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ASSUMPTION
TECHNIQUE
EXAMPLE: KING COUNTY
Using SIC Code data
for King County in 1994, we can illustrate the Assumption
Technique. In Table 1 are presented the employment
figures for the Major Industrial Sectors.
Table 1: King
County Employment by Major Industrial Sector, 1994
Industrial
Sector
|
Employment
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Agriculture
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7,847
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Mining
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697
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Construction
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55,146
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Manufacturing
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179,691
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TPU
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61,430
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Wholesale
Trade
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67,643
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Retail
Trade
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153,268
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FIRE
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72,523
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Services
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239,308
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Unclassified
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2,744
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Total Employment
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840,297
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In
Table 2 we can begin to apply our Assumption Technique.
We have assumed that King County's Agriculture, Mining,
and Manufacturing sectors are basic and all other sectors
are non-basic. This is the most basic application of this
Technique.
Table 2:
Assumption Technique Applied
Industrial
Sector
|
Employment
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Basic or
Non-Basic
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Basic
Employment
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Non-Basic
Employment
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Agriculture
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7,847
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Basic
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7,847
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Mining
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697
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Basic
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697
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Construction
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55,146
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Non-Basic
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55,146
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Manufacturing
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179,691
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Basic
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179,691
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TPU
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61,430
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Non-Basic
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61,430
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Wholesale
Trade
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67,643
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Non-Basic
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67,643
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Retail
Trade
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153,268
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Non-Basic
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153,268
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FIRE
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72,523
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Non-Basic
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72,523
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Services
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239,308
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Non-Basic
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239,308
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Unclassified
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2,744
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Non-Basic
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2,744
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Totals
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840,297
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188,235
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652,062
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In
Table 2 we have also calculated totals for our Basic and
Non-Basic Sectors so that we can then calculate our Base
Multiplier. In Table 2 we see that Basic employment
totals 188,235 and Non-basic employment totals 652,062.
Using the Base Multiplier formula:
Base Multiplier =
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Total Employment Year i
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=840,297
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=4.46
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Basic
Employment Year i
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=188,235
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In this
example, King County has a Base Multiplier of
4.46 when calculated using the Assumption
Technique.
This
multiplier estimates that for every one Basic
Sector job created, 3.46 Non-basic Sector jobs
are created.
Would an
employer like Boeing be pleased with these
results? Would this finding help or hinder their
argument that they deserve special tax
consideration by the county?
What
problems/limitations do you see with this
technique?
In the King
County example above, data from the Major
Industrial Sectors was used. What would happen if
the assumption technique were applied at a finer
level of data, say, the Three-Digit level? Would
some of your assumptions change? How so?
Give two
examples of how your assumptions would change if
you were to use the Assumption Technique for King
County at the Three-Digit Level.
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