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USC has $8 billion impact on state, report says

SOUTH LOS ANGELES — The University of Southern California generates about $8 billion in economic output and produces more than 42,000 jobs, according to a recent economic and social analysis.

The study was conducted by research and consulting firm Beacon Economics on fiscal year 2015-16, and examined the influence of the university in three geographic locations: Los Angeles County, Southern California and the state of California.

“When the university buys and inputs things from local companies, and as employees earn wages, that translates to thousands of jobs in the L.A. County just in operations from USC,” said Robert Kleinhenz, executive director of research at Beacon Economics. “Those are powerful findings.”

The firm looked at five economic divisions, including direct expenditures, the impacts of USC-related economic output, its spending on employment and earnings for workers and tax revenues.

Of the expenditures related to the university that were noted were capital projects such as campus expansion and improvement plans; purchase orders and credit cards on goods and services; and staff, faculty, student and visitor expenditures on housing, transportation, food and retail products.

In total, the report found that USC spent $514.2 million on capital projects in the county, and the amount of student expenditures in the same area totaled another $562.8 million.

Kleinhenz explained the “ripple effect” generated by USC on the economy.

He said the ripple effect refers to the way the university’s spending moves through the economy. The ripple results “in a total impact that is much larger than the initial direct spending,” the report said.

But the ripple effect, Kleinhenz said, is smaller than expected.

“USC’s spending is much more local than one would expect from a world-class university,” Kleinhenz said. “A surprisingly large share of the university’s spending was within the local economy.”

A crew works on the USC Village development, a project across the street from the campus that will provide retail stores and restaurants on the street level and housing above. It is another way the university impacts the economy of the surrounding neighborhood.
(Photo by Tyrone Cole)

According to the analysis report, the spending generated a total of $2.19 billion in worker wages for Los Angeles, $2.6 billion for Southern California, and $2.91 billion for the state.

The economic output USC generated in Southern California was $7.44 billion, with a total of $8.13 billion for the entire state.

The school also supported more than 42,300 jobs for the county, 50,487 for Southern California and 53,425 in the state.

Tax revenues produced by USC for local government amounted to $155 million, with $178 million for Southern California and $455 million in local and state government.

According to the report, “USC plays a major role in supporting public services, through the tax revenues generated by its day-to-day operation purchasing goods and services in the local area, the spending by its students, faculty and staff, as well as the spending by visitors the university draws to the area.”

In addition to analyzing the institution’s economic impact, Beacon Economics also reported the social effects of USC within the local and surrounding communities.

Its outreach programs, which amount to more than 400, include the Boyle Heights Beat, a journalism program for young journalists that distributes to 28,000 homes and centers in the Boyle Heights area; Med-COR, a career-preparedness program for high school students interested in health and medical careers; and Troy Camp, a long-term mentorship program for the youth of South Los Angeles, among others.

Thomas Sayles, USC’s senior vice president for university relations, said that USC’s partnerships with the neighborhood are creating an educational and career pipeline for children.

“USC’s future is bright, and L.A.’s future is bright, and we work together,” Sayles said. “We will continue to improve the quality of life and continue to educate our students. I’m proud that USC is such a prominent player in all good things going on in L.A., and I’m very optimistic about the future of the university and the region.”

Sayles added that it had been about 10 years since an economic and social impact analysis like this had been conducted. The economic impact, he added, is more than it was several years ago, and Sayles believes it will continue to grow in the future.

The study took nine months to complete, according to Kleinhenz, and was finalized in March.

For the full report, visit: https://about.usc.edu/files/2017/03/USC_EIR_FINAL.pdf.

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