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Measuring the Impact of New Residents

Posted on Monday, March 30th, 2020

IDM is occasionally asked if it is possible to measure the impact of a new resident to a community. Coming up with one precise “number” to represent the overall impact of a resident is not possible, but there are a several things that can be assessed, both quantitatively and qualitatively that can help you describe the “value” of new residents in your community.

New residents offer benefits to communities that are multi-faceted. Local governments, businesses and nonprofits all reap the rewards of adding new residents. New residents can increase overall:

  • Spending on goods and services
  • Local sales tax collections
  • Local property taxes
  • Student enrollment
  • Volunteerism
  • Support of community groups and churches

Spending on goods and services. Everyone spends money, and every community hopes to capture as much of that spending in the local economy as possible. Trying to calculate how much any resident or household spends is an imprecise exercise but there is data available to help approximate general spending.

New residents with a job will earn income that can be spent on goods and services in the community. In economic impact analysis terms this is known as the Induced Effect. An employer pays the employee a salary and some of that money stays in the local economy, spent on food, clothing, shelter and other consumer goods and services. To determine an exact number, the person’s salary and how much they spend locally would have to be known, so this is probably not something that can be precisely determined. Economic impacts vary and depend both on the industry employing the person and the location of the company, so there is not one “multiplier” that can be used in all cases.

One could approximate salary and spending. The US Department of Labor’s Bureau of Labor Statistics offers data on average annual pay or weekly wage by industry (up to six-digit NAICS code detail) at a state or county level through its Quarterly Census of Employment and Wages. For potential spending, the US Department of Commerce’s Bureau of Economic Analysis offers state level per capita expenditures for goods and services, and household consumption expenditures. For a more localized approximation of spending per household, Esri, the leading developer of GIS software, offers Budget Expenditure Reports that estimate an average amount spent per household on a number of expenditures. In Iowa, one can access these reports by region, county or community through IEDA’s LOIS portal. Just choose a region, county or community, and then click on “Reports” for a dropdown of available Esri reports. You can also purchase reports from Esri directly, or check with your utility, county or council of governments to see if they have access and can pull a report for you.

Local tax collections. Retail spending on taxable items such as clothing, food (excluding non-taxable food items), home furnishings, services and utilities can be estimated using the Retail Trade Analysis Reports produced by Iowa State University. These reports provide average sales per capita on a county basis for 12 types of firms, such as apparel stores, building materials stores, eating and drinking establishments, etc. Some jurisdictions in Iowa also collect a local option sales tax of up to 1.0 percent

Perhaps the largest item a new resident spends money on is housing. Did the resident purchase an existing home, build a new home or are they renting? This will vary for each person but housing impact could be estimated by using the average home price for new or existing homes, or the average price for a rental unit in the community. Property taxes will vary based on the assessed value of the home. If an EDO is looking back to measure the impact of past programs or events, actual sales price data is public record and most assessors’ records are available online.

New residents with school age children help grow your local school system’s budget as schools receive per student state aid for instruction and support services. The Iowa Department of Education produces a Performance Profile for every school district and every school in the state. Each profile includes a Financial Report Card (“Finance District Report Card” under the “Additional Metrics” dropdown) that has a breakdown of cost per pupil and the federal and state revenue sources supporting the district.

Social capital.  Building strong social capital, where community members are actively engaged in community building and supporting one another, is a hard number to approximate. Yet the amount a person gives in money and time to local nonprofits and churches is invaluable. If you feel the need to frame this social participation in terms of numbers, Nonprofits Source offers a few statistics on giving at a macro level and Independent Sector offers an hourly value of volunteer time by state ($23.41 per hour in Iowa for 2018). In addition to supporting nonprofit entities, social capital goes well beyond by growing church memberships, supporting school fundraisers and events, and even helping elderly neighbors with shoveling - things that make a community a home. The more people you have building up this sense of place, the stronger your community will be. Communities themselves play a critical role in developing community participation in new residents. Being truly welcoming (not just “nice”) to newcomers is key to successfully engaging them and building up the value of their contributions to social capital.

To sum this all up, putting a value on a new resident is a combination of estimated numbers and being able to describe potential community participation. From justifying newcomer programming to housing development, there are numerous reasons why people want to measure the impact. Think about why you want to measure the impact of a new resident, and tell the story accordingly.