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Health Care in Clinton County is Big Business
by Colin Read, March 18, 2010
The past two monthly columns described the overall Clinton County economy and the ten major employers in Clinton County. We discovered that the County generated total income of $2.795 billion in 2008. We also observed that the primary source of income is from labor. Much of that income was generated by just ten industries in 2008:
The top ten employment sectors in Clinton County in 2008 are as follows:
There were 37,294 employed individuals in the labor force in 2008. Of these, just short of half, or 47.2%, of the employed labor force were employed in these top ten sectors. They also represented $911,150,760, or 53.3%, of the labor income earned in Clinton County.
However, these top ten industries also generated significant additional employment in the county. Those industries that heavily rely on local firms to supply intermediate factors of production will, in turn, generate additional jobs. Economists call these secondary jobs "indirect" because they are a byproduct of other primary sectors. The total number of such direct and indirect jobs can be measured by calculating what economists call a Type I multiplier. For instance, if each job in one of these top ten primary jobs generates an additional job in a secondary sector, the Type I multiplier will be 2.0. in other words, two jobs are created from each job in the primary sector.
In addition, labor and other income generate spending for its recipients. Some of this spending also induces local employment. A county that it able to meet the bulk of its consumers' needs will be able to keep income circulating within its boundaries. More jobs yet are then created by direct and indirect jobs. These "induced" jobs, when added to the direct and indirect jobs, yields a Type II multiplier that tells us how many jobs in total are supported by one job in a primary industry.
In these measures of job creation, not all sectors are equal. For instance, the health-related sectors of hospitals, physicians, dentists and health practitioners, and the pharmaceutical industry create on average .46 additional jobs in Clinton County for each direct job created. In comparison, the remaining top ten industries generate .38 additional jobs for each direct jobs in one of the remaining top ten sectors of government, retail food, drink, and motor vehicle sales and parts, and wholesale trade.
This health-related sector generated 7,162 direct, indirect, and induced jobs in Clinton County, which represented 19.2% of the employed Clinton County labor force in 2008:
The health-related industry also represented 28.9% of total labor income generated in the top ten sectors, and 55.4% of the value of total top ten output county-wide.
Some of this disproportionately large local impact arising from the health-related industry is related to the higher salaries they generate. The health-related industry paid an average salary of $65,644 per year, while the other sectors in the top ten industries paid the lower annual salary of $47,599 on average in 2008.
The other disproportionate effect is the value of output. The value of services provided in the hospital and health practitioner industries remains in the County. The pharmaceutical industry produces very high value products, in research and in medication production, that generates a large amount of income and value for their corporate owners.
The health-related industry also pays for a significant portion of our federal, state, and local tax base.
We find that the health care industry represents $54.555 million of our state and local tax base, or 30.7% of the contribution from the top ten industries, but with only 22.8% of the employment. Comparatively, the remaining sectors that constitute 77.2% of the top ten employment sectors pays a proportionately smaller 69.3% of state and local taxes. The health-related industries pay even a greater share of federal taxes, with its 22.8% of employment paying 34% of taxes, while the 77.2% of employees in the other top ten sectors pay 66% of federal taxes.
The combination of high value and high productivity from the health care industries represents the single most significant sector in the Clinton County economy. With the pronounced growth of our aged population that will be the subject of a future column, and the expectation that layoffs in the drug manufacturing industries will be reabsorbed, we may expect this sector to grow to be even more significant in our economic future.