Original Source Date: October 24, 2024
Impact Highlights
| Annual ROI | Time Horizon | Confidence |
|---|---|---|
| 10.0% | 6.0 years | 2 - Strong |
| Activities | Outcomes | Indicators |
|---|---|---|
| Employment | Health / Wellness, Opportunity, Safety / Support | Health Insurance, Income, Job Availability, Unemployment, Violent crime |
| Geography | Demographics |
|---|---|
| Delaware, United States | Working Age |
Article Details
Oxford Economics conducted an extensive study to assess the socioeconomic effects of large employer investments in local U.S. communities. The research investigates the impact of major business expansions and relocations, defining a “large investment” as the creation of at least 1,250 jobs at a single establishment. The study quantifies various economic and social outcomes over a multi-year time horizon, providing a data-driven perspective on how these investments influence community prosperity.
Key Findings and Insights
The study finds that large-scale employer investments lead to substantial long-term benefits in business formation, labor market performance, earnings, crime reduction, and healthcare coverage. The impact is measurable and sustained, with benefits accumulating over time.
1. Economic Growth and Business Formation
- Business formation grew by 3.6% within five years of an investment.
- This equates to nearly 100 new business establishments per county, driven by increased economic demand and clustering effects.
2. Wage Growth and Employment Gains
- Average earnings increased by 1.4%, equivalent to an annual wage boost of approximately $635 per worker in today’s prices.
- Unemployment rate decreased by 0.4 percentage points, translating to an average reduction of 210 unemployed adults in a county.
- Labor force participation rose by 2.1 percentage points, bringing an additional 1,560 working-age adults into the workforce.
3. Reduction in Violent Crime
- Violent crime rates dropped by 8.1% five years post-investment.
- This corresponds to 140 fewer violent crimes per county, likely linked to increased employment and improved economic stability.
4. Shift to Private Healthcare Insurance
- Private healthcare coverage increased by 1.3 percentage points, with a corresponding decline in public insurance (e.g., Medicaid).
- Approximately 1,200 individuals per county moved from public to private healthcare, reducing the fiscal burden on public programs.
Case Study: Amazon Fulfillment Center in Wilmington, Delaware
The study highlights Amazon’s investment in a 4 million-square-foot fulfillment center on a previously abandoned General Motors plant site. Key outcomes include:
3,000 new jobs created, exceeding initial hiring projections.
- Higher wages (starting at $18/hour) and comprehensive benefits (medical, dental, retirement plans).
- Job training and upskilling programs like Career Choice, providing pathways for workers to obtain degrees and career advancement.
- Broad community engagement, including job fairs and direct hiring support for underprivileged individuals.
Return on Investment & Time Horizon
Estimated Annual Return on Investment (ROI):
The economic impact of large employer investments yields an estimated annual return of 8-12%, considering increased business activity, wage growth, and fiscal savings from reduced unemployment and crime.
Time Horizon to Achieve Full ROI:
The study finds that the majority of economic benefits materialize within five to seven years post-investment, suggesting a mid-term payoff period for communities.
Conclusion
The findings of this report strongly indicate that large employer investments foster economic dynamism, higher wages, improved employment rates, lower crime, and better access to private healthcare. The data-driven approach challenges anecdotal skepticism and provides a compelling case for policymakers and communities to actively attract and support major business investments.
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