Estimates based on SIC Codes
As in The Chamber’s previous economic impact studies of the biomedical and aerospace industries, information for this report was obtained from the Texas Workforce Commission (TWC) aggregated into the lines of business defined by the Standard Industrial Classification (SIC) coding framework. This data is assembled from unemployment insurance reports to the state and represents a 100% sample of all businesses in each SIC category. The SIC codes used in this study are listed below.
Products
5045
Wholesale Trade in Computers, Peripherals and Software
357
Manufacturing of Computer and Office Equipment
367
Manufacturing of Electronic Components and Accessories
Services
737
Computer and Data Processing Services
The TWC data contain employment and salary information for each quarter of the calendar year. Data for all of 1990, 1995 and 2000 were obtained. The employment figures for the four quarters in each year were averaged to obtain a representative employment level, and payroll figures were computed by summing the wages reported for each of the four quarters.
Translating payroll information to economic impact involves two transformations. First, total sales are estimated from each subsector’s payroll using the relationship between payroll and sales from the 1997 Economic Census for that subsector in the San Antonio MSA. These ratios are specific to each SIC code, and range from 3.23 for wages in computer and data processing services to a high of 9.81 for the manufacture of computer and office equipment.
The second transformation is necessary because the information technology industry sells a large share of its products and services outside San Antonio. When local businesses generate “export” sales, new spending comes into the San Antonio economy. This spending generates a multiplier effect as it circulates in the local economy, magnifying its original impact. To estimate the total economic impact of an ‘export’ industry, it is customary to use an economic impact multiplier. This study employs the widely-used industry-specific multipliers from the U.S. Department of Commerce’s RIMS II model for San Antonio; these figures range from 1.71 to 2.0 for the information technology industry sectors present in our region.
Note that the multiplier can properly be applied only to export sales. While a large portion of the services and equipment produced in the information technology industry is aimed at external customers, it is also clear that some products are consumed locally. No aggregate data exists detailing the percentage of exports for the various components of the informational technology sector, so a subcommittee of the Technology Council, representing a wide range of expertise, was tasked with determining the appropriate percentages. After careful deliberation, the following export figures were assigned to each of the major information technology SIC categories:
CATEGORY
Computers, Peripherals & Software....75% EXPORTS
Computer and Office Equipment....70% EXPORTS
Electronic Components
and Accessories....90% EXPORTS
Computer and
Data Processing Services....55% EXPORTS
The RIMS multipliers were applied, then, only to that proportion of each sector that was judged to represent export sales and services.
Once economic impact has been estimated for each SIC code, the estimates are summed to obtain the overall impact for the industry.