New independent analysis calculates Laboratory’s economic contribution to state at $3.7 billion
Economists calculate influence on job creation, tax revenue and related industries
August 20, 2024
A joint analysis recently released by two New Mexico academics determined that Los Alamos National Laboratory contributes more than $3.7 billion to the state and regional economies.
This analysis differs from the annual Economic Impact on New Mexico report, which only lists hiring figures and dollars spent directly by the Lab. By contrast, this report calculates the indirect and induced contributions of those same expenditures, presenting a more comprehensive picture of Laboratory’s effect on the seven counties surrounding it (Los Alamos, Mora, Rio Arriba, Sandoval, San Miguel, Santa Fe and Taos) and the New Mexico economy as a whole.
Robert Grassberger, assistant professor emeritus of Organization, Information and Learning Sciences at University of New Mexico, and Jay M. Lillywhite, assistant dean for Economic and Rural Development, College of Agricultural, Consumer, and Environmental Sciences at New Mexico State University, analyzed data provided by the Laboratory for fiscal year 2022.
The information for FY22 was the latest set of data available in full detail when the monthslong analysis process began. The analysis also makes preliminary calculations for the Laboratory’s FY23 economic contribution and provides profiles of New Mexico small businesses that have benefited from the Laboratory’s policies supporting underrepresented or disadvantaged businesses.
Key findings
- The Laboratory’s total economic contribution to New Mexico was $3.77 billion. This includes direct, indirect and induced effects, as measured by economic output derived from the Laboratory’s in-state expenditures of $2.61 billion.
- The direct labor of 14,433 employees supported more than 18,000 jobs in the seven-county region and 21,000 jobs statewide, and generated an estimated $1.7 billion in employment income in the region and $1.90 billion statewide.
The analysis also outlines the top 15 supported industries based on economic output and jobs created from the Laboratory’s economic contribution, including construction, health care and retail.
The authors of the analysis chose to conduct a contribution analysis (rather than an impact analysis), stating, “The results presented in the report should be considered conservative as compared to those that would have been estimated using an impact analysis.”
FY22 tax contributions
The report also found that the Laboratory contributes to state and local government tax revenues that are used to fund public services such as safety, health and human services, judiciary and education.
Seven-county region fiscal impacts:
- The Laboratory supported combined tax revenues of $109.5 million to county and municipal governments in the seven-county region around the Lab, based on Laboratory payroll and procurement data and the indirect and induced impacts of household and business expenditures and tax payment rates derived from secondary sources.
- Gross Receipts Tax payments to local governments in the seven-county region totaled $54.3 million.
- Residential property taxes were estimated at $28.8 million, and non-residential property taxes were $26.4 million.
Statewide fiscal impacts:
- The Laboratory supported combined tax revenues of $304.9 million to New Mexico’s General Fund. This included $53.4 million in personal income tax payments made by Laboratory employees and others employed because of Laboratory spending.
- $191.4 million in gross receipts tax was generated at the state and local government level. (The Laboratory paid $134.2 million in GRT in FY22. The rest was paid by households on goods and service purchases.)
Preliminary FY23 estimates
The analysis mainly focuses on FY22 data, but using the multipliers, it also includes a preliminary measurement of the Laboratory’s FY23 economic and employment contribution:
- Total expenditures within New Mexico in FY23 are estimated to equal $2.68 billion, including employee compensation.
- The Laboratory’s economic contribution to New Mexico in FY23 can be approximated to equal $3.88 billion, using the output multiplier of 1.45 calculated from the FY22 analysis.
- The total employment contribution in FY23 is estimated to equal 23,446, using the employment multiplier calculated for FY22.
Examples of qualitative contribution
While largely quantitative in nature, the analysis also takes a qualitative approach to explore the Laboratory’s policies and procedures that aim to support small and sometimes marginalized or disadvantaged businesses. The analysis provides profiles of several New Mexico businesses that have benefited from these approaches, including Performance Maintenance Inc., Tsay Corporation, and Wildflower International.
The authors conclude, “The Laboratory’s efforts in these areas have allowed business owners to expand beyond their relationship with the Laboratory, generating additional economic benefits that are not directly measured in this analysis.”
Methodology
Grassberger and Lillywhite used a multi-regional input-output analysis with a social accounting matrix model, as facilitated by the popular economic modeling software IMPLAN.
Complete Analysis
You can download the complete analysis.