An Analysis of the Food and Beverage Industry’sImpacts on the Florida Economy and theEmployment of WAGES ParticipantsPrepared byDr. Tim LynchCenter For Economic Forecasting and AnalysisFlorida State UniversityTallahassee, FloridaJanuary, 19992EXECUTIVE SUMMARYI. ECONOMIC IMPACT OF FLORIDA’S FOOD AND BEVERAGE INDUSTRYFY 1998-99Florida’s Food and Beverage Industry generates a considerable amount of direct and secondaryeconomic activity within the Florida Economy. In 1998-1999 fiscal year this Industry is forecast tobe responsible for:1. EMPLOYMENT1Direct Jobs Created 434,096Indirect Jobs Created 57,225Induced Jobs Creates 108,901Total Jobs Created 600,2222. WAGES (1998 Dollars)Direct Wages Generated $5,688,446,464Indirect Wages Generated $1,431,587,200Induced Wages Generated $2,520,615,168Total Wages Generated $9,640,648,8323. OUTPUT (1998 Dollars)Direct Output Generated $15,570,212,864Indirect Output Generated $ 5,053,352,960Induced Output Generated $ 7,440,250,880Total Output Generated $28,063,816,7044. STATE SALES, USE AND FUEL TAX (1998 Dollars)Direct Taxes Generated $1,067,073,082Indirect Taxes Generated $ 140,667,634Induced Taxes Created $ 267,694,993Total Taxes Generated $1,475,435,709 1 Direct Economic Effects. These effects are the changes in local business activity occurring as a direct consequence of public orprivate business decisions, or public policies and programs. These occur as a result of investment and spending decisions - becausethese decisions directly affect the flow of spending, income and jobs associated with economic activities.Indirect and Induced Effects. There are also broader indirect and induced economic effects (they may be positive or negative) thatfollow as secondary impacts flowing after and as a result from the direct effects.3II. ECONOMIC IMPACTS OF WAGES WORKERS IN THE FOOD AND BEVERAGEINDUSTRYEmployment of WAGES participants within the Florida Food and Beverage Industry generates aconsiderable amount of additional direct and indirect economic stimulus in the Florida Economy.The source of this economic stimulus takes two forms. The first is from reinvesting public welfaredollars currently supporting WAGES public assistance recipients back into other government tasksand into the general economy in the form of tax savings to consumers. The second is through theprimary and secondary economic effects that these newly employed individuals will generate fromtheir earnings and economic activities. Those potential impacts are estimated below based on theprojected 32,934 WAGES participants that will be hired by the Food and Beverage Industry overthe period October 1, 1996 through June 30, 1999 (Table 8). The direct indirect and inducedeconomic impacts of employing these WAGES individuals are provided in the following summary.1. EMPLOYMENTDirect Jobs Created 31,392Indirect Jobs Created 6,091Induced Jobs Creates 7,185Total Jobs Created 44,6682. WAGES/INCOME (1998 Dollars)Direct Wages/Income Generated $341,286,848Indirect Wages/Income Generated $172,024,004Induced Wages/Income Generated $183,335,403Total Wages Generated $696,646,2553. OUTPUT (Gross Sales) (1998 Dollars)Direct Output Generated $1,326,395,008Secondary Output Generated $ 542,274,467Induced Wages Generated $ 498,745,402Total Output Generated $2,367,414,8774. STATE SALES, USE AND FUEL TAX (1998 Dollars)Direct Taxes Generated $ 77,166,245Secondary Taxes Generated $ 14,973,329Induced Taxes Created $ 17,660,579Total Taxes Generated $109,800,1534III ESTIMATED WELFARE SAVINGS AND NET INCREASE IN INCOME ANDWELFARE BENEFTIS DUE TO EMPLOYMENT OF WAGES PARTICIPANTSEmploying WAGES workers results in welfare savings to the public. These savings can beexpended by the government elsewhere for expanding existing programs or for addressing newpublic needs and thereby generate new stimulus to the Florida economy. Although the employmentof WAGES workers will not totally eliminate all forms of welfare assistance, the total welfare costis reduced. In addition employment of WAGES workers increases their combined net annualincome. The combined effect is to provide additional economic stimulus as presented below:1. Estimated Welfare Savings from Employment of WAGES Participants:State of Florida $50,135,216US Government $215,510,216Total Savings $265,645,6442. Estimated Total Net Increase in IncomeAnd Benefits by WAGES Participants: $133,712,0403. Estimated Total Economic Stimulus from Net Increase in Income and Benefits due toEmployment of WAGES Participants:Savings by the State of Florida $50,135,216Net Increase in Income and Benefits $133,712,040Total Economic Stimulus $183,847,4685I. IntroductionThe purpose of this report is to examine the statewide direct and secondary economic activity(employment, output, wages and taxes) generated by Florida's Food and Beverage Industry. Thefirst part of this evaluation will examine the employment (direct, indirect and induced), output(gross sales), wages, and taxes that the Industry generates. A second component of the analysiswill examine the economic value the Industry generates when it returns a Floridian on welfare tofull-time employment in a Food and Beverage Establishment.As full time employees in the economy, these former welfare recipients will earn wages, pay taxes,and in turn, generate direct and secondary demands for goods and services from the wages that theyearn.Finally, these individuals will also stimulate the economy by saving public tax dollars (since theywill no longer be on public support), and the savings generated will return to the economy tofurther stimulate additional direct and secondary economic output, earnings and wages.II. Data and MethodologyAll estimates of employment and average wages were obtained from reports of the Food andBeverage Industry prepared by the Florida Bureau of Labor Market and Performance Information.The gross sales and taxes are the sum of the restaurants and lunchrooms, delicatessens, and tavernsand nightclub categories from the Florida Department of Revenue gross sales and taxes database.Data on Medicaid costs, cash assistance, food stamps, and childcare costs were obtained from theDepartment of Children and Families, and the Agency for Health Care Administration.Assumptions regarding wages and salary increases were based on 1998 estimates by the FloridaEconomic Consensus Estimating Conference. All estimates of economic impacts are derived fromIMPLAN; an input-output based computer model