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Study Confirms Port's Nationwide Impact

Long Beach fuels jobs, spending throughout U.S. economy

March 27, 2019

Just how powerful is the economic engine that is the Port of Long Beach?

Trade, construction in the Harbor District, and other business activity related to moving cargo through the Port support one in five jobs in the city alone.

For each of these 51,090 local jobs, the effect of cargo moving through Long Beach multiplies to another 50 jobs nationwide, for a total of nearly 2.6 million jobs across the country.

All these jobs generate more than $126.8 billion in wages. And all this activity pours an additional $374 billion in spending into the national economy.

“To call it a ripple effect is an understatement,” said Port Executive Director Mario Cordero. “The Port of Long Beach is a force that touches and lifts every corner of the U.S.”

The numbers are captured in the recently released Port of Long Beach: Economic Impact Study, released. The report offers the most up-to-date insights into the economic importance of the nation’s second-busiest container port.

The study analyzes the value of wages and spending from three sources of economic activity supported by the business of the Port: on-site cargo operations; producers and shippers of parts and finished goods who use the Port to reach global markets; and construction and tourism. Combined, this spending stimulates virtually every sector of the U.S. economy: agriculture, construction, education and health services, financial and other professional services, government, manufacturing, media and information, postal and warehousing, retail and wholesale, transportation, and utilities.

Why do the study?

Quantifying the economic significance tells people why the Port matters and explains the link between the Port’s success and their quality of life. The connections are crucial: The economic impacts are one in five jobs, more than $3 billion in wages, and $9 billion in spending. The business of the Port affects the local community on a daily basis.

The Long Beach Board of Harbor Commissioners, which oversees the Port of Long Beach, ordered the study in 2017, seeking to update the data on the Port’s impact.

“The Board is committed to maintaining a seaport that serves many needs of our customers, our public, our region, our state and our nation,” said Harbor Commission President Tracy Egoscue. “By identifying and quantifying the economic impacts, this report underscores the importance of ensuring the success of the Port of Long Beach.”

Beyond the city, the report examines the impact of Port activity on jobs, wages and spending within Los Angeles County, across five counties in Southern California, statewide and at the national level. As the geographical region expands, so do the economic benefits.

“The study validates the investments we and our partners make to modernize our facilities, optimize the flow of cargo and green our operations to stay competitive,” Cordero said. “The Gerald Desmond Bridge Replacement Project is a perfect example. While the $1.47 billion construction cost over seven or eight years is considerable, it is less than half of 1 percent of the economic activity our Port generates in a single year and it allows these benefits to grow.”

Mapping the Port’s reach also illustrates its significance to the nation. California, Minnesota, Illinois, Texas and Wisconsin are the top five states exporting goods to global consumers through the Port. New Jersey, New York, Texas and Illinois join California as the top five importers of goods and parts, fueling business, jobs and wages in their states.

Regardless of how an individual state ranks, every U.S. congressional district has business ties to the Port of Long Beach stemming from companies that import, export or ship in both directions. Districts linked to trade valued at more $50 million include those in Tennessee, Oklahoma, Washington, Nebraska, Iowa and Florida.

Port activity is also a major contributor to the tax base. For calendar year 2017, spending and jobs associated with cargo moving through the Port generated more than $46.6 billion in local, state and federal taxes from businesses and households. Understanding these benefits is essential for lawmakers charged with managing taxpayer dollars for the greater good, Cordero said.
 
“The study tells the story of why communities across the country and the lawmakers who represent them should care about what happens at the Port of Long Beach and take an interest in the widespread benefits of supporting Port projects such as infrastructure improvements and zero-emissions initiatives,” he said.  

Other big picture findings

The value of goods shipped through the Port has increased 66 percent since 2001, the last year for which the Port did an economic impact analysis. That growth is “directly related to the growth in manufacturing and retail trade industries in the U.S. and overseas that depend on the Port as a gateway for intermediate and final goods distribution,” the report says.

Leading imports are machinery, electronics, fuel and oil, vehicles and apparel. Leading exports are aircraft, machinery, vehicles, plastics and cotton. For 2017, the total value of these and other goods moving through the Port is more than $194.1 billion. When the unfinished goods and parts in the mix become products, and the total value increases to $206.2 billion.

Not surprisingly, the lion’s share of economic activity comes from “Port users” – cargo owners who spend hundreds of billions of dollars to move goods through the Port. Producers and shippers of parts and finished goods that rely on the Port to reach global markets generate about 97 percent of the nation’s jobs, wages and business sales associated with Port operations.

“These data points highlight the Port’s role as a service provider,” Cordero said. “We’re a critical gateway that links cargo from one mode to another to connect producers and consumers worldwide.”

How the study works

Conducted by the EDR Group in association with Tioga Group, Inc., the study uses a traditional input/output model to evaluate wages and spending associated with Port activity. Jobs, wages and spending are estimated based on the direct, indirect and induced effects of Port activity. Spending on goods, labor and materials for Port operations are direct impacts; the purchase of goods and services by suppliers to meet the demands of Port operations are indirect impacts; and induced impacts result from money funneled back into the economy by those who earn a living from Port-related economic activity.

“Economists call it the multiplier effect,” said Director of Master Planning Matt Plezia, who oversaw preparation of the new study. “Dollars from Port-related wages and spending fuel the larger economy.”

The economic impact report comes with a new feature: a modeling tool that allows the Port to update the study in-house. The software also makes it possible for the Port to estimate the impacts of future variables such as changes in cargo throughput, facilities improvements, proposed projects subject to the environmental review process, and possible disruptions, whether natural or man-made.

“This model improves our ability to forecast and plan based on more complete information,” Plezia said.

Read the full Economic Impact Study here.

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