The University of Tennessee, Knoxville, generates $1.6 billion in annual income for the state of Tennessee, creates nearly 33,000 jobs, and contributes more than $125 million in tax revenue to the state and local governments. That’s according to a study by UT’s Center for Business and Economic Research (CBER) released today.
Bill Fox, CBER director, and Lawrence Kessler, research assistant professor of economics, used detailed revenue and expenditure data for fiscal year 2014 to complete the impact study.
Chancellor Jimmy G. Cheek and Fox presented the findings today at a news conference.
The campus economic impact has grown from $915 million to $1.6 billion since 2007. Economists said the $685 million increase is due in large part to the volume of campus construction and renovation projects. CBER’s previous study was released in 2009 and was based on 2007 data.
“The operation of UT Knoxville is responsible for more than 1 percent of Tennessee’s total employment and personal income, in addition to the broad effects the university has on the state’s labor force and international reputation,” said Fox.
Spending Impact and Employment Effects
In 2014, UT spent more than $1 billion on payroll and benefits, and services and goods. Full-time students and visitors who came to campus for sporting events and conferences spent $281 million. Economists estimate that area fans spend $40.20 a day at football games and $20.10 for basketball games and special events, excluding the ticket prices. Fans from outside the area who stay the night spend $218 a day in and around the Knoxville area.
UT’s nonpayroll spending has spiked in recent years because of the university’s significant investment in new construction and renovation. UT spent $147.9 million on construction in 2014. Construction spending was 27 percent of UT’s nonpayroll spending for 2014. Other nonpayroll spending includes utilities, maintenance and repairs, supplies, materials and services.
This combined spending has a multiplier effect whereby “money is spent and re-spent elsewhere in Tennessee, such that each dollar spent generates more than one dollar in economic activity.”
“Specifically, university-related purchases of goods and services from vendors within the state create jobs and income for their employees and owners,” the report states.
UT directly employs 9,263 workers, and its spending supports another 23,659 jobs, for a total of nearly 33,000 jobs in Tennessee.
Economists estimate that UT’s payment of wages and fringe benefits results in one additional job for every UT employee as the multiplier process works through the economy.
In addition, 9,420 nonpayroll jobs were created, including 2,740 in construction. Student and campus visitor spending creates another 4,978 jobs.
Additionally, the university’s spending and the income it generates infuse $125.3 million a year in taxes to state and local governments. More than $73 million of the total is generated through direct and indirect taxable sales.
UT enhances the quality of life and cultural diversity of Tennessee. The study cites the impact of UT’s prominent research projects and community engagement, and its critical role in supplying the state’s well-educated workforce.
“Tennessee benefits from an educated workforce, including students currently enrolled and faculty members as well as alumni and retired faculty who reside or work in the state,” the study says.
A more educated workforce results in higher wages and lower unemployment rates for UT graduates. Past CBER research found that approximately 59 percent of UT graduates stay and work in Tennessee during the first quarter following graduation.
A spillover benefit is the improved productivity of other workers and their resulting higher incomes.
UT faculty and students attract, create and work on a variety of prominent research projects that improve the well-being of the state.
Research projects create income and jobs for the state while improving its reputation and quality of life. Many of these projects are financed by federal, state, or corporate expenditures. The study points to significant benefits of the UT-Oak Ridge National Laboratory partnership.
Finally, students and faculty provide to their local communities through religious organizations, schools, charities and a range of other community endeavors. UT attracts a diverse group of students and faculty, providing a wide range of cultural and social activities that would otherwise not be present in Tennessee.
The Center for Business and Economic Research is a department within the Haslam College of Business that conducts research on national and state economic trends for UT, state agencies, and public and private organizations.
To read the study, visit http://tiny.utk.edu/economic_report.
For more information about the Center for Business and Economic Research, visit http://cber.utk.edu.
For more information about the Haslam College of Business, visit http://haslam.utk.edu.