A bigger hit than you might think

It’s looking like 500 workers at the Invista plant are going to be out of jobs between now and February, give or take. Let’s look at that number, 500. What does it mean to the Waynesboro economy?
Because at first glance, OK, 500, that’s a lot of people, but the Waynesboro economy supports roughly 11,000 jobs, and the regional economy including Staunton and Augusta County supports in the area of 50,000 jobs. So 500, it’s a lot of people, sure, but it’s a trickle relatively, right?

That’s one way to look at it. Another is to do some quick math. The average annual wage for a manufacturing employee in Waynesboro, according to data collected by the Virginia Employment Commission, is $45,812 a year, compared to the average annual wage for non-manufacturing employees of $30,351. That’s a $15,000-plus gap, for those keeping score at home.

To get a sense of how much the job losses at Invista are going to affect the local economy, I’ve got two measures for you. One is to assume that the employees don’t get jobs for an entire year after being laid off. We’ll call this the worst of all worst-case scenarios. Multiply $45,812 by 500 and you get an economic impact of $23.3 million in lost wages that will not be circulating through the Waynesboro economy. My second measure is one of the better-case scenarios available, assuming that all 500 employees get jobs at the prevailing average wage. You multiply the difference in what they were making before and what they would be making then, $15,500, by 500, and you get $7.75 million in economic impact.

In the interest of adding to the context here, the Waynesboro economy in calendar-year 2008 is on pace to break the $400 million barrier for the first time. Even in my rosier scenario, we’re talking about retraction in 2009 of right around 2 percent. My worst-case scenario puts us in the area of 6 percent retraction in the local economy.

And keep in mind that my measures here are 100 percent specific to Invista employees. There are models out there for measuring what is called the multiplier effect of economic activity that to varying degrees suggest that related industries can suffer impacts beyond the first level of, say, a mass layoff. I’m not partial to any one or the other, so I’ll leave it to debate to decide how much of a multiplier we can end up agreeing this bad news will have. My point is that it stands to reason that if we’re losing somewhere between $7 million and $23 million in wages in our local economy next year, then downtown is going to suffer, and the West End is going to suffer, and the newspaper is going to suffer, and, oh, yeah, I’m going to suffer.

The irony is that this is happening now. Some of the gloomier predictions out there are calling the economic downturn that we’re facing today the worst since the Great Depression. The Invista plant is the remains of the DuPont plant that opened in 1929 and to a great degree shielded Waynesboro from the worst of the Depression. And now here we are 80 years later, coming full circle.

 

– Column by Chris Graham