Studies that attempt to quantify economic effects tend to elicit the skeptical response the numbers are overblown. Using mistaken assumptions and unrealistic multipliers, studies invariably purport that a given industry sector or even an individual business contributes billions and billions of dollars to the economy.
Fortunately, that’s not the case with studies detailing the economic contributions of Colorado Mesa University in Western Colorado. If anything, the studies understate the growing role CMU plays in the regional economy. Regardless of the exact numbers, though, business owners and managers clearly have a lot for which to be thankful.
The latest analysis for the 2011 and 2012 fiscal year estimates the overall economic impact of CMU to total more than $351 million. That figure includes a total of more than $195 million in direct economic contributions and another $156 million in indirect contributions.
Not surprisingly, the purchases the 9,500 students enrolled at CMU make for housing, food, entertainment and other expenses constitutes the single largest direct economic effect at almost $109 million. University expenditures for everything from office supplies to furniture to utility bills accounted for the second largest direct contribution to the economy at more than $25 million. Still other direct effects included money spent by visitors to CMU, the wages paid to faculty and staff and, of course, the ongoing capital construction on the growing campus.
While all those numbers with millions are impressive enough, other, far smaller numbers are equally important. Those figures are the proportions of spending related to CMU that occur in the region. Thankfully, what’s spent in Western Colorado stays in Western Colorado. About 90 percent of what CMU students spend and CMU employees earn stays in the region. About 80 percent of the money spent on capital construction stays on the Western Slope and
76 percent of what’s spent on university purchases stays here.
What it all means is that Western Colorado businesses fully enjoy the benefits of spending related to CMU in the goods and services they sell to the university and its students and staff. The money those businesses earn in turn go to vendors and employees, who in turn buy things from still other businesses.
That’s where the multiplier effect comes into the calculations of economic impacts. It can be argued just how much one dollar in direct contributions generate additional dollars in indirect contributions. Some studies of the economic impacts of universities have used multipliers as low as 1.38 and as high as 2.3. The analysis of CMU has always used a figure near the middle of that range at 1.8.
What the CMU analysis doesn’t include is the economic effects of a university education to the workforce on a collective or individual basis. The more educated and skilled the workforce of a region, the better that region performs economically. Educated and skilled workers not only better meet the needs of existing businesses, but attract new businesses that tend to pay higher wages. Educated and skilled workers earn more money. By one estimate, workers with college degrees earn $1 million more over the course of their careers than workers who don’t.
One final thing: University educations hold the potential to change lives. And you can’t put a price tag on that.