University Boosts Regional Economy by $125 Million Annually


Student spending in Cape area exceeds $51 million

CAPE GIRARDEAU, Mo.,

Aug. 22, 2003 – Southeast Missouri State University boosts the regional economy with student expenditures of $51.2 million annually, and a total University impact of $125.6 million, according to two related studies recently completed by Southeast students and professors in the Donald L. Harrison College of Business.

Student expenditures in the Cape Girardeau area were calculated by students of Dr. Judy Wiles, Southeast professor of marketing, as part of a study during the spring 2003 semester.

Students in Wiles’ MK345 Introduction to Business Research administered a survey to 266 on- and off-campus students taking more than six credit hours during the spring 2003 semester. Students participating in the survey were asked to provide weekly, monthly and nine-month academic year spending estimates in various categories such as food and beverage, travel, medical, rent, entertainment and personal appearance. Student expenditures were based on purchases made in Cape Girardeau, Jackson, Scott City and rural areas of Cape Girardeau County.

At the same time, a corollary study to determine the overall impact of students, employees and University spending on Cape Girardeau County was conducted by Dr. Bruce Domazlicky, Southeast professor of economics. Major findings of that study show total spending by University employees having a $35.6 million impact and total spending as an institution having a $17.9 million impact, along with student impact of $72.1 million, to make up the total of $125.6 million.

Domazlicky praised Wiles’ class for the work they did in computing student spending. “Dr. Wiles’ marketing class executed a very thorough survey of Southeast’s student body,” he said. “The students and Dr. Wiles are to be commended for their excellent performance.”

According to that study, students, during the nine-month 2002-2003 academic year, spent $5.3 million on dining out in restaurants, $5.5 million on groceries, $4.2 million on gasoline, $3 million on rent and $1.79 million on cell phone charges. The study also found that students spent $1 million on utilities, $1.1 million on toiletries, $4.1 million on car payments, $2.1 million on clothing, and $1.1 million on computers and software. The study also found that students’ families spend an estimated $2.8 million when they visit the Cape Girardeau area.

“Clearly, student spending in the Cape Girardeau area makes a significant impact,” Wiles said. “Southeast students reflect a viable target market for many businesses in the surrounding area.”

Dr. Irene Ferguson, dean of students, said, “Students are much more informed and sophisticated consumers these days.”

She said many students today have expenses more like those of people who have been out of school and working in the economy for a while, such as payments for cell phones, car insurance and palm pilots –“the whole nine yards,” she said. They are managing multiple priorities much more early in life” than college students from previous generations.

Southeast currently serves about 9,500 students and provides full-time employment for 1,122 faculty and staff.

“Faculty and student spending in the region creates jobs,” Domazlicky said. “For every one University job, two jobs are created outside of the University.” This amounts to a total employee effect in the county of 3,481.

A second major finding of Domazlicky’s study is the impact the University makes on the region in terms of the number of skilled graduates it produces who live in the area and earn an income as a result of their training from Southeast. By improving the knowledge and skills of workers in the region, the University helps to make them more productive. This also contributes to faster economic growth and development for the region.

Recent studies indicate that, on the average, a college graduate earns about $22,500 more per year than someone with only a high school diploma. The study determined the value of human capital by multiplying $22,500 times the number of alumni in the University’s 24-county service area.

Based on that estimate, the study pegs the difference in increased earning power of more than 21,000 Southeast graduates now working in the region at $475.4 million because of their greater knowledge base and enhanced employability in jobs with good salaries.

“This is easily the largest economic impact of the University on the region,” Domazlicky said.

Jerry Westbrook, director of Career Services at Southeast, added, “The broadening of individuals to be adaptive in all situations – analytical, problem-solving, team work, and interpersonal and social skills – is greatly enhanced by a college education. A college education allows students to look at circumstances and trends and not only be able to adapt to them but also to prevail in a global marketplace.

“A Southeast education really provides a rich fertile field for students to enhance their intellectual and social skills all at the same time,” he added. “In addition, Southeast graduates leave the institution with enhanced ability to be productive citizens in their communities. Southeast produces an educated, enlightened citizenry that accepts its responsibility to participate in social and political processes by assuming leadership roles in their communities.”

Domazlicky conducts his study periodically to determine the impact of the University on the Cape Girardeau region. The study surveys the combined value of direct and indirect expenditures and contributions made to the monetary base by the University and its employees and students, as well as the “human capital” created by the institution.

The study calculates total expenditures – direct and indirect combined – at $112.8 million annually in Cape Girardeau County, resulting in $125.6 million being contributed to the production of goods and services in the region. Direct expenditures were $80.9 million annually. Indirect spending, which is the economic activity sometimes referred to as the “multiplier effect,” was $36.9 million annually.

Economists use a multiplier to describe the total effect of dollars as they are circulated in the economy. A dollar, for example, may be spent by one person and become income for a second person, who in turn spends the money again. In this study, Domazlicky used IMPLAN, an input-output model of Cape Girardeau County. An input-output model is designed to represent links between various sectors of the economy so that when one sector expands, it has predictable effects on other sectors that may supply inputs to the expanding sector. A conservative multiplier of 1.75 was used in this study.

The study based spending on: goods and services bought by the University from regional vendors and suppliers; earnings spent by University employees; and purchases made by students.

The study shows spending by the University of having a $17.8 million output effect on the economy of the county. The overall effect, or output, is a measure of regional production of goods and services and is the regional counterpart of Gross National Product, Domazlicky said.

Survey results also showed that Southeast students contribute significantly to the local labor market. Projected estimates for students’ take-home pay in the Cape area per academic year, including on –campus jobs, exceeds $22.5 million, according to the results.

University employees also have an enormous effect on the labor market, earning more than $45 million annually in personal income. That, along with a $19.6 million indirect effect on personal income, amounts to a $64.7 million impact on personal income in Cape Girardeau County. IMPLAN calculates the output effect of total employee spending at $35.6 million.

Overall results of the survey indicate that Southeast continues to play an increasingly significant role in the economic health of the region. The $75.9 million direct impact reported in this year’s study compares with $69.3 million reported in 1998, $53.8 million reported in 1995 and $48.9 million reported in 1991. University-related dollars enter regional economic channels, resulting in increased income, profits, employment, tax revenues and other factors for various sectors of the local and regional economy.