federal model, so the data is credible. However, it should be presented as an economic estimate, not a guaranteed return or audited result.

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8. Why don't the categories always add up exactly?

Some rounding occurs, and certain values (like Value Added) are subsets, not overall totals. If you are comparing different impact types (e.g., direct vs. total), be sure not to combine them unintentionally.

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9. What determines the size of the multipliers?

Multipliers depend on:

• Industry

• Geographic region

• Type of impact (output, jobs, income)

For example, manufacturing often has high output multipliers, while service industries may show stronger compensation (wage) multipliers.

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10. Can we customize RIMS II results to better match our spend?

Yes. You can refine the results by providing:

• Detailed supplier or project spend

• NAICS (industry) codes

• Local vs. non-local sourcing information

The more specific your input, the more accurately the model can reflect your actual economic impact.