The University of Alabama at Birmingham is a powerhouse for academic, clinical and research innovation throughout the Birmingham region, statewide, nationally and throughout the globe.

With an enrollment of more than 19,500 students in 2016 (rising to 22,080 students in fall 2019), employment of more than 23,000 full-time and part-time individuals, and more than 120,000 active alumni worldwide, the impacts of UAB can be felt by many throughout the world. As the largest single employer in the state of Alabama, UAB generates significant impacts for its employees and the state in terms of economic, employment and government revenue impacts on a daily basis. UAB, the UAB Health System and Southern Research drive a significant amount of the Alabama economy every year.

UAB's economic impact was measured as part of a report prepared by economic development consulting firm TrippUmbach in 2016, following a previous study in 2009. A summary of that report, along with the full report publication, is included on this site.

 

UAB economic impacts to the state -  - infographic

  • UAB generates $7.15 billion in economic impact annually within the state of Alabama.
  • UAB supports 64,292 jobs throughout the state of Alabama.
  • One in every 31 jobs within the state of Alabama either is held directly by a UAB employee or is supported as a result of UAB’s presence.
  • State and local government revenue attributable to the presence of UAB totaled $268.6 million in FY16.
  • For every $1 in state funding received by the institution, UAB generates $25 in economic impact that is returned back to the state.
  • UAB faculty, staff and students generate more than $80.5 million in community impact through donations and volunteer time to local nonprofits. In addition, the UAB Health System supports more than $144 million in charity care to underserved populations in Birmingham and across the state.

 

Combined economic impacts of UAB, UAB Health System and Southern Research  - infographic

PROJECT OVERVIEW

The overall economic and fiscal impact that the University of Alabama at Birmingham has on the vitality of the region and state includes the following elements:

  • Economic impacts through spending (capital expenditures, operational expenditures, payroll and benefits)

  • Direct, indirect and induced employment impacts

  • Government revenue impacts at the local and state levels

  • The impact of spending by employees in the local economy on goods and services

  • The impact of visitor spending on the economy (wage premiums, job creation, etc.)

  • The impact of student spending in the region (retail/merchandise, hospitality, etc.)

  • The impact of the attraction of external research dollars, the commercialization of research discoveries, and the impacts on the economic development throughout the region

  • The impact that employees and students have on the community through donations and volunteer work.

This economic impact analysis measures the effect of direct, indirect and induced economic, employment and government revenue impacts for UAB Academic, UAB Health System and Southern Research operations throughout the state of Alabama as well as the Birmingham Combined Statistical Area (CSA).

For the purposes of the impact analysis, UAB is defined as the combined impacts of UAB Academic, the UAB Health System and Southern Research. These entities are further defined as:

  • UAB Academic – The UAB Academic impact analysis included all schools and colleges of UAB, including UAB Arts (AEIVA, Alys Stephens Center) and UAB Athletics.

  • UAB Health System – The UAB Health System impact analysis included the UAB Health System Corporate Office, the UAB Hospital, the University of Alabama Health Services Foundation (UAHSF), Medical West, Baptist Health System in Montgomery, Triton Health System / Viva Health Group, and UAB Callahan Eye Hospital Authority.

  • Southern Research – Southern Research impact analysis included only the operations of Southern Research.

Impact findings were generated for UAB Academic and Southern Research at the state and Birmingham CSA geographies; impact findings for the UAB Health System were generated for all of the aforementioned entities at the state-level geographic analysis, but omitted Baptist Health for the Birmingham CSA analysis (Baptist Health is not located within the Birmingham CSA).

IMPACT METHODOLOGY

The methodology employed in the calculation of these impacts was IMPLAN. Primary data utilized to conduct the analysis was collected directly from each institution analyzed. Data included capital expenditures (five-year average), operational expenditures, employment headcounts, payroll and benefits, taxes, and event information for FY16. The multipliers used in this study were derived from the IMPLAN software. Tripp Umbach’s approach to economic impact analysis is conservative by way of utilizing the industry standard software, IMPLAN, to conduct the impact analysis and using conservative assumptions for individual spending patterns. Tripp Umbach bases assumptions of spending on federal per diem rates. Economic impact begins when an organization such as UAB spends money. Studies measuring economic impact capture the direct economic impact of an organization’s spending, plus additional indirect and induced spending in the economy as a result of direct spending.

Total economic impact measures the dollars that are generated within the region due to the presence of UAB Academic, UAB Health System and Southern Research. This includes not only spending on goods and services with a variety of vendors within the region and the spending of its faculty, staff, students and visitors, but also the economic impact generated by businesses that benefit from UAB’s spending. It is important to remember that not all dollars spent by an organization remain in its home state. Dollars that are spent out of the region, in the form of purchases from out‐of‐area vendors, are not included in UAB’s economic impact on the region. The multipliers utilized in this study were derived from IMPLAN.

Key economic impact findings presented within this study include the total current (FY16) economic impacts of UAB Academic, UAB Health System and Southern Research operations on employment in Alabama, as well as the revenue impact on state and local governments. It is important to note that all impact values of UAB reported in this study occur on an annual basis.

WHAT IS ECONOMIC IMPACT?

WHAT IS THE MULTIPLIER EFFECT?

WHAT METHODOLOGY WAS USED IN THIS STUDY?

WHAT IS EMPLOYMENT IMPACT?

WHAT IS THE DIFFERENCE BETWEEN DIRECT AND INDIRECT TAXES?

IS THIS A ONE-TIME IMPACT, OR DOES THE IMPACT REPEAT EACH YEAR?

WHAT ARE TRIPP UMBACH’S QUALIFICATIONS TO PERFORM ECONOMIC IMPACT ANALYSIS?

 

 

WHAT IS ECONOMIC IMPACT?

Economic impact begins when an organization spends money. Economic impact studiesmeasure the direct economic impact of an organization’s spending, plus additional indirect spending in the economy as a result of direct spending. Economic impact has nothing to do with dollars collected by institutions, their profitability or even their sustainability, since all operating organizations have a positive economic impact when they spend money and attract spending from outside sources.

Direct economic impact measures the dollars that are generated within a geographic region due to the presence of an institution. This includes not only spending on goods and services with a variety of vendors within the region, and the spending of its employees and visitors, but also the economic impact generated by businesses within the region that benefit from the spending of the institution. It is important to remember that not all dollars spent by an institution stay in geographic region of study. Dollars that “leak” out of the region in the form of purchases from out‐of‐area vendors are not included in the economic impact that an institution has on the region.

The total economic impact includes the “multiplier” of spending from companies that do business with an institution. Support businesses may include lodging establishments, restaurants, construction firms, vendors, temporary agencies, etc. Spending multipliers attempt to estimate the ripple effect in the economy where the spending occurs. For example: Spending by an institution with local vendors provides these vendors with additional dollars that they re‐spend in the local economy, causing a “multiplier effect.”

WHAT IS THE MULTIPLIER EFFECT?

Multipliers are a numeric way of describing the secondary impacts stemming from the operations of an organization. For example, an employment multiplier of 1.8 would suggest that for every 10 employees hired in the given industry, eight additional jobs would be created in other industries, such that 18 total jobs would be added to the given economic region. The multipliers used in this study range from 1.8 to 2.0.

The Multiplier Model is derived mathematically using the input-output model and Social Accounting formats. The Social Accounting System provides the framework for the predictive Multiplier Model used in economic impact studies. Purchases for final use drive the model.  Industries that produce goods and services for consumer consumption must purchase products, raw materials and services from other companies to create their product. These vendors must also procure goods and services. This cycle continues until all the money is leaked from the region’s economy. There are three types of effects measured with a multiplier: the direct, the indirect, and the induced effects. The direct effect is the known or predicted change in the local economy that is to be studied. The indirect effect is the business-to-business transactions required to satisfy the direct effect. Finally, the induced effect is derived from local spending on goods and services by people working to satisfy the direct and indirect effects.

  • Direct effects take place only in the industry immediately being studied.

  • Indirect effects concern inter-industry transactions: Because an institution is in business, it has a demand for locally produced materials needed to operate.
  • Induced effects measure the effects of the changes in household income: Employees of an institution and suppliers purchase from local retailers and restaurants.
  • Total Economic Impacts are the total changes to the original economy as the result of the operations of an institution, i.e., Direct effects + Indirect effects + Induced effects = Total Economic Impacts.

WHAT METHODOLOGY WAS USED IN THIS STUDY?

IMPLAN (IMpact analysis for PLANning) data and software. Using classic input-output analysis in combination with regional specific Social Accounting Matrices and Multiplier Models, IMPLAN provides a highly accurate and adaptable model for its users. The IMPLAN database contains county, state, ZIP code and federal economic statistics that are specialized by region, not estimated from national averages, and can be used to measure the effect on a regional or local economy of a given change or event in the economy’s activity.

WHAT IS EMPLOYMENT IMPACT?

Employment impact measures the direct employment (employees, staff, faculty, administration) plus additional employment created in the economy as a result of the operations of an institution.

Indirect and Induced employment impact refers to other employees throughout the region who exist because of an institution’s economic impact. In other words, jobs related to the population — city services (police, fire, EMS, etc.), employees at local hotels and restaurants, clerks at local retail establishments, and residents employed by vendors used by the institution.

WHAT IS THE DIFFERENCE BETWEEN DIRECT AND INDIRECT TAXES?

Direct tax dollars include sales taxes and net corporate income taxes paid directly by the institution to the state, while indirect taxes include taxes paid to the state by vendors that do business with an institution and individuals.

IS THIS A ONE-TIME IMPACT, OR DOES THE IMPACT REPEAT EACH YEAR?

The results presented in this economic impact study are generated on an annual basis. The economic impact in future years can be either higher or lower based on number of employees, students, capital expansion, increases in external research and state appropriations.

WHAT ARE TRIPP UMBACH’S QUALIFICATIONS TO PERFORM ECONOMIC IMPACT ANALYSIS?

Tripp Umbach is the national leader in providing economic impact analysis to leading health care organizations, universities and academic medical centers. Since 1990, Tripp Umbach has completed more than 300 economic impact studies for such clients as: Boston University, Indiana University, Michigan State University, The Pennsylvania State University, The Ohio State University, UCONN, the University at Buffalo, University of Arizona, University of Michigan, University of Minnesota, The University of Pittsburgh, the University of Vermont, the University of Virginia, The University of Washington and the previous impact analysis for The University of Alabama at Birmingham.

DEFINITION OF TERMS

ORGANIZATIONAL DEFINITIONS

METHODOLOGY DEFINITIONS

EMPLOYMENT DEFINITIONS

ECONOMIC IMPACT VALUE DEFINITION

GOVERNMENT REVENUE IMPACT DEFINITION

VISITOR DEFINITIONS

VISITOR SPENDING

COMMUNITY BENEFITS

RESEARCH IMPACT DEFINITION


DEFINITION OF TERMS


Study Year

Fiscal year was defined as FY16, October 1, 2015 – September 30, 2016

Total Industry Output

The total impact of an organization includes the spending of the organization, the labor income expenditures, and the value-added to the economy as a result of the organizational spending; this is described as the total industry output.

Total Economic Impact

The total impact of an organization is a compilation of the direct impact, the indirect impact, and the induced impact generated in the economy as a result of the organization.

Direct Economic Impact

Direct impact includes all direct effects the organization has on the region due to the organization’s operations. These include direct employees, organizational spending, employee spending, and spending by patients and visitors to the organization.

Indirect Economic Impact

The indirect impact includes the impact of local industries buying goods and services from other local industries. The cycle of spending works its way backward through the supply chain until all money is spent outside of the local economy, either through imports or by payments to value added.

Induced Economic Impact

The response by an economy to an initial change (direct effect) that occurs through re-spending of income received by a component of value added. IMPLAN’s default multiplier recognizes that labor income (employee compensation and proprietor income components of value added) is not lost to the regional economy. This money is recirculated through the household spending patterns causing further local economic activity.

Multiplier Effect

The multiplier effect is the additional economic impact created as a result of the organization’s direct economic impact. Local companies that provide goods and services to an organization increase their purchasing by creating a multiplier.

Government Revenue

Government revenue that is collected by governmental units in addition to those paid directly by an organization, including taxes paid directly by employees of the organization, visitors to the organization, and vendors who sell products to the organization.

Direct Employment

Total number of employees, both full-time and part-time, at the organization based on total jobs.

Indirect Employment

Indirect employment is the additional jobs created as a result of the organization’s economic impact. Local companies that provide goods and services to an organization increase their number of employees as purchasing increases, thus creating an employment multiplier.


ORGANIZATIONAL DEFINITIONS

For the purposes of the impact analysis UAB is defined as the combined impacts of the UAB Academic, the UAB Health System, and Southern Research. These entities are further defined as:

  • UAB Academic – The UAB Academic impact analysis included all schools and colleges of UAB including UAB Arts (AEIVA, Alys Stephens Center) and UAB Athletics.

  • UAB Health System – The UAB Health System impact analysis included the UAB Health System Corporate Office, the UAB Hospital, the University of Alabama Health Services Foundation (UAHSF), Medical West, Baptist Health System in Montgomery, Triton Health Systems / Viva Health Group, and UAB Callahan Eye Hospital Authority.

  • Southern Research – Southern Research impact analysis included only the operations of Southern Research.

 


METHODOLOGY DEFINITIONS

In 2010, UAB contracted with Tripp Umbach to conduct a similar economic impact analysis of their impacts on the state. The 2010 analysis was completed using an ACE-based linear cashflow methodology; the current study was completed using IMPLAN methodology. It is important to understand the different methodologies as the output differs related to methodology utilized. The different methodologies are described below:

ACE-based Linear Cash-Flow Methodology – The methodology employed in the 2010 UAB economic impact study was derived from an original set of research tools and techniques developed for the American Council on Education (ACE). (Caffrey, John and Isaacs, Herbert, “Estimating the Impact of a College or University on the Local Economy,” American Council on Education, 1971) The ACE-based methodology employs linear cash flow modeling to track the flow of institution-originated funds through a delineated spatial area. The ACE-base methodology distinguishes the economic impact of the institutions that are attributable to funds brought into the state from out-of-state sources. The application of this “fresh dollar” model provides a first-line measure of the initial direct expansion in the state economy caused by the institution of study. The final Tripp Umbach, ACE-based, linear cash-flow model is a hybrid model that includes a fresh-dollar approach feeding into a traditional model that tracks institutional in-state spending. Thus, the final model used for the 2010 study measured funds brought into the state together with the ultimate flow of these funds through the state economy and the effect on economic expansion, job growth, and enterprise development. This methodology has been utilized by Tripp Umbach for more than 10 years in quantifying the economic impact of all Association of American Medical Colleges (AAMC) member medical schools and member teaching hospitals.


IMPLAN Methodology – The economic impact of UAB was estimated using IMPLAN (IMpact Analysis for PLANning), an econometric modeling system developed by applied economists at the University of Minnesota and the U.S. Forest Service. The IMPLAN modeling system has been in use since 1979 and is currently used by over 500 private consulting firms, university research centers and government agencies. The IMPLAN modeling system combines the U.S. Bureau of Economic Analysis’ Input-Output Benchmarks with other data to construct quantitative models of trade flow relationships between businesses and between businesses and final consumers. From this data, one can examine the effects of a change in one or several economic activities to predict its effect on a specific state, regional or local economy (impact analysis). The IMPLAN input-output accounts capture all monetary market transactions for consumption in a given time period. The IMPLAN input-output accounts are based on industry survey data collected periodically by the U.S. BEA and follow a balanced account format recommended by the United Nations.

IMPLAN’s Regional Economic Accounts and the Social Accounting Matrices were used to construct state- and CSA-level multipliers, which describe the response of the economy to a change in demand or production as a result of the activities and expenditures of UAB. Each industry that produces goods or services generates demand for other goods and services, and this demand is multiplied through a particular economy until it dissipates through “leakage” to economies outside the specified area. IMPLAN models discern and calculate leakage from local, regional and state economic areas based on workforce configuration, the inputs required by specific types of businesses, and the availability of both inputs in the economic area. Consequently, economic impacts that accrue to other regions or states as a consequence of a change in demand are not counted as impacts within the economic area.

The model accounts for substitution and displacement effects by deflating industry-specific multipliers to levels well below those recommended by the U.S. Bureau of Economic Analysis. In addition, multipliers are applied only to personal disposable income to obtain a more realistic estimate of the multiplier effects from increased demand. Importantly, IMPLAN’s Regional Economic Accounts exclude imports to an economic area, so the calculation of economic impacts identifies only those impacts specific to the economic impact area. IMPLAN calculates this distinction by applying Regional Purchase Coefficients (RPC) to predict regional purchases based on an economic area’s particular characteristics. The RPC represents the proportion of goods and services that will be purchased regionally under normal circumstances, based on the area’s economic characteristics described in terms of actual trade flows within the area.


EMPLOYMENT DEFINITIONS

IMPLAN analysis is conducted to measure jobs/positions (part-time or full-time), not full-time equivalents (FTEs). Full-time and part-time employees generate impact in the economy and support additional indirect and induced employment throughout the state of Alabama. Employment data of the UAB Academic, UAB Health System, and Southern Research was provided as an output of all individuals who receive a paycheck from the respective institution. This includes all full-time, part-time, and employed faculty, staff, and students.


ECONOMIC IMPACT VALUE DEFINITION

The overall economic impact values provided in this report for UAB, UAB Academic, UAB Health System, and Southern Research include the following impact values that were broken out as sub-analyses:

  • Organizational spending – capital and operational

  • UAB Arts

  • UAB Athletics

  • UAB Research

The impact values of UAB, UAB Academic, UAB Health System, and Southern Research that were presented in this report that are not included in the overall economic impact value and are, therefore, in addition to the economic impact of the organization are:

  • Government revenue impacts

  • Community benefit impacts

  • Alumni impacts

  • Individual institutional impacts


GOVERNMENT REVENUE IMPACT DEFINITION

Government revenue impacts generated in the current, FY16 study included all taxes paid by each of the UAB entities to the state of Alabama and the Birmingham CSA (i.e., payroll, property, sales, unemployment, income, and any other taxes paid to the state and local government). Any federal taxes paid by UAB were not included in the government revenue impacts (i.e., FICA payments). Differences in methodology have also played a role in the differences in reported government revenue impacts of UAB from 2010 to 2017.


VISITOR DEFINITIONS

Impact analysis looks to quantify the impact of the attraction of “fresh” dollars to a region. Therefore, when including visitor spending in the impact analysis of a university, health system, or other organization, the analysis will only include those visitors coming to a region from outside of said region. Visitors to events who also live in the region would have spent their dollar in that region otherwise; therefore, this dollar was not attracted to the region as a result of the organization being analyzed.

For UAB, the impact analysis looked at impacts to the state of Alabama and the Birmingham CSA region. Visitors to UAB were only counted if they were from outside of said region being analyzed.


VISITOR SPENDING

Tripp Umbach uses federal per diem rates to estimate visitor spending in an area. Per diem rates can be found here by area: http://www.gsa.gov/portal/content/104877. Tripp Umbach has utilized per diem rates to estimate visitor spending as they can be considered a conservative measure (i.e., visitors generally spend more than the per diem rates in any given area).

The rates utilized specifically for this analysis were:

  • Birmingham region = $96 for lodging; $59 for meal and incidental expenses

  • Standard for Alabama = $91 for lodging, $51 for meal and incidental expenses


COMMUNITY BENEFITS

Community benefits provided in this report outline two forms of impact — monetary donations made by employees and students to local nonprofits as well as volunteer hours that are valued at a monetary value.

  • Tripp Umbach has conducted survey research to estimate the amount of monetary donations a student, staff, faculty, and physicians will spend in a year. This amount differs per individual but ranges from $500-$700. Tripp Umbach also understands that not all individuals donate; therefore, this is adjusted as well.

  • The value of a volunteer hour has been quantified by Independent Sector to be $23.56 per individual per hour. Tripp Umbach utilized this value with the understanding (also from survey research) of the average number of hours faculty, staff and students engage in volunteer activities (estimated 100 hours per year, for 50 percent of the employees and students).


RESEARCH IMPACT DEFINITION

The 2010 impact analysis quantified the total research funding impact of UAB (revenue received as opposed to expenditures for one year) and the impact of that entire “engine.” For the 2017 analysis, research impact was quantified as the annual impact of UAB research expenditures in FY16. The methodology was refined from 2010 to 2017 with the understanding that an institution may have “secured” a certain amount of research funding in one year; however, this funding is generally not all spent in one fiscal year. Therefore, the 2017 analysis looks at the research expenditures that occurred in FY16 to estimate the annual impact of UAB research on the state economy.