How does the Gigafactory equate to $100B of economic impact to Neveda?

[MuskForPresident]

Does anyone know where they get the $100B of economic impact over 20 years = $5B/year number from? If they have 6,500 workers making $25/hr = $50k/year that equates to $325MM in salaries paid/year.

How does that equate to $5B in economic impact?

 

[bonnie]

Other benefits accrue, like health care, day care, investments ... employees buy groceries, have kids that go to school and need teachers, buy houses, etc etc. 6500 workers are just the people directly employed. There are all the other businesses that will come in to supply services and sell goods. And then the businesses that supply services and sell goods to them. And so on.

 

[mitch672]

well... the factory isn't just the workers. There are materials to be delivered and removed (trucking jobs, railroad jobs), there are workers to feed and house (shopping strips, restaurants, new housing for the workers), there is the construction of the factory itself. There are impacts far and wide when a project this large pops up.

 

[ItsNotAboutTheMoney]

well... the factory isn't just the workers. There are materials to be delivered and removed (trucking jobs, railroad jobs), there are workers to feed and house (shopping strips, restaurants, new housing for the workers), there is the construction of the factory itself. There are impacts far and wide when a project this large pops up.

And leisure activities, entertainment industry.

If Tesla makes 50GWh/year at $100/kWh with 10% margin, over $4.5B per year.will be costs.

 

[Bighorn]

Gov mentioned 16000 new jobs outside of the factory as well.

 

[supersnoop]

Don't forget about property taxes on the building, contents, and inventory.

 

[AudubonB]

Here is the answer I gave when you earlier asked the identical question on another thread....sorry that others have provided similar material:

That impact comes through the multiplier effect. Each high-quality manufacturing job should generate about three other full-time jobs - retail, service, other trade, education and so forth. These are REAL, not hypothetical impacts. So the 6,500 direct Tesla-jobs should expand to something like 25,000 total jobs created in Nevada.
By the way, service industries....especially Nevada's gambling....have a minuscule multiplier effect. Casinos' ancillary jobs created are low-quality and relatively few. The state absolutely needed a keystone manufacturing opportunity like the one Tesla offered - it absolutely will have an demonstrable and large positive effect on Nevada's economy for decades.

Well done to all.

 

[Robert.Boston]

Thanks, Audie. There's a range of job creation. The US "Advanced Manufacturing Portal" cites a study by two economists that finds:

On average, one new manufacturing creates 1.6 additional jobs in local service businesses. Jobs in high-tech manufacturing industries, which require workers with high skill levels and pay above-average wages, generate five local service jobs.

So even though Nevada is waiving certain taxes for Tesla, it's not waiving taxes on Tesla's employees nor on the businesses or employees of those other multiplier-effect jobs.

 

[Papafox]

Not only will the added workers increase the number of individuals paying property taxes and sales taxes, but the property taxes for most Reno/Sparks residents will rise too because the property values will be rising considerably. Nevada was one of the worst-hit locations in the country when property values sank after the 2008 subprime mortgage meltdown. Property values took another hit as Indian gambling in California and other neighboring states reaked havok on Northern Nevada's gaming income. Now Northern Nevada is diversifying with a great business: manufacturing with good-paying jobs that is relatively pollution free (electricity coming from solar, etc.). I grew up in Reno and know the area well.

 

[reechardli]

I'm assuming the increased demand from Nevada's lithium mining operations are also factored into those numbers.

 

[TD1]

I'm assuming the increased demand from Nevada's lithium mining operations are also factored into those numbers.

actually that doesnt matter.
Tesla would still used the Nevada lithium mines, no matter wwhat state the GF would be in.

 

[ItsNotAboutTheMoney]

Not only will the added workers increase the number of individuals paying property taxes and sales taxes, but the property taxes for most Reno/Sparks residents will rise too because the property values will be rising considerably.

Unless rising housing values allow the local government to lower the mill rate.

 

[jhm]

We know roughly what the labor costs will be. Average wage is $25/hour or $50,000/year. For 6500 at full capacity, this is $325M/year for wages. Benefits may be another $175M/year. So total labor costs will be about $500M/year. (This is also just $10/kWh.)

A multiplier effect of 5 indirect jobs, even ones paying $50,000, only gets us to about $3B/year in personal income and benefits.

Over the long run, home prices rise in proportion to income. (In fact, the last housing bubble could have antipated, and was, by simple observation that the ratio of the median home price was substantially higher than historical norms.) So a $3B increase in income should generate only about $800M sustainable increase aggregate home prices. However, the jobs and household income this creates should already be accounted for in the job multiplier effect. Additionally, things like increased shipping and B2B sales should likewise be included in the multiplier effect. So we need to be careful not to double count economic impact.

I'm not sure wages and the job multiplier effect get us to $5B per year, maybe $3B. But we also need to consider the impact on the rate of economic growth and inflation. Suppose real growth is 3% per annum and inflation about 2% pa. Then nominal GDP grows about 5%. After 20 years that $3B grows to over $8B. Summing up over 20 years of 5% nominal growth, starting with $3B, I get a total economic impact of $99B, close enough for government work.

 

[evme]

Here is a copy of the projected report of economic impact:

Economic report says Tesla to generate $1.9 billion in new taxes for state - Las Vegas Sun News

avg salary will be $27.35/hour