ON INDUSTRY: Morgan, Logan counties build $1.7 bil. economy

In two previous columns, we discussed the economies of Albany (Laramie) and Laramie (Cheyenne) counties in Wyoming, our neighbor to the north. The Northern Colorado economy is affected by these neighbors, as we affect them.

In this column, we discuss Weld County’s neighbors to the east, Logan and Morgan counties. Perhaps in a future column, we’ll discuss our neighbors to the south, Adams and Boulder counties, and Larimer County’s neighbor to the west, Jackson County.

The major trading centers in Logan and Morgan counties are Sterling, Fort Morgan and Brush, all lying along Interstate 76 on its way from Denver to the northeast corner of Colorado and its intersection with I-80, a major east-west trucking route.
The economy of these two counties has total sales of about $1.7 billion, with about $700 million of that locally produced value added. About 25,000 jobs generate $360 million in wages and salaries. The largest employer in the Logan-Morgan economy is services, with 22 percent of total employment, 18 percent of value added and 22 percent of wages.
The single-largest service business is hospitals, with 10 percent of total employment. A large medical sector is often indicative of an aging population and/or a major rural regional medical center. Both situations are probably present in the Logan-Morgan economy.
The second largest industry is trade (wholesale and retail), with 19 percent of employment, 14 percent of value added, and 16 percent of wages.
Agriculture, government and manufacturing are also important employers. Manufacturing creates more than 41 percent of total sales in the economy, with 10 percent of employment and 16 percent of total wages and salaries.
Meat-packing, the only major manufacturing employer, accounts for 65 percent of manufacturing employment and 62 percent of wages. Ranching and feedlots support the meat-packing sector and account for $100 million of sales and 3,000 jobs, almost all of agricultural employment. Another $350 million of cattle, sheep and hog imports are also processed by meat packers.
Other major employers in the two-county economy are state and local government with almost 3,000 employees, eating and drinking places with more than 1,100 employees, wholesale trade with 1,000 employees and automotive dealers and services with 650 employees.
Agricultural livestock accounts for five of the 10 largest imports in this economy. Other large imports, $15 million to $30 million each, are real estate services, advertising, petroleum products, insurance and sugar beets.
Imports and exports are balanced in this economy: $1.1 billion of imports and $950 million of exports. Major exports are processed and prepared meats at $500 million, more than 50 percent of exports.
The hospital industry exports $67 million of its services to people who come from surrounding areas for treatment. Other significant exports include sugar ($65 million), auto repairs (I-76 and farm traffic, $40 million), electric power, crude petroleum, motor freight, and railroads.
In this column, we introduce another category of income, one that is more evident in this rural economy. That category is proprietor’s income. This is the income the business owner retains from total sales as payment for his labor, capital consumption and inventory changes.
This economy has almost $100 million of proprietor’s income, about half in the agriculture sector. Ranchers and feedlot owners receive $44 million in proprietor’s income. Proprietor’s income is highly variable and may be more or less than employee wages and salaries, depending on agricultural commodity prices and, thus, total sales revenue.
Recall that multipliers show which industries are most closely tied to the local economy – the higher the multiplier, the more integrated that industry is with the rest of the economy.
Agricultural products typically have large employment and income multipliers, especially if the commodities are processed in the local economy. The meat-packing industry in the Logan-Morgan economy has an employment multiplier of 5.68, meaning that 4.68 jobs are supported in the local economy for each job in meat packing.
Personal-income multipliers focus on personal income generated in the local economy rather than jobs. The sector with the largest personal-income multiplier is vegetables, at 16.8. That suggests that $15.80 of personal income is generated in the local economy for each $1 of personal income generated in the vegetable-farming sector.
Other sectors with personal-income multipliers above 5.00 include oil-bearing crops, poultry and eggs, sugar crops, dairy-farm products, food grains, and miscellaneous crops. Feed grains is at 4.79.
The three parts of an employment multiplier are, first, the jobs in that sector (direct); second, the jobs in the sectors it buys from (indirect); and, third, the jobs in sectors that sell consumption goods to households (induced).
Household purchases also have direct and indirect effects. In the Logan-Morgan economy, the most important influence on the employment and personal-income multipliers was the indirect effect. This is a characteristic of a highly interdependent economy that relies on itself to supply what it consumes and which does not rely on exports for most of its employment and income.John Green is professor of economics at the University of Northern Colorado in Greeley. Eric Siverts is president of the Fort Collins-based Siverts & Associates.