Thursday January 26 was a slow news day in Boulder.
The headlines on page 1 of the Daily Camera read, “A BIKE BIZ HUB – Survey finds $52 million impact from Boulder’s cycling-related sector”. Underneath the headline article was, “JFK hearse arrives in Longmont.” The other articles were of similar significance. Truly a slow day at the Camera.
The value of this article is that it illustrates the role of sporting activities in the economy. More importantly it shows that there are many different occupations and each makes a different contribution to our lifestyle and economic well-being. Every job is important, particularly in a down economy.
As well as being a great sport, cycling has a positive impact on the health of cyclists, unless they end up on the wrong end of a confrontation with citizens who don’t appreciate spandex wearing two-wheelers. In addition, the sport is part of Boulder’s outdoor recreation and life-style clusters.
Forty-one companies, 330 employees, and $52 million in sales. Based on its sales, the Boulder bike-biz hub is equivalent about 20 Hooters restaurants or one medium sized small business. Based on the survey results, the industry accounts for about 0.2% of the county’s employment and about 0.3% of the county’s Real GDP.
The stated impact of $52M is questionable. Sales and impact, or economic activity, measure different things. In some cases, the sales figures appear to be inflated.
• 214 rental repair employees generate $24.4 million in sales or $114,019 per worker. (This is reasonable).
• 13 manufacturing workers generate $10.4 million in sales or $800,000 per employee. (Either employment is understated or sales are overstated).
• 48 education and advocacy employees generated $7.9 million in sales or $164,583 per person. (It is surprising that education and advocacy groups would generate that amount in revenue).
• 55 miscellaneous workers brought in $9.5 million in sales or $172,727 per employee. (Without knowing the types of businesses, this seems high).
The average revenue generated per person was $158,182. Based on the above comment this seems high.
Economic activity is typically measured by wages, local purchases, and the multiplier effect. Most of the jobs associated with the cluster are lower than the average annual wages for the county. If average annual wages are $40,000 then the total is about $13 million.
Local purchases would be a subset of the sales total. If local purchases are about 1/4 of total sales then they would be about $13 million. The impact of the multiplier effect would be negligible.
This quick and dirty analysis estimates that the economic activity, or impact, of the bike-biz hub is in the range of $25-$30 million or about half of what the article stated.
The real message of the study is not in the numbers. Boulder would be an ideal hub for the cycling industry. It would be great to see more clothing, equipment, and accessory manufacturers headquartered in the county. As well, cycling events might have a positive economic impact if they attracted visitors from out of town to stay in hotels, eat in local restaurants, and buy from local stores.
If a fiscal impact analysis of the cycling industry was conducted it would likely uncover results that do not favor the sport. Sales tax revenues attributable to the cluster probably would be less than the expenses associated with the cyclist’s share of the cost to build the roads, sidewalks, and bike paths that they ride on.
Impact studies are not easy – even the best ones are subject to scrutiny. Hats off to the biz-bike hub folks for giving it their best shot. Weaknesses in the report distract from the good news in this story. Unfortunately, the report is not front page news, not even on a slow day.