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HomeMy WebLinkAboutMINUTES - 06102003 - D5 TO:, BOARD OF SUPERVISORS . ` Centra FROM: DENNIS M. BARRY, AICD Ess„ Costa COMMUNITY DEVELOPMENT DIRECTORCounty DATE: JUNE 10, 2003 SUBJECT: REPORT ON ECONOMIC IMPACTS OF OUT-OF-AREA WORKERS AT 'MAJOR CONTRA COSTA COUNTY REFINERIES SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION RECOMMENDATIONS ACCEPT the report prepared by University of California at Berkeley,Department of City and Regional Planning, assessing the economic impacts of out-of-area workers at major Contra Costa County refineries. FISCAL IMPACT None. CONTINUED ON'ATTACHMENT: X YES SIGNATURE �'�'�+��• ��:' RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMIMITT APPROVE OTHER SIGNATURES ACTION OF BOARD ON JANE '1: �' APPROVED AS RECOMMENDED X OTHER PLEASE SEE ATPACM ADDELgW. VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE AND XUNANIMOUS(ASSENT. !!rj CORRECT COPY OF AN ACTION TAKEN AND AYES: NOES; ENTERED ON THE MINUTES OF THE BOARD OF ASSENT: ABSTAIN: SUPERVISORS ON THE DATE'SHOWN Contact: Patrick Roche,CDD­AP,Ph#925-335-1242' ATTESTED JUNE 10, 2003 cc: CAO JOHN SWEETEN, CLERK OF THE BOARD OF Clerk of the Board SUPER7ISORS''AND COUNTY ADMINISTRATOR County Counsel W.Walker,Health Service Director R.Sawyer,Health Services Dept. BY ,DEPUTY' Press Box—Clerk of the Board June 10, 2003 Board of Supervisors Assessment of Economic Impacts of Out-Area-Workers at Contra Costa County's Major Oil Refineries Page BACKGROUND 1 REASON FOR RECOMMENDATION At the December 3, 2002 the continued public hearing on a proposed Contractor Safety Amendment to the County's Industrial Safety;Ordinance, County Ordinance Code Chapter 450-8, the Board of Supervisors directed the Community Development Department to study and report on the economic impacts of out-of-area workers at Contra Costa County major oil refineries. In response to this directive,the Community Development Department contacted the University of California at Berkeley to gauge their interest in conducting this study.They were contacted because U.C. Berkeley's Institute of industrial Relations had previously prepared a study in 1989 for the Board of Supervisors examining the impact of out-of-area workers in non-residential construction using the USS-POSCO Steel Plant Modernization as a case study. The principal'investigator for the 1989 study is no longer affiliated with the university, but did recommend U.C. Berkeley's'Department of City and Regional Planning would be interested in conducting'the economic impact study: The Department subsequently contracted with Professor Karen Chapple, U.C. Berkeley, Department of City and Regional Planning, to undertake the assessment of economic impacts of out-of-area workers at major Contra Costa County oil refineries. U.C. Berkeley's Department of City and Regional Planning agreed to conduct this study pro bono. Attached for the Board's review and comment, is the study undertaken by graduate students from the Department of City and Regional Planning, U.C. Berkeley,`under the direction of Professor Karen Chapple (See attached Exhibit "A") The report shows that the petroleum refining industry plays a significant role in Contra Costa County's economy and that the use of out-of-area workers at major refinery construction or "turnaround" projects can have moderate to significant "leakage" impacts as expenditures that normally occur within the area now occur elsewhere. This diminished local spending in turn reduces the industry's positive impacts on the Contra Costa County economy. This study provides a framework for further research into economic impacts to Contra Costa County from hiring out-of-area workers. Subsequent to the submittal of this report by U.C. Berkeley, the Department received a'letter from the Committee for Industrial Safety, signed by the four major oil refinery managers, explaining their position on the oil refineries' participation in this study (See attached Exhibit "B"). Attachments t2 Exhibit "A": ASSESSMENT OF ECONOMIC IMPACTS OF OUT-OF-AREA WORKERS AT MAJOR CONTRA COSTA COUNTY REFINERIES, June 2, 2003, U.C. Berkeley, Department of City and Regional Planning Exhibit "B": Letter to Dennis Barry, Community Development,'Director,from the Committee for Industrial Safety, dated June 2 2003, received by the Community Development Department on June 4, 2003' GAAdvance PlanningWv-pianlBoard'Orders\BOARO ORDER economic impact out of area workers oil refineries.doc ADDENDUM TO ITEM D.5 June 10, 2403 On this day the Beard of Supervisors considered accepting report on economic impacts of out-of-area contract employment at Contra Costa County oil refineries,prepared pro bone for the Community Development Department by University of California at Berkeley, Department of City and Regional Planning. Dennis Barry introduced students Melissa Edwards and Alex'Lantsberg from the University of California,Berkeley,the principal authors who prepared the report. The Board discussed the matter, and complimented students: Nadya Chinoy Dabby, Melissa Edwards and Alex Lantsberg from the University of California,Berkeley fora job well done,and expressed their desire to pursue recommendations for more analysis of out of state workers. The Board invited comments from the public. The following persons spoke: Tom Baca, Contra Costa Building Trades Council, 935 Alhambra Avenue Martinez; Roger Goodwin, 515 Palms Drive,Martinez; Greg Feere Contra Costa Building Trades Council, 935 Alhambra Avenue, Martinez; Tom Adams, 176 Valdeflores Drive,Burlingame. After further discussions,the Board took the following action: • Accepted the report prepared by the'University of California at.Berkeley, Department of City and Regional Planning, assessing the economic impacts of out-of-area workers at major Contra Costa County refineries. • Directed Community Development Department continue the research with collection of more complete data from all stakeholder groups which in this case means the involvement of the refineries and the non union contractors which were the two groups identified where we dad not receive specific information and that we specifically extend orr direct that we establish a process to bring together all the stakeholder groups to collect the necessary data to be able to further refine this study under the recommendations on page 22 Exhibit "A" Assessment of Economic Impacts of Out-of-Area Workers at Major Contra Costa County Refineries. PRODUCEDBY: Nadya Chinoy Dabby MelissaEdwards Alex Lantsberg University of California, Berkeley Department of City and Regional''Planning SUBMITTED.TUNE 2,2003 TO: Dennis M. Barry, AICP' Community Development Director Contra Costa County TABLE OF CONTENTS TABLE OF CONTENTS, .................,. . ........................, . ............: . I TABLE OF FIGURES. ........ . ....... ........... ........ . ........2, EXECUTIVE SUMMARY. ............. .. .......................................3' SECTION 1. OVERVIEW AND METHODOLOGY..............................................................4 PURPOSE OF REPORT 4 METHODS 4 Literature Review ` Secondary Data Economic Modeling 7 Employment and Payroll;Scenarios 8 Defining Out-of-Area Workers 9 Interviews 9 ASSUMPTIONS AND LIMITATIONS 10 SECTION 2. ECONOMIC IMPACT OF REFINING INDUSTRY EMPLOYMENT IN CONTRACOSTA COUNTY.......... ........ .. ......... .................. ................... ... 14 ASSUMPTIONS14 :base Lever Employment and Payroll Scenarios 14 IMPACTS 14 Employment: 14 Labor Income 14 Industry Output 1 Indirect Business Taxes: 15 SECTION 3. OCCUPATIONAL PROFILE OF OUT-OF-AREA CONTRACT WORKERS.........` .............. ............ ........ .............................. .................. ..... 16` WORK OPPORTUNITIES FOR OUT-OF-AREA WORKERS 16 PROPORTIONS OF OUT-OF-AREA WORKERS 16' SECTION 4. ESTIMATING ECONOMIC IMPACT OF OUT-OF-AREA HIRING.......17 ASSUMPTIONS 17 Area- porker Scenarios 17 Consumer Expenditure Patterns 17 Impact Scenarios 17 IMPACTS 18 SECTIONS. -.:CONCLUSIONS ......................... ........ . ................... .22. AREAS FOR FURTHER RESEARCH 22 APPENDIX .................................... ... ........ ............ . ...........,......23' SUPPLEMENTAL DATA TABLES 23. LIST OF INTERVIEWEES 27` Ivey Interviewees ` 27 Union Interviewees 27 Final Report—June,200 t Department of City and Regional Planning, UC Berkeley TABLE OF FIGURES Table 1. Base Level Payroll and Employment Scenarios..............................................................9 Table 2. Local vNon-Local Consumer Expenditure Categories................................................. 11 Table 3. Economic Impacts from Refinery Employee Household Expenditures.......... ..... ....... 15 Table 4. Average Expenditures by Income . ...... ... ... ... ... 17 Tables 5 &6. Total Estimated FTE of Out-of-Area Workers in Refinery Turnarounds 18 Figure 1. 'Estimated Employment Impacts of Hiring Out-of-Area Workers at One Refinery per Year... ......... ........: ......... ........ . ... ......... ........ ......... .......... ......... ......... .......... 19 Figure 2. Estimated Impacts of Out-of-Area Workers on Output ..... ........ .... ........ ..... .......... 19 Figure 3. Estimated Impacts of Hiring Out-of-Area Workers on Business Taxes. ......... ..........20 Tables 7 & 8. Total Estimated Expenditure Impacts of Out-of-Area vs. Local Workers. .......,..20'' Table A-1-. Petroleum Refining Self-Reported Employment, Occupations,and Wages in Contra Costa County..... ....... ....... ......... .......... ......... ........ ......... ......... ......... ..........23 Table A-2. Aggregate Income by Annual Income Category for Baseline Impact;Calculation Scenarios .. ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... Final Report--June 2003 2 Department of City and Regional Planning, UC Berkeley EXECUTIVE SUMMARY This report was prepared by the University of California Department of City and Regional Planning at the request of the Contra Costa Community Development Department and the Contra Costa County Board of Supervisors. Its purpose is to examine the economic impact of out-of-area contract employment at the county's four largest refineries. This report shows that the petroleum refining industry plays a significantrole in Contra Costa County's economy and that use of out-of-area workers at major refinery construction or "turnaround"projects can have moderate to significant"leakage"impacts as expenditures that that normally occur within the study area now occur elsewhere. This diminished'local spending in turn reduces the industry's positive impacts on the Contra Costa County economy. It should be noted that the use of out-of-area workers occurs primarily during temporary construction projects and for a variety of reasons These may include, among others,the inability to fill demand from the local labor pool and the decreased costs from hiring from areas with lower wage rates. It may not always be possible to have a 100%local labor workforce at major projects. The most significant reductions are to output and business taxes. For example,;a "turnaround"project in one refinery lasting only'4 weeks and using only 250 additional workers results in a leakage of$640,000 dollars of output and almost$30,000 in indirect business taxes, whilea,more intense activity level of all four major refineries performing large turnarounds in one year results in a leakage of over$12 million in output and over$700,000 in indirect business taxes. Overall,refining is the County's largest industrial spender, sixth in indirect business tax payments,;and ninth in employee compensation—all the more impressive because of its relatively small share of the County's total employment. The household expenditures of refinery employees reverberate throughout the Contra Costa County economy,contributing significantly to countywide output,employment,.labor income, and indirect business taxes. Skilled trade and labor positions,which are the subject of the Industrial Safety;Ordinance,provide about 26.5%of these total impacts. Depending on total employment in various scenarios,the impact of all spending is responsible for an additional: ■ $265 to $493 million in total output by county businesses; ■ 2061 to 3838 jobs within the county; ■ $72 to $134 million in labor income that is additionally respent in the area;and ■ $12 to 23 million in indirect business taxes,' This study provides a framework for further research into economic impacts to'Contra Costa County from the hiring of out-of-area workers. Findings from this study could be supplemented by additional relevant primary data with the cooperation of all relevant stakeholders, such as unions,,contractors,;refineries, and public agencies. Final Report--guar 2003 3 Department of City and Regional Planning, UC Berkeley SECTION 1 OVERVIEW AND METHODOLOGY Purpose of Report' At the request of the Contra Costa County Board of Supervisors,the Contra Costa County Community Development Department(hereafter referred to as"the Community Development Department")undertook a study of the economic impact of out-of-area contract employment at the county's four largest refineries. In turn,the Community Development Department contacted the Department of City and Regional Planning(DCRP) at the University of California at Berkeley; DCRP agreed to conduct this study pro Bono under the direction of the Community Development Department in April and May of 2003. This report presents the findings from this study. The four refineries analyzed for the purpose of this report are Chevron(Richmond), Phillips(Rodeo), Shell(Martinez)and Tesoro Golden Eagle(Avon). This report presents data regarding out-of-area contract workers and then uses this information to describe the socio- economic impact of out-of-area contract employment. Where certain data were not available, this report utilizes ranges and depicts possible scenarios; these ranges and scenarios can then be used for policy-making where appropriate. Before outlining the economic impacts of out-of-area workers,this report describes the study methodology,assumptions,and data limitations. Methods Literature Review Several;recent studies have been done in various states concerning the impacts of refineries on local economies. Studies in Alaska(2001),Louisiana(2001)and Delaware(2002) assess the impact of the refineries on state and local tax revenues, local spending, income and employment. flue to the size of the refining industries in these locations,they provide a sizeable portion of the tax revenue and employment,not only in the cities in which they are located,but also across the'state. The study in the available literature whose purpose is most comparable to this one was completed in Lake Charles, Louisiana. That study looked at the impacts of out-of- area contract workers on local spending.; They found that the contract workers,greatly increased local spending in Lake Charles, and boosted the localeconomy. A 2001 study;commissioned by the Western States Petroleum Association(WSPA)also found substantial economic benefits from the petroleum industry, although it analyzed overall direct and indirect job creation from the refineries rather than the specific impact of out-of-area workers.' Both of these'aforementioned studies--the Western State Petroleum Association study and the Lake Charles>study—looked at the financial contributions made to charitable'institutions by the refineries. A review'of the literature vindicates that the existence of refineries in a locale can result in bath benefits and losses for the local and regional economies. The purpose of this ' The WSPA report stated that there were 3,800 employees at the Contra Costa County refineries in 1997;the tbree different employment estimates used in this report(described'later in this section)encompass this figure. WSPA's 1997 figure was estimated to generate from I to 3 indirect jabs in support of refining,transportation and marketing for every direct job in refining(the 3,800 referenced above). Final Report---.tune 2003 4 Department of City and Regional Planning, LIC Berkeley study,notwithstanding, is decidedly narrower: it explores the economic impact on Contra Costa County and on the nixie-county Bay Area of out-ofarea employment at the refineries. A less recent study is often referenced in the context of Contra Costa County refineries: it was produced for the Contra Costa County Board of Supervisors in 1990. This report is entitled The Impact of Out-of-Area Workers in Non-Residential Construction on Contra Costa County:A Case Study of the USS-POSCO Modernization and was conducted by Carlos Davidson at the Center for Labor Research and Education.,Institute of Industrial Relations,University of California at Berkeley. There are significant differences between the methodologies of that prior report and this study. In particular,these differences relate to the definition out-of-area-workers, the secondary data sources utilized and the understanding of relevant economic:impacts. The methodologies of this study are discussed in greater detail in the following sections on secondary data, interviews, and models used. Because the methodologies are not strictly comparable; caution should be used when attempting to compare the reports' results. Secondary Data Various secondary data sources were used for this report. Secondary sources are data that have been produced for a variety of different purposes other than the project at hand. These data are then used to extrapolate relevant informationfor the specific project. The bulk of these secondary data sources were used to develop an understanding of employment at the four refineries. In particular,it was necessary to determine the number of employees,the positions occupied by these employees and the estimated earnings of those employees. These sources were also used to understand expected spending patterns and the resultant economic impacts. The specific secondary data sets examined for this report are as follows:2 (1) California Employment Development Department(EDD)—The EDD tracks historic average monthly employment by industry group at the county and Metropolitan Statistical Area(MSA) levels,3 identifies the prevalence of specific occupations: within industry groups, and tracks average wages by occupation at the county and MSA levels. This sector is defined according to the North American Industrial Classification System(NAILS);the petroleum and coal manufacturing sector is NAICS 324. This data was used to (i)develop an estimate of overall employment at the four largest refineries in Contra Costa County and(ii)calculate the baseline wage income that corresponded to employment figures. (2) County Business Patterns (CBP), US Department of Commerce--The CBP data reveal the number of employees by industry,the number of establishments,and the total wages. All of these figures are for the payroll period that includes March 12th of the reference year;CBP also provides an annual payroll figure. The industry analyzed for CBP data was NAICS 32411,petroleum.refineries. These data were used to determine the total number of employees at the four largest refineries. According to the CBP,Contra Costa County had five refineries operating in 2001— It should be noted that attempts to get more precise secondary data from the Contra Costa County Assessor's Office regarding employment figures were unsuccessful due to legal restrictions preventing release of the data. 3 The MSA is a US Census Bureau category that represents multiple counties. Final Report—,June 2003 5 Department of City and Regional Planning, UC Berkeley; the four refineries which are the subject of this study and one small firm with between 20 and 49 employees. It should be noted that the CBP employment figures were provided as ranges, not as exact figures. The"median convention"technique,where the number of employees per firm is estimated to be the category median,was used to translate those ranges into actual numbers. The fifth refinery in the CBP data was given a value of 34.5 and subtracted from the overall employment figure to arrive at the total employment by the four refineries. This proportion was then used to calculate the other employment scenarios, as described below. (3) I.tllfPLAN--- I PLAN is a proprietary economic modeling package used to measure the economic impacts of specific events through input-output analysis and is further described below. IMPLAN's industry employment estimate is based on three data sources. In general,Bureau of Labor Statistics(BLS) Covered Employees and Wages (ES02)data provides the county-level industry structure for the IMPLAN database. CBP data is used to make non-disclosure adjustments to ES202 data,while Regional Economic Information System data is used for control totals. Wages are given and include all payroll costs,including employee benefits. Average wages for the baseline impact scenarios(see below)are based on IMPLAN data. IMPLAN's estimate of employment is higher than that calculated solely though the EDI) occupation and wage data. It also based on all payroll costs,including employee benefits. Wage income had to be calculated from this aggregate figure by discounting the total by the BLS estimate of employee benefit expenses mentioned above. (4) Public Use Microdata Sample(PDMS), US Census Bureau--This 2000 data set presents detailed'self-reported information:regarding employee residence,commute and migration patterns,race, gender,industry and occupation,wage'and income, household,educational; and ether demographic data for a 1% sample of the households within a,geographic reference area. Following an examination of these data,however, it was concluded that it would not be very useful for this particular study. Specifically,the PUNTS data provided an employment estimate somewhere between the CBP and INIPLA.N data;therefore it was not used for this report,because it fell between the low and middle scenarios(see below). Also of nate,the PUMS occupational composition was significantly different than proved by the EDD data. The data is provided for informational purposes in an appendix to this report. (5) Employer''Costs far Employee Compensation 1986-1999,.Bureau of`Labor Statistics— This data set was used to calculate the additional employee benefit expense incurred by the refineries. Because RAPLAN(see below)includes employee benefits as part of its total employee compensation value, it is important to distinguish between direct wages and benefits so that income effects can be accurately modeled throughout the economy;' (6) Consumer Expenditure.Data, Bureau of Labor Statistics (BLS)--The Consumer Expenditure Data uses national information to produce a report that details how consumers spend their money. These spending patterns are presented by income category as well as by occupation type. These data were used to develop'a model of how out-of-area contract workers at the refineries could be expected to spend their wages. This report docs not analyze the impact of these out-of-area workers' spending in their"home"regions(i.e., outside of the nine-county Bay Area). Final Report—June 2003 Department of City and Regional Manning, UC Berkeley Economic Modeling IMPLAN economic modeling software extrapolates a specific economic event's impact on a region from national input-output data that is supplemented by state and county level data to correct for regional differences. Economic modeling is particularly useful to policymakers because it allows them to see how their decisions are likely to reverberate throughout the economy. Since, economic modeling fundamentally relies on a series of assumptions,this report's use of conservative estimates of base levels for the modeling scenarios provides confidence that projections capture the overall range of possibilities. Input-output accounting describes the commodity flaws from producers to intermediate and final consumers. The total industry inputs of commodities, services, employment compensation,value added,and imports are equal to the total value of the commodities produced. Purchases for final use(final demand),drive the model as producers purchase goods and services from other producers who,in turn,must purchase commodities to provide for the producers who are selling to final demand. Outside impacts,such as purchases from out-of-area suppliers or out-of-area household expenditures are referred to as leakages. This cycle of indirect purchases continues until leakages from the region stop the cycle. IMPLAN's detailed county level input-output matrices make it an ideal package for analyzing changes resulting from discrete economic events. Data files include annual information for up to 528 different industries---generally to the 3 or 4 digit SIC code level, and 21 different economic variables. IMPLAN also includes a"social account matrix"that allows the modeling of household and government expenditures and revenues. This ensures that any impact analysis considers effects throughout the county's economy. This method was used to assess the multiplier effect of the hiring of out-of-area contract workers at the four refineries. In the input-output model,mathematically derived multipliers uniquely describe the change of output for each and every industry as a result of producing one dollar of final demand,which are unique to each industry. In this case,impacts solely within Contra Costa County were computed. Impacts outside of the region are not included in the multiplier effect,based on the notion that economic development is regional in nature. In this study,leakages would primarily include;spending in workers' "home"'region(i.e.,outside of the Contra Costa County). Multipliers can be calculated for a variety of impacts such as employment,total business output,personal and total income,and business taxes among others. The total multiplier effect refers to the impact of an initial round of spending--in this case,the wages paid to out-of-area contract workers—and the impact of the subsequent re-spending of those initial dollars within the region. Each"round"of spending generated by the initial round contributes to the total: multiplier effect is made up of three components. The first and largest is the"direct"impact and simply the spending by the refinery employees. The"indirect"impact is the business-to- business spending resulting from the direct expenditures and considerably smaller. The household expenditures of the employees of indirect spenders make up the"induced"portion of nat Report—June 2003 Department of City and Regional Planning, UC Berkeley the multiplier and can be larger than the indirect multiplier. In general,the greater the interaction with the regional economy,the greater is the multiplier.` Employment and Payroll Scenarios As alluded to above,data from the aforementioned secondary data sources yielded a wide range of estimates for total employment. This variability in estimates can be caused by a number of factors,such as different reporting requirements and non-disclosure agreements,among others,and should not be considered out-of-the-ordinary. In order to address this issue, a range of employment scenarios were developed to ascertain more accurately the range of possible economic impacts resulting from refinery payrolls. These scenarios were created based on the varying estimates of employment and payroll expenses provided by the County Business Patterns,IMPLAN,and EDI) data,then used to establish baseline payroll amounts and the ranges of impacts from the household expenditures of refinery employees. Scenario 1 is based on the County Business Patterns estimate of total employment and EDD industry occupational and wage data and is the most conservative for the three employment and wage scenarios. Overall employment was calculated by applying the employment proportions estimated from the County Business Patterns for the petroleum-refining portion of the petroleum and coal manufacturing sector. Payroll income amounts were calculated by applying the occupational proportions to the overall employment estimates and multiplying those values by the average annual income for the occupation. This constitutes the"low"'scenario for employment. Scenario 2 is calculated based on IMPLAN's proprietary input-output database described in Section 1. EDD wage estimates are not used in this scenario. Income categories are instead developed by applying the proportion of wage income accruing to each occupation to IMPLAN's total estimated'wages. Average incomes for all positions are higher than in scenarios I and 3 ■ Scenario 3 is based on EDD industry specific employment,occupational,and income data and uses the same methods as Scenario 1. Total wage expense for employees at Contra Costa County's four largest refineries ranges between$207.5 and$386.3 million, depending on the employment scenario. Skilled trade and labor positions earn about 85%of the industry average wage. Together they comprise 31°lo',of the overall refinery employment but receive only 26%of the total wages. Their total annual earnings.range from$54.2 million to $100.8 million. The large number of lower paid workers earning less than the industry average causes this discrepancy. Table 1 summarizes the values used to calculate the baseline impacts of the major refiners payroll expenditures. Detailed tables by occupation and projected aggregate annual income can be found in the appendix at the end of this report. 4 A detailed description of the IMPLAN model and how multipliers are calculated is available at the website of the Minnesota IMPLAN Group at www.. lan.com. s The interviewees gave the impression that many of these skilled trade workers earn wages higher that the occupational average,however a conservative approach was chosen to use the average value due to the absence of any other corroborating industry specific data: Final Report--June 2003 8 Department of City and Regional Planning,'UC Berkeley Table 1' Base Level Payroll and Employment Scenarios Scenario 1 Scenario 2 Scenario 3 Employees at major Centra Costa refineries 3,421 5,546 6,371 Total Payroll for refinery employees $207,498,485 $354,275,106 $386,431,109 Payroll with Benefits $275,142;992 $509,548,791 $512,407,651 Average Annual Income for refinery employees $60,654 $69,290 $60,654 Skilled'Tracie Workers at refineries 1,056 1,713 1,967 Total Payroll for skilled trade workers and laborers $54,137,233 $100,259,001 $100,821,511 Payroll with Benefits $71,785,970 $132,943,435 $133,689,324 Average annual income for skilled trade workers and laborers $51,248 $58,545 $51,248 Benefits ex nse 32.6% 32.6% 32.6% Sources-Scenarios(1)US Census&CA EDD,(2)IMPLAN&CA EDD,and(3)CA EDD; Bureau of Labor Statistics Defining Out-of-Area Workers For the purposes of this report,cut-of-area workers are defined as workers from outside of the-,nine-county Bay Area.'There are two principal reasons for utilizing this definition of out- of-area workers: (i)this definition acknowledges the interconnected nature of the Bay Area economy and(ii)it represents a standardized definition/criteria,which is thus compatible with other potential data sources and relevant analyses. Interviews The intended design of this study entailed telephone interviews with four different key groups. These four groups are as follows: (i)refinery representatives from each of the four refineries, (ii)anion contractors that represent the union out-of-area workers at the refineries; (iii)independent/nonunion contractors who hire out,-of-area workers at the refineries; and(iv) other persons who have relevant expertise and/or knowledge regarding these refineries. Attempts to interview these four groups,however,were not entirely successful. In fact, DCRP was only able to completeinterviews with two of these four groups: the union contractors and the ether persons'who have relevant expertise and/or knowledge. Interviews with refinery representatives and independent/nonunion contractors were attempted but ultimately unsuccessful,despite'multiple efforts from DCRP. It is likely that a confluence of factors prohibited the completion of these interviews,including the following: difficulty in collecting the data that was requested,worries about revealing what was perceived as confidential information, concerns about the intent of the study in the current political environment of Contra Costa County,and/or time constraints. In the absence of some essential;data that would have been gathered from these interviews—particularly,the proportion and number of independent/nonunion contract workers who are from out-of-area, and the total hours worked by 6 In other words,out-of-area-workers are those from outside of Alameda,Contra Costa,Marin;Napa,San Francisca, San Mateo,Santa Clara,Solano and Sonoma counties. Final Report--dune 2003 9 Department of City and Regional Planning, UC Berkeley contract workers(both union and independent/nonunion)over the course of a year—same assumptions were made about possible ranges into which these figure fall. Using those ranges, computations were made for low,medium,and high scenarios. Ten telephone interviews were conducted with unions who represent refinery workers. While data from the Contra Costa County Building Trades Council Data indicated that there are 14 unions who represent workers from the refineries, four of these unions could not be contacted; they are thus not included in this report. These unions were asked to,respond to questions regarding,positions occupied by out-of-area contract workers,the number and proportion of these workers relative to local workers,the wage level/range associated with those positions, the duration of the position(year-round or a;shorter duration)anal the benefits afforded to these out- of-urea contract workers. The data gathered from these interviews regarding contract union workers' occupational positions and wages is not utilized in this report,however. Originally, it was anticipatedthat comparable data from both the unions and the refineries would be available. Because data from the refineries was not made available, it was determined that reliance on union data would result in an incomplete data and would not be relied upon for this report. Instead,figures from the EDD for wage levels were used and various scenarios regarding the proportion of out-of-area workers were developed. DCRP also contacted various people who have regular contact with the refineries to gain a falter picture of the situation. These people included: a refinery public relations contractor, a refinery lobbyist,a Contra Costa County Building Trades Council staff member, a Building; Trades Council attorney,the Contra Costa County Assessor, Contra Costa County Community Development Department staff, and a Philadelphia-based refinery;worker. These conversations took place over the phone and did not follow an established,protocol. Instead, information was elicited that was particular to each contact. This information included: basic descriptions of how, when and why the refineries use contract workers;particular issues that were of concern to the refineries,their contractors and/or the county as a whole; suggestions regarding available data, and/or recommendations of other potential contacts. Because the information elicited was not designed to be representative, a content analysis of these conversations was not performed. Instead,this information served to inform the evolution of the research design. The list of interviewees is provided in the appendix. Assumptions and Limitations Certain!assumptions were made in order to produce meaningful analysis of the existing data. baking these assumptions explicit helps ensure that the study remains replicable, and elucidates potential limitations. The assumptions of this study include • Consumer expenditure patterns---Because out-cif-area workers are,by definition, transitory and rooted in another community,certain assumptions were made about what out-of-area workers would purchase'locally, and what they would purchase in their region of origin. purchases in their region of origin represent"leakage"and are not included in the multiplier effect. The following table(1)presents the categories Final Report---Mune 21003 10 Department of City and Regional Planning, UC Berkeley that are included as local;expenditures and those that were understood to represent non-local expenditures. Table 2. Local v Non-Local Consumer Expenditure Categories Local Expenditures(included in Non-Local Expenditures(not included in multiplier) multiplier) o Alcoholic beverages o Apparel and services o Entertainment o Cash contributions o Food o Education o Housekeeping supplies o Health care o Housing(rented, other) o Household operations. o Personal care,products and services o Housing(owned,household furnishings o Tobacco products and smoking supplies and equipment) o Transportation(gas and motor oil) o Personal insurance and pensions(life o Utilities,fuels and public services and other personal insurance, pensions and Social Security) o Reading.'. o Transportation(vehicle purchases,other vehicle expenses, public transportation) o Miscellaneous ■ Cast burdens and savings due to out-of-area workers Various potential cost burdens/savings incurred by the County were explored clue to the presence of out-of- area workers. These included educational costs borne by the county for children of out-of-area workers;health care costs borne by the county for out-of-area workers who may not have health care; and unemployment costs for supporting unemployed local residents who could potentially be employed by the refineries,but which instead hire out-of-area workers: It was determined'that these cast burdens would be minimal based on the following information: o Education—Reports from union contractors indicate that out-of-area workers do not tend to bring their children with them. It was thus assumed that the costs of educating out-of-area workers' children would thus be insignificant. Moreover,this research indicated that even if this were to be an issue, the data regarding school children's residency status(i.e.,how long the child has lived in the local area)'is only available on an individual school basis. Collecting that data from each school in the county would therefore also have been beyond the scope of this project. o Health costs—Due to the temporary nature of the turnarounds,these workers were unlikely to generate a significant impact on the health care system in Contra Costa County. o Unemployment benefits—Under direction of the Community Development Department, it was assumed that the local unemployed,persons would not 7 These categories are based on the BLS Consumer Expenditure Survey,as expounded upon earlier. Final Report--June 2003 11 Department of City and Regional Planning, UC Berkeley have the qualifications for employment at the refineries. Potential casts to the County for unemployment insurance payments were not calculated. • IMPLAN modeling—IMPLAN's model is based on national trends,supplemented with state and MSA level data in order to adjust for local patterns. Except where noted,IMPLAN''s assumptions were used as applicable to Contra Costa County. • Industry Structure—Based on knowledge,of the structure of the refining industry in Contra Costa County,it was assumed that the four largest f nns in the CBP data were, in fact,the four largest refineries on which this study is focused. The proportions developed:using CBP data were applied to calculate employment from the EDL)data. ; Employee benefits were assumed to be identical for each scenario. •< Occupational composition of contract wort,force—For the purposes of this report,it was assumed that contract workers occupy only the blue-collar occupational positions within the refineries(i.e.,no contract workers in higher-level management or technical positions). These occupational positions are as follows: o Boilermakers o Control and Valve Installers and Repairers o Electricians o First-Line Supervisors/Mangers of Mechanics,Installers, and Repairers o First-Line Supervisors/Managers of Production and Operating Workers o General Maintenance and Repair Workers o Heavy and.Tractor-Trailer Truck Drivers o Inspectors, Testers, Sorters, Samplers and..Weighers o Installation,Maintenance,and Repair Workers o Machinists o Petroleum Pump System Operators,Refinery Operators and Gaugers o Plumbers,Pipefitters, and Steamfitters The employment figures for blue-collar workers:were then used as the basis for computing various proportions of out-of-area workers. Implicitly,then, it was also assumed that the relative proportions of each occupation are the same among contract workers(local and out---of area)as among the overall workforce(contrast and non- contract). ■ 2080-hour work-year—Annual figures for out-of-area contract workers' earnings and their impacts on the region(i.e.,multiplier effects)are computed based on a 2080- hour work year.8 ■ Types of ontraci worker projects There are various types of refinery projects that require contract workers, including turnarounds,construction,maintenance, and/or follow-up work after a refinery accident. As mentioned previously;however,t data from the refineries regarding the nature of these projects was unavailable-- particularly,the average duration and frequency of these projects per year. For the purposes of this report,then,certain assumptions about these projects were made. All s This computation was necessary because original wage figures are calculated on an annual basis while construction projects generally last far only a fraction of a year. Final Deport--,lune 2003 12 Department of City and Regional Planning, UC Berkeley of the calculations in this report analyze only the,imact of turnarounds(and not of the tither projects),the most conservative approach. One turnaround per year per refinery was assumed(a totalof four turnarounds per year)with durations of four, six,or twelve weeks. This study is thus limited by the aforementioned assumptions. There are, furthermore, some additional limitations that should be clarified. Regarding secondary data sources, it should be noted that 2002 data are not available at the time of writing this report. The majority of the data used in this report are for 2001,the most recent year available; the exceptions are the Consumer Expenditure Survey data,which is an average for 2000-01, and the IMPLAN data is for 1999.', The following sections provide a picture of the refinery industry's overall contribution to the County's economy and how the economy is impacted by the use of use of non-local labor at major refinery projects. Specifically, Section 2'will outline the overall economic contribution of refinery employees' household expenditures to the output, employment, labor income,and business taxes. Section 3 discusses how the total number of workers was calculated. Section 4 discusses the economic impact of out-of-area workers at refinery projects in relation to the impacts of an all-local workforce. v Because less is known about the nature of contract-worker projects that are not turnarounds,it was not possible to make reasonable assumptions upon which to base calculations. Final Report—June 2003 13 Department of City and Regional Planning, UC Berkeley `S"ECTION 2.. ECONOMIC IMPACT OF REFINING INDUSTRY EMPLOYMENT IN CONTRA COSTA COUNTY The purpose of this section is to establish an overall picture of the economic impacts to Contra Costa County's economy resulting from the wages paid to refinery employees.> Economic modeling is conducted using IMPL;AN software, as described in Section 1 above. The calculation includes employment, labor income, and indirectbusiness tax impacts resulting from the industry's normal operations, as well as the impacts attributable solely to the skilled trade and laborer positions affected by the ISO. Assumptions Base Level Employment and Payroll Scenarios The baseline payroll amounts established in the three scenarios described.in Section'1 were used to calculate the range of impacts from the household expenditures of refinery employees. These figures are used to compare and contrast the relative significance of the impact of out--of-area workers. Impacts The household expenditures of refinery employees reverberate throughout the local and regional economy,adding new jobs, local income,countywide industry output, and tax..revenue. These are summarized in Table 3 below. Employment. The total indirect and induced employment resulting from the household expenditures of the employees of Contra Costa's major refineries ranges between 2,061 and 3,838 jobs,with between 537 and 1005 of these jobs attributable to spilled trades and laborer positions. The industry's employment impacts in this analysis are significantly lower than the findings of the Western States'Petroleurn Association report,which estimated nearly 54,400 direct and indirect jobs resulting from the refineries in Contra Costa,and Solano Counties. This is likely the result of more conservative'assumptions.'° Labor Income As a result these expenditures total labor income from all refinery workers ranges between$71.7 million and$133.5 million dollars, depending on the scenario. 'Labor income from the skilled trades and laborer employees is between$18.8 million and$35.2 million. This constitutes about 26.5%of the total labor income effect resulting from the employees of the four major refineries. 'o For example,the W SPA report considered retail gasoline station workers and marketing positions to be related to the presence of the refining industry while IMPLAAN limited employment effects strictly to the employment increases resulting from the expenditures of refinery wage income throughout the economy. Final Report—June 2€03 14 Department of City and Regional Planning, UC Berkeley Industry Output This figure shows the increases in total output as a result of employee household spending. This effect is most pronounced on county industries that sell a';large proportion of their goods or services to local residents. Refinery payrolls spur between$12.1'and$22.6 million of additional output.; Skilled trades and laborers contribute between$32 and$5.9 million of this impact'. Indirect Business Tars:` Total taxes generated as a result of employee household spending are between'$12.1 and $22.6 million,with skilled trades people and laborers contributing between$3.2 and$5.9 million The calculation'of indirect business taxes is based upon the Bureau of Economic Analysis's Gross State Product series,which gives state-level estimates of taxes by industry classification. Table 3. Economic impacts from Refinery Employee Household Expenditures Scenario 1 Scenario 2 Scenario 3 Total Employment 2,061 3,817 3,838 Total Employment from STL*Household Spending r 537 1,005 1,900 Total Labor Income 71,713,196 132,808,666 133,553,799 Total Labor Income from STL Household' Spending 18,883,593 35,320,946 35,169,579 Total Output 264,951,135 490,674,080 493,427,039 Tota!Output from STL Household;Spending 69,200,619 129,429,197 128,874,532 Total Indirect Business Tax 12,149,125 20,499,472 22,625,706 Total Indirect Business Tax from STL Household Spends 3,182,894 5,953,118 5,927,605 Sources-(1)US Census&CA Employment Development Department;(2)IMPLANT&CA EDD;(3)CA EDD *-STL:Skilled Trades and Laborers Final Report—June,2003 15 Department of City and Regional Planning, UC Berkeley SECTION 3. OCCUPATIONAL PROFILE OF OUTMOF-AREA CONTRACT WORKERS Work Opportunities for Out-of-Area Workers Out-of-area workers are employed in Contra Costa refineries,for a variety of reasons. Without interviews with the refineries themselves, it is not possible to be exhaustive about all of the different mechanisms and reasons out-of-area contract workers come to work in the refineries. Nonetheless,some of the basics regarding this process were determined through interviews from other sources. The refineries may need contract workers for a variety of projects, including turnarounds (where refinery operations---or a certain part of those operations—are temporarily halted so that cleaning andmaintenancecan be performed),construction projects, and general maintenance. It is assumed that additional skilled trades workers and laborers are brought on in the same proportions as they deployed throughout the refinery. There are two primary paths of entry into contract employment for out-of-area workers: independent/nonunion contractors and union contractors. It is not clear as to how the independent/nonunion contractors locate their workers. It is known that the unions interviewed share a common policy on the hiring of out-of-area workers(meaning union members from outside of the nine-county Bay Area). Under this policy,the unions first attempt to fill all positions locally. If there are not enough members locally to meet the refineries' stated need for workers,then the unions pull in out-of-area workers. Primarily,the reason that there may not be sufficient numbers of local union members to meet the refineries' need is because the refineries sometimes need a large number of workers quite immediately. There is no reason to believe that the independent/nonunion contractors have different reasons for hiring out-of-area workers,but no definitive data on their policies was available at the time of writing. Proportions of Out-of-Area Workers Based upon information from key interviews,it was estimated that approximately 50%of all workers brought in for a turnaround were considered out-of-area. This assumption was used for both union and non-union workers. As mentioned above,it was assumed that contract workers occupy only the blue-collar positions listed in Section 1. Based on occupational wage data from the Bureau of Labor Statistics,those occupations fell into three income categories: 10%are in the$30,000 to$39,999 category, 12%in the$40,000 to $49,999 category,and 78% in the$50,000 to$69,999 category. It was assumed that these proportions were also valid for workers hired for the turnarounds. These income categories were used with the 2000-2001 Consumer Expenditure Survey to calculate the impact of local spending of out-of-area workers. The following section presents analysis regarding the economic impact of the hiring of these out-of-area workers. This analysis takes into account the occupational positions, and wages of these lworkers. Final Report--June 2003 16 Department of City and Regional Planning, UC Berkeley SECTION 4. ESTIMATING ECONOMIC IMPACT OF OUT-OF-AREA HIRING Assumptions Area-Worker Scenarios To determine the economic impact of out-of area hiring due to consumer expenditures, several scenarios were used. Overall,two area-worker scenarios were used. The first scenario (the"out-of-area worker"scenario)assessed the value of consumer expenditures assuming that 50%of the workers were out-of-area. The second scenario (the"all'local worker"scenario) assessed the value of consumer expenditures assuming that 100%of the workforce was hired' locally. The difference between these area-worker scenarios represents the"leakage"of expenditures and other revenues due to out-of-area hiring. Additional impact scenarios devised within these two larger'scenarios are discussed later in this section. Consumer Expenditure Patterns' As previously showninTable 2, assumptions were made about which goods and services out-of-area workers were likely to purchase locally and which goods and services they were likely to purchase in their region of origin. Table 4 shows the average expenditures made by local and out-of-area workers based on these assumptions. The table shows,as would be expected,that out-of-area workers spend a much smaller proportion of their income locally than local workers. In fact,the workers that hold positions used by the refineries during turnaround spend less than 40%of their total income in Contra Costa County. Further analysis will show than this disparity in expenditures results in significant revenue leakages for Contra Costa County. Table 4 Average Expenditures by Income Total Aug. All Local OOA Income Income Workers Workers $30,000 to$39,999 $34,113 $29,762 $11,587 $40,000 to$49,999' $43,732 $35,383 $12,947 $50,000 to$69,000 $57,331 $41,676' $13,565 Source;:Consumer Expenditure Survey,Bureau of Labor Statistics. Impact Scenarios As previously mentioned, since precise data was not available from the refineries about their turnaround'processes, several impact scenarios were developed to estimate',impacts of out- of-area hiring on Contra Costa County. Based on information from,key informants,it was estimated that a turnaround at a refinery typically lasts anywhere from 1 to 3 months,with an average of 6 weeks, and can employ from"500 to 1000 workers. As mentioned above,it was assumed there was only one turnaround per refinery,per,: year. Assuming for the out-of-area scenario that 50%of all turnaround workers were out-of- area,from 250 to 500 workers would be employed in a typical refinery turnaround. Also included is a mid-range estimate of 350 workers, for a total of three scenarios. These figures' Final Report--June 2003 17 Department of City and Regional Planning, UC Berkeley were multiplied by four to get the impacts of a turnaround at the four refineries in one year. These figures were adjusted to estimate the number of full-time-equivalency workers(FTE)for these short-terra employees. Impacts were also estimated for the all-local-worker scenario where all of these workers were hired locally. The following tables illustrate the total FTE estimated for each of the above scenarios. Tables 5.cRi 6, Total Estimated FTE of Out-of-Area Workers in Refinery Turnarounds One Refinery Number of Workers Length of Turnaround in Work Hours* 250 350 500 4 weeks(160 wk hrs) 19 27 38 6 weeks(240 wk hrs) 29 40 58 12 weeks(480 wk hrs), 58> 81 115 Four Refineries Number of workers Length of Turnaround in Work Hours* 1000 1400 2000 4 weeks(160 wk hrs) 77 148 154 6 weeks(240 wk hrs) 115162 231 12 weeks 480 wk hrs'` 231 323 462 *2080 work hours per year Impacts The impacts of hiring out-of-area workers as opposed to local workers can result in significant leakages for the Contra Costa County economy. 'Figures 1 through 3 show the leakage of jobs,output and business taxes from hiring 50'%out-of-area workers as opposed to hiring all of the workers locally in various scenarios. These charts-represent the impacts of one refinery. They show that the leakage impacts of out-of-area workers in employment,business taxes, and output increase as the size and duration of the turnaround increases.' A similar linear increase was found when measuring the impact at all'four refineries. On the'low end, one turnaround in one refinery lasting only 4 weeks and using only 250 workers would result in a leakage of 5 jobs, $640,000 dollars of output and almost$30,000 in indirect business taxes. The high-end scenario,which involves all four refineries performing large turnarounds in one year, would result in a leafage of 121 jobs, over$12 million in output and over$700,000 in indirect business taxes. Final Report---June 2003 18 Department of City and Regional Planning,UC Berkeley Figure 1. Estimated Employment Impacts of Hiring Out-of-Area Workers at One Refinery per Year 50 45 —-- ---- F 0-Out of Area Impacts 40 ■Contra costa.impacts 35 30 25 ------ 20 —------- 15 10 4(250) 6(250) 6(500) 12(500} Weeks in Turnaround(#of Workers) Figure 2. Estimated Impacts of Out-of-Area Workers on Output 7 IltOut of Area Impact ■Contra Costa Impacts 4 3 2 0 0 4(250) 6(250) 12(500) 12(500) Weeks In Turnaround of Workers) Fina[Rsport—June 2003 19 Department of City and Regional Planning,UC Berkeley ............ Figure 3. Estimated Impacts of Hiring Out-of-Area Workers on Business Tees 300 250 ®Out of Area Impacts ra G ■Contra Costa Impacts 1 c 20a - -- w a 150 100 - - - - 50 m 4(250) 6{250} 6(500) 12(500) Weeks in Turnaround(#Workers) Tables 7 and 8 provide the total impacts for all scenarios. On,the low end, one turnaround in one refinery lasting only 4 weeks:and using only 250 workers would result in a leakage of jobs, $640,000 dollars of output and almost$30,000 in indirect business taxes. The high.-endscenario,which involves;all four refineries performing large turnarounds in one year, would result in a leakage of 121 jabs, over$12 million in output and over$700,00£?in indirect business taxes. Tables 7& 8. Total Estimated Expenditure Impacts of Glut-of--Area vs.Local Workers One Refinery Weeks in indirect Business Turnaround Lobar income Jabs Output Taxes (#of Workers) 50%OOA 100%Local 5016 OOA 100%Local 50/i ODA 100%Local 50%00A 100%Local _ 4(260) $88,208 $263,439 3 8....... ...$322,865 $964,947 $14,843 $44,373 4(3511)' $126,348 $296,361 4 11 $458,838 "$1,371,240 $21,093 $63,058 6(2511); $134,093 $402,092 4 :. 12 $492,82-7 $1,472,814 $22,655 $67,728 4(500)' $176,416 $526,878 5 15 $645,773 ''$1,869,894 $29,686 $88,748 6(3511); $185,700 $554,608 5 16 $679,760 $2,031,468 $31,248 $93,417 6(5€111) $269,266 $804,183 8 23 $985,653 $2,945,629 $45,311 $135,455 12(260) $269,266 $804,183 8 23 $985,663 $2,945,629 $45,311 $'135,455 12(3541) $376,044 $1,123,082 11 32 $1,376,516>$4,113,722 $63,279 $190,171 12 5€3(1 $533,890 $1,594,469 15 45 $1,954,314 $5,840,469 $89,8401 $268,576 Final Report-Juna 2003 20 Department of City and Regional Planning, UC Berkeley Four Refineries Weeks in Indirect Business Turnaround Labor Income Jobs Output Taxes (#of Workers) :SO%OOA 100%Local 50%OOA 100%Local 50%OOA 100%,Local 50%OOA 100%LOW 4(1000) $357,473 $1,067,621 10 30 $1,308,538 $3,910,575 154 $179,829 A(1400) $501,392 $1,497,623 14 43 $1,835,354 $6,484,964 $84,372 $252,228 6(1000) $533,890 $1,594,500 15 45 $1,954,314 $5,840,469 $89,840 $268,576 4(2000) $714,947 $2,135,244 20 61 $2,617,079 $7,821,151 $120,307 $359,658 6(1400) $752,086 $1,976,165 21 64 $2,753,030 $7,227,444 $126,558 $378,342 $11,731,72 6(2000) $1,072,419 $3,202,864 31 91 $3,9251617 7 $180,461 $539,488 $11,731,72 12(1000) $1,072,419 $3,202,864 31 91 $3,925,617 7 $180,461 $539,488 $16,403,76 12(1400) $1,499,531 $4,478,374 43 127 $5,489,066 9 $252,333 $754,333 $20,463,45 $1,078,97 12(2000) $2,144,839 $6,406,730 61 182 $7,8514.232 ,., , 2 $360,923 5 While the multiplier effects on employment may at most only contribute to 121 extra jobs,the impacts on output and business taxes are more pronounced. Most significant are the losses to Contra Costa County through output. By hiring workers locally,local businesses could stand to gain millions in output. The high-end figure of$12 million would only result from large,3-month turnarounds at all 4 refineries,but substantial leakage figures of$3-5 million would occur on moderately sized 4 to 6 week projects. An increase in output from local businesses would also result in a substantial increase in taxes to the county. Increased local spending primarily generates sales taxes for a host of public services and moderate estimates put the amount of leakage between roughly$50,000 and $250,000,again depending on the length and intensity of the construction project. Final Report—June 2003 21 Department.of City and Regional Planning, UC Berkeley Assessment of Economic Impacts of Out-of.-Area:Workers at Major Contra Costa County Refineries Produced by: Nadya Chinoy cabby Melisse Edwards' aiex Lant berg University of California, Berkeley Department of City and Regional Planning Introduction + impact analysis of outs-of-area contract employment at county's 4 largest refineries- Chevron, efineriesChevron, Phillips, Shell, and Tesoro Golden Eagle + Under supervision and direction of Community Development Department Impacts of Out-of-Area Workers Household expenditures "leak" Outside the region, impacting Contra Costa County $640,000-$12 million in reduced output 5- 121 fewer jobs $175,000- $4.3 million loss of labor income v$30,000 700,000 in reduced indirect business taxes Impacts of Out-of-Area Workers comparison of impacts on Countywide Business Output Ii Ccnaa Cartxhpscis 3 o � o o' 4(250) a(250) 12 4500). 12{64m}. .6 In Yucnamund(S rt WarUr* Conclusions • The use of out-of-area workers decreases tax revenues to the County • Household expenditures from increased in- area workerswould result in economy wide output, employment, and labor income benefits • With additional information from all stakeholders, further research could provide more precise'`estimates 5 APPENDIX Supplemental Data Tables Table A-1. Petroleum Refining Self-Reported Employment,Occupations,and Wages in Contra Costa County Average Aggregate Number in Wage Wage Occupation Industry income Income Marketing and sales managers 65 86,000 5,590,000 Purchasing managers 118 60,000 7,080,000 Managers,all other 290' 78,669 22,814,000 Management analysts 238 65,597 15,612,000 Accountants and auditors 92 138,000 12,696,000 Computer scientists and systems analysts 263 77,779 20,456,000 Computer programmers 291 64,914 18,890,000 Computer software engineers 172` 82,238 14,145,000 Network and computer systems administrators 92 57,000 5,244,000 Chemical engineers 224 72,746 16,295,000 Computer hardware engineers' 131 60,000 7,860,000 Industrial engineers,including health and safety 119 60,000 7,140,000 Chemists and materials scientists 159 64,000 10,176,000 Paralegals and legal assistants 79 61,000 4,819,000 Miscellaneous media and communication workers 79 18,000 1,422,000 Other healthcare practitioners and technical occupations 79 58,000 4,582,000 Sales representatives,wholesale and manufacturing 79 34,300 2,709,700 First-line supervisors/managers of office and administrative 158 12,000 1,896,000 Court,municipal,and license clerks 27 50,000 1,350,000 Customer'service representatives 106> 43,000 4,558,000 Receptionists and information clerks 132 32,700 4,316,400 Production, planning,and expediting clerks 106 68,000 7,208,000 Office clerks,general 79 36,500 2,883,500 Office and administrative support workers, all other 92' 125,000 11,500,000 First-line supervisorslmanagers of construction trades and extraction industries 158 69,000 10,902,000 Electricians 39- 61,000 2,379,000 First-line supervisors/managers of mechanics, installers, and repairers 53 71,000 3,763,000 Industrial and refractory machinery mechanics 79 72,000 5,688,000 First-line supervisors/managers of production and operating 593 49,730 29,490,000 Computer control programmers and operators 106 70,000 7,420,000 Machinists 79 112,000 8,848,000 Welding, soldering,and brazing workers 145 75,000 10,875,000 Miscellaneous plant and;system operators 475 74,459 35,368,000 Chemical processing machine setters, operators, and fenders 198 65,000 12,870,000 Production workers, all other 185 77,081 14,260,000 ar ver/sales workers and truck drivers 79 43,000 3,397,000 Laborers and freight, stock, and material movers, hand 80 35,000 2,800,1700 Machine feeders and offbearers 225 72,000 16,200,000 TOTAL' 5,764' 65,146 375,5021600 TOTAL STW 3,494 65,862 114,260,000 Source:US Census Bureau, I%Public Use Microdata Sample Final Report--June 2003 23 Department of City and Regional Planning, UC Berkeley Table A-2. Aggregate Income by Annual Income Category for Baseline Impact Calculation Scenarios Occupation Description Scenario 20,000— 30,000-- 40,000 50,000— Over 29,999 39,999 497999 69,999 70,000 Accountants and Auditors Scenario 1 9,195,525 Scenario 2 17,029,576 Scenario 3" 17,125,122 Boilermakers Scenario 1. 915,331 Scenario 2 1,695,139 Scenario 3 1,704,650 Bookkeeping,Accounting,and Scenario 11,889,286 Auditing Clerks Scenario 2 3,498,848 Scenario 3 3,518,479 Business Operations Scenario 1 14,812,339 Specialists,All Other Scenario 2 27,431,589 Scenario 3 27,585,495 Chemists Scenario 1" 1,499,406 Scenario 2` 2,776,812 Scenario 3 2,792,391 Compliance Officers, Except Scenario 1 1,356,448 Agriculture, Construction Scenario 2 2,512,063 Health and Safety,and Transportation Scenario 3 2,526,157 Computer Programmers Scenario 1 3,918,343 Scenario 2 7,256;543 Scenario 3 7,297,256 Computer Specialists,All Scenario 1 1,601,264 Other Scenario 2 2,965,448 Scenario 3 2,982,086 Computer Systems Analysts Scenario 1 11,186,593 Scenario 2 20,716,918 Scenario 3 20,833,152 Control and Valve installers Scenario'1` 1,228,938 and Repairers,Except Scenario 2 2,275,922 Mechanical Door Scenario 3 2,288,691 Customer Service Scenario 1 1,752,292 Representatives Scenario 2 3,245,143 Scenario 3 3,263,350 Drafters, Engineering,and Scenario 1 3,499,830 Mapping Technicians,All Scenario 2 6,481,480 Other Scenario 3 6,517,845 Electricians Scenario 1. 1,695,284 Scenario 2 3,139,567 Scenario 3 3,157,182 Engineering Managers Scenario 1 5,601,033 Scenario 2 10,372,787 Scenario 3 10,430,984 Final Report--June 2003 24 Department of City and Regional Planning,LIC Berkeley Occupation Description Scenario 20,000– 30,000– 40,000– 50,000– Over 29,999 39,999 49,999 69,999 70,000 Engineers,All Other Scenario 1' 14,131,609 Scenario 2 26,170,916 Scenario 3 26,317,750 Executive Secretaries and Scenario 1 2,161,064 Administrative Assistants Scenario 2 4,002,165 Scenario 3 4;424,620 Financial Analysts Scenario 1 3,392,624' Scenario 2 6,282,943 Scenario 3' 6,318,194 Financial Managers Scenario 1 2,349,515 Scenario 2 4,351,165 Scenario 3: 4,375,577 Financial Specialists,All Other Scenario 1 4,747,890 Scenario 2 8,792,817' Scenario 3 8,842,149 Financial', Information, & Scenario 1 971,220 Record Clens,All Other Scenario 2 1,798,642 Scenario 3 1,808,734 First-Line Scenario fi 3,269,818 Supervisors/Managers of Scenario 2 6,055,512 ` Mechanics, Installers, and Repairers Scenario 3 6,089,487 First-Line Scenario 1 1,961,999 Supervisors/Managers of Scenario 2- 3,633,507 Non-Retail Sales Workers Scenario 3 3,653,€393 First-Line Scenario T 1,280,420 Supervisors/Managers of Scenario 2 2,371,264 Office and Administrative' Support Workers Scenario 3 2,384,568 First-Line Scenario 1 4,291,646 Supervisors/Managers of Scenario 2 7,947,878 Production and Operating Workers Scenario 3 7,992,470 General and Operations Scenario 1 2,383,905' Managers Scenario 2 4,414,853 Scenario 3 4,439,623 Geological and Petroleum Scenario 1 1,147,667 Technicians Scenario 2 2,125,413 Scenario 3 2,137,337 Geoscientists, Except Scenario 1 1,803,594 Hydrologists and Scenario 2 3,340,152 Geographers Scenario 3 3,358,892 Human Resources Assistants, Scenario 1 991,370 Except Payroll and Scenario 2 1,835,960 Timekeeping Scenario 3 1,846,261 Human Resources Managers Scenario 1 2,007,184 Scenario 2' 3,717;187 Scenario 3- 3,738,043 Industrial Engineers Scenario 1 3,708,045 Scenario 2: 6,867,084 Final Report—June 2G03 25 Department of City and Regional Planning, LIC Berkeley Occupation Description Scenario 20,000– 30,000 40,000 50,000– Over 29,999 39,999 49,999 69,999 70,000 Scenario 3 6,905,612 Inspectors,Testers, Sorters, Scenario 1 1,712,094 Samplers, and Weighers Scenario 2 3,174,698 Scenario 3': 3,188,487 Installation, Maintenance, and Scenario 1'. 1,165,633 Repair Workers,All Other Scenario 2 2,158,685 Scenario 3 2,170,796 Lawyers Scenario 1' 5,156,843 Scenario 2" 9,550,172 Scenario 3 9,603,754 Life,Physical, and Social Scenario 1 3,773,661 Science Technicians,All Scenario 2 6,988,604 Other Scenario 3` 7,027,810 Machinists Scenario 1 2,210,208 Scenario 2 4,093,176 Scenario 3 4,116,141 Maintenance and Repair Scenario 1 1,009,953 Workers, General Scenario 2 1,870,375 Scenario 3' 1,880,868 Management Analysts'' Scenario 1' 11,223,373 Scenario 2 20,785,033 Scenario 3 20,901,649 Managers,All Other Scenario 1 6,263,129 Scenario 2 11,598,950 Scenario 3` 11,664,026 Marketing Managers Scenario 1' 2,492,112 Scenario 2' 4,615,247 Scenario 3' 4,641,141 Office Clerks, General Scenario 1' 2,153,688 Scenario 2 3,988,504 Scenario 3: 4,010,882 Paralegals and Legal Scenario 1 1,306,740 Assistants Scenario 2 2,420,406 Scenario 3 2,4331584 Payroll and Timekeeping Scenario 1 958,754 Clerks Scenario 2` 1,775,556 Scenario 3 1,785,518 Petroleum Engineers Scenario 1 6,693,851 Scenario 2 12,396;622 Scenario 3 12,466,174' Petroleum Pump System Scenario 1' 34,122,315 Operators,Refinery Scenario 2 63,192,539' Operators,and Gaugers Scenario 3 63,547,085 Physical'Scientists,All Other Scenario 1 4,024,494 Scenario 2. 7,453,129 Scenario 3' 7,494,945 Plumbers, Pipefitters,and Scenario 1 1,374,260 Stearnfitters Scenario 2-. - 2,545,050 Scenario 3 2,559,329 Final Report—June 2003 26 Department of City and Regional Planning, UC Berkeley Occupation Description Scenario 20,000— 30,000— 40,000;— 50,000— over 29,999 39,999 49,999 69,999 . 70,000 Public Relations Specialists Scenario 1 1,377,730 Scenario 2 2,551,476 Scenario 3 2,565,791 Pump Operators, Except Scenario 1 110,801 Wellhead Pumpers Scenario 2 205,197 Scenario 3 206,348 Purchasing Agents, Except Scenario 1 1,392,715 Wholesale, Retail;and Scenario 2 2,579,226 Farm Products Scenario 3 2,593,697 Receptionists and Information Scenario 1 667,776 Clerks Scenario 2 1,236,682 Scenario 3 1,243,621 Sales and Related Workers, Scenario:! 2,709,360 All Cather Scenario 2 5,017,577 Scenario 3 5,045,729 Sales Managers Scenario 1 2,429,039 Scenario 2 4,498,438 Scenario'3 4,523,677 Training and Development Scenario 1 1,387,523 Specialists Scenario 2 2,569,611 Scenario 3 2,584,028 Truck Drivers, Heavy and Scenario 1 1,030,952 Tractor-Trailer Scenario.2 1,909,263 Scenario 3 1,919,975 Total Scenario 1 2,821,464 10,200,300 17,609,174 89,532,887 87,334,660 165,809,69161,738,70 Total Scenario 2 5,225,187 18,890,362 32,611,165 0 3 166,738,97162,646,14 Total,Scenario 3 5,2541503 18,996,347 32,794,132 8 9 List of Interviewees Key Interviewees 1. Tom Adams,Attorney for the Contra Costa County Building Trades Council 2. Dennis Barry, Contra Costa County Community Development Department 3. Greg Fere, Centra Costa County Building Trades Council 4. Gus Kramer,Contra Costa County Assessor 5. Patrick Roche,Contra-Costa County Community Development Department 6. Jeff Small,Sunoco Philadelphia Refinery engineer 7. Tom Stewart,Inform Public Relations 8. Eric Zell,Zell and Associates Union interviewees 1. Boilermakers Local 549,Fred Fields and Torn Baca 2. Brick and Tile Layers Local 3, Greg Miranda 3. Carpenters Local 152,Dennis McWhorter,negligible OOA.workers Final Report---June 2103 27 Department of City and Regional Planning, UC Berkeley 4. Cement Masons Local 300, Leslie Trapps 5. Electricians Local 302,Michael Yarbrough,negligible OOA workers 6. Irvin Workers Local 378, Dan Zampa,negligible OOA workers 7. Laborers Local324,Randy Le Maine 8. Laborers Local'67,Jerry Rodarte 9. Sheet Metal Workers Local 104, Kevin Van Buskirk,negligible OOA workers 10. Steamfitters Local 342,Larry Blevins Unable to reach: I. Asbestos Workers Local 16 Steve Steele 2. Operating Engineers Local 3, Walt Powers 3. Painters Local 741,Elmer Kennessey 4. Teamsters Local 315,Dale Robbins Final Report--,June 2003 2 Department of City and Regional Planning, UC Berkeley Exhibit "B" d' 03 JUN-4 PM 12: 12 COMMITTEE FOR INDUS:TRIAL SAFETY C BOY, ., 7 1 r June2, 2003 MARTINEZ, CA 94533 Mr. Dennis Barry Director Contra Costa County Community Development Department 651 Pine Street, 4th Floor,,North Wing Martinez, CA 94553 Dear Mr. Barry We want to reiterate our pledge`to participate and provide reasonably necessary informationn for the proposed "Study of Economic Impact of Out-of-County Contract Employment at Contra Costa'Oil Refineries." However, we believe that;there has been some confusion regarding both the information needed anal the scope of the study. Moreover, we do not believe that the tinaefrarne set for the study (completion.in mid-June) is realistic. After reviewing your May 7, 2003 e-mail message to Eric Zell, the revised information request from VC Berkeley, and the Scope of Work prepared for the study,we offer the following comments: ■ Whenever there is more than one coil company participating in a project, issues of antitrust arise: Accordingly, an internal review and discussion of the requested information in this context is required. ■ In many cases, the requested'information isnot information that is readily available to us, but is information that needs to be assembled and/or obtained from contractors. Assignments of this nature take time especially when the number of workers for which information is requested is in the thousands. ■ We do not understand the relevance of some of the requested information: -- Why is information being requested regarding workers living outside the nine Bay Area counties, as opposed to outside of Contra Costa County? We previously understood that the study was to discuss economic impacts on Contra Costa County, not on the Bay Area. What is the relevance of whether workers are members of the Building Trades, California ContractorsGroup, or some other organization? Again, we understood that the study was to measure economic impacts in the county based on the residence of the worker, not his or her union affiliation.; Of a more general nature, we question whether the study would be more meaningful and valuable if its scope is broadened. Specifically, we question why the study is limited to oil refineries? There are many other industries anchor entities that could be included in the study that would be as relevant to review as our companies. For instance, why doesn't the study evaluate the economic impacts within the county of the county's employment of workers residing outside the county— specifically general county employees, the county fire districts and sheriffs department? We suggest these public entities as a potential example because they are large employers, should have the information needed available for the study, and. cooperation with LSC Berkeley should be assured. The results of such an expanded study should provide a meaningful comparison of the impacts of hiring out-of-county residents for at least portions of the public and private sectors. Such a comparison should be helpful'in whatever ultimate use will be made of the study. We suggest that a meeting be set up with you, Pr1ofessor Daubi, and our representatives to discuss the scope of the study and the information needed for it to proceed. Please feel free to contact Eric Zell regarding this letter and the proposed meeting. Thank you for your time and effort on this matter. Willie Chiang Aamir Farid General Manager General Manager Rodeo Refinery Shell Oil Products Conoco Phillips U.S. Bay Valley Complex Bill Haywood Gar R. Fisher President General Manager, External California and Southwest Region affairs General Manager Richmond Refinery Golden Eagle Refinery Chevron Products Company cc; The Honorable Mark DeSaulnier The Honorable John Gioia The Honorable Federal Glover The Honorable Gayle Uikema Mr. JohnSweeten Assessment of Economic Impacts of Out-of-Area Workers at Major Contra Costa County Refineries Produced by; Nadya Chinoy cabby Melissa Edwards' Alex Lantsberg University of,California, Berkeley Department of City and Regional Planning Introduction . Impact analysis of out-of-area contract employment at county's 4 largest refineries- Chevron, Phillips, Shell, and Tesoro Golden Eagle • Ander supervision and direction of Community Development Department Scope of Inquiry • Study concentrates on the effects of reduced household expenditures resulting from out-of- area workers at refinery projects • Impacts only measured for additional workers brought in from outside of 9-county Bay Area for refinery "turnarounds" + Other potential impacts were deemed insignificant Impacts of Out-of-Area 'Workers • Impacts vary depending on project length and number of employees involved 4- 12 week turnarounds: Projected 50% out-of-area ✓250-500 additional out-of-area workers per refinery 2 :MY .R......:..,.. .. Impacts of taut.-cif-Area Workers • Household expenditures "leak" outside the region, impacting Lantra Costa County ✓$640,.000 $12 million in reduced output 5-- 121 fewer jobs ✓$175,000-$4.3 million loss of labor income ✓$30,000—`.$700,000 in reduced indirect business taxes Impacts: of taut-of-Area Workers Comparison of Impacts on Countywide Business Output pOutM Arsehp[f p� - MCMOe Coetihpxt6 & 4 — L f 0 O <[250) d(25b) 12(300) f2{6001 Weeks In Turnaround(10 of Workanq 3 RefiningIndustry's Contribution to Contra Cosh County • Industry has a big impact even though it makes up just over I%. of the County's total employment • Refining industry is the county's largest industrial spender • 6th in indirect business taxes; o,9th in employee compensation Defining' Industry's'Contribution to Contra Costa County • Household expenditures have significant positive impacts ✓'$265—$493 million of additional output -2061' —3838 more,jobs x'$72-$134 million additional labor income ✓>$3 -°$6 million in increased indirect business taxes 4 Conclusions • The use of out-of-area workers decreases tax revenues to the County • Household expenditures from increased in area workers would result in economy wide output, employment, and labor income benefits • With additional information from all stakeholders, further research could provide more precise estimates 5 Assessment of Economic Impacts of Out f-Area 'i orke rs at Major Contra Costa County Refineries Produced by: Nadya Chinoy©abby Melissa Edwards Alex Lantber University of California,Berkeley Department of City and Regional!Tanning Introduction • Impact analysis of out-of-area contract employment at county's 4 largest refineries- Chevron,»Phillips, Shell, and Tesoro Golden Eagle e Under supervision and direction of Community Development Department Scope of Inquiry • Study concentrates on the effects of reduced' household expenditures resulting from out-of- area workers at refinery projects • Impacts only measured for additional workers brought in from outside of 9-county Bay Area for refinery "turnarounds" • Other potential impacts were deemed insignificant Impacts of Out-of-Area Workers • Impacts vary depending on project length and number of employees involved' v— 12 week:.turnarounds ✓Projected 50% out-of-area ✓250 -'500 additional out-of--area workers per refinery 2 Impacts of Out-of-Area Workers Household expenditures "leak"' outside the "region, impacting Contra Costa County $640,000-$12 million in reduced output 5— 121 Fewer jobs' ✓$175;000—$4.3 million lass of labor income $30,000—$700,000 in reduced indirect business taxes Impacts of Cut-of-Area Worker Comparison of Impacts on Countywide Business Output b % 4 O 9 ] d 0 4(250) B(250) 12(500) 12(5M) .sin.7umawund(M of Wwk*N 3 Refining Industry's Contribution to Contra Costa County s Industry has a big impact even thought it makes up just over I% of the County's total employment . Refining industry is the county's largest industrial spender • 6th in indirect business taxes • 9th in employee compensation Refining industry's Contribution to Contra Costa County • Household expenditures have significant positive impacts ✓';$265--$493 million of additional output ✓2061 --3838 more jobs ✓$72-$134 million additional labor income ✓`$3 - $6 million in increased indirect business taxes 4 Conclusions r The use of out-of-area workers decreases tax revenues to the County . Household expenditures;from increased in- area workers wouldresult in economy wide output, employment, and labor income benefits . With 'additional;information from all stakeholders, further research could provide more precise estimates 5 Assessment of'Economic Impacts of taut-cif-Area Workers at Major Contra Costa County Refineries Produced by: adya Chinoy flabby Melissa Edwards Alex Lantsberg University of California,Berkeley Department of City and Regional Planning Introduction • 'Impact analysis of cut-of-area contract employment at county's 4 largest refineries- Chevron, Phillips, Shell, and Tesoro Golden Eagle • Under supervision and direction of Community Development Department 7 ............... ........... ............. ........... Scope of,Inquiry • Study concentrates on the effects of reduced household expenditures resulting fromout-of- area workers at refinery projects Impacts only measured for additional workers brought in from outside of 9-county Bay Area for refinery "turnarounds • Other potential impacts were deemed insignificant Impacts of Out-of-Area Workers Impacts vary depending on project length and number of employees involved 4- 12 week turnarounds ✓Projected 50% out-of-area ✓250-500 additional out-of-area workers per refinery 2 Impacts of Out-of-Area Workers Household expenditures "leak" outside the region, impacting Contra"Costa County ✓''$640,000- 12 million in reduced output 5- 121 fewer jobs $175,000-`$4.3 million loss of labor income ✓'$30,000 -$700,000 in reduced indirect business taxes Impacts of Out-of-Area Workers Comparison of impacts on Countywide Business Output ----:_W_. -- --------— 5 ®beaar..�,i o 2 — -- 0 e ' 41250) a(250) 12(SOD).. 12(500} Weeks in TOrnMMu d(9 of Worker* 3 Refining Industry's Contribution to Contra Costa County 4w :«Industry has a lbig impact even though it makes up just over 1°la of the County's total employment • Refining industry is the county's largest industrial spender 6th in indirect business taxes • 9th in employee compensation Refining Industry's Contribution to Contra Costa County • Household expenditures have significant positive impacts ✓;.$265—$493 million of additional output ✓''2061 3838 more jobs ✓$72-$134 million additional labor income ✓;$3 - $6 million in increased indirect business taxes 4 Conclusions . The use of out-of-area workers decreases tax revenues to the County r Household expenditures from increasedin- area workers would result in economy wide output, employment, and labor income benefits With additional information from all stakeholders,' further research could provide more precise estimates 5 Assessment of Economic Impacts of Out-of-Area Workers at Major Contra Costa County Refineries Produced by: , Nadya Chlnoy Dabby Melissa Edwards Alex Lantsberg University of California,Berkeley Department of City and Regional Planning Introduction 0, Impact analysis of out-of-area contract' employment of county's'4 largest refineries- Chevron, Phillips, Shell, and Tesoro Golden Eagle �► Under supervision and direction of Community Development Department l Scope of Inquiry • Study concentrates on the effects of reduced household expenditures resulting from out-of- area workers at refinery projects • Impacts only measured for additional workers brought in from outside of 9-county Bay Area for refinery "turnaroundsy' • Other potential "impacts were deemed in significant Impacts of Out orders Impacts vary depending on project length and number of employees involved 4— 12 week:turnarounds Projected 50% out-of-area 250 500 additional out-of-area workers per refinery 2 Impacts of Out-of-Area Workers . Household expenditures "leak" outside the region, impacting Contra Costa County $640,000—;$12 million in reduced output f 5— 121 fewer jobs $175,000-$4.3 million loss of laborincome $30,000—$700,000 in reduced indirect business taxes Impacts of Out-of-Area 'Workers Comparison of impacts on Countywide Business Output 7-C ea CoMtl IrfiaEU -- 5 w 4 —_— — c s � 1 0 4(250) 6(250) 12(50D) 12(500) Weeks:In Turnaround-(a of Workers) 3 Retiring Industry's Contribution to Contra Costa County Industry,has a big impact even though it makes up just over 1% of the County's total employment Refining industry is the county's largest industrial spender 6th in indirect business taxes 9th in employee compensation Refining Industry's Contribution to Contra Costa County Household expenditures have significant positive impacts ✓$265—$493 million of additional output ✓2061 —3888 more jobs ✓$72—$134 million additional labor income $3'- $6 million in increased indirect business taxes 4 r o cc nclusions . The use of out-of-area workers decreases tax revenues to the County • Household expenditures from increased in- area workers would result in economy wide output, employment, and labor income benefits • With additional information from all stakeholders, further research could provide more precise 'estimates 5 ............ .. ,Nlli SIMON mosommi .... . . . ... SO ills F ill'osir 1 Wo FF MEMOS ........ lid I MEN! TO: BOARD OF SUPERVISORS Contra FROM: DENNIS M. BARRY, AICPCosta COMMUNITY DEVELOPMENT DIRECTOR County DATE: JUNE 10, 2003 SUBJECT: REPORT ON ECONOMIC IMPACTS OF OUT-OF-AREA WORKERS AT MAJOR CONTRA COSTA COUNTY REFINERIES SPECIFIC REQUESTS) T(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION RECOMMENDATIONS ACCEPT the report prepared by University of California at Berkeley,Department of City and Regional Planning, assessing the economic impacts of out-of-area workers at major Contra Costa County refineries. FISCAL IMPACT None. CONTINUED ON,ATTACHMENT: --X-YES SIGNATURE RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTI�E APPROVE OTHER SIGNATURE(S). ACTION OF BOARD ON APPROVED AS RECOMMENDED OTHER_ VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE AND UNANIMOUS(ABSENT CORRECT COPY OF AN ACTION TAKEN AND AYES: NOES: ENTERED ON THE MINUTES OF THE BOARD OF ABSENT: ABSTAIN., SUPERVISORS ON THE DATE SHOWN Contact: Patrick Roche,CDD-AP,Ph#925-335-1242 ATTESTED cc: CAO JOHN SWEETEN, CLERK OF THE BOARD OF Clerk of the Board SUPERVISORS AND COUNTY ADMINISTRATOR County Counsel W.Walker,Health Service Director R.Sawyer,Health Services Dept. BYDEPUTY Press Box-Clerk of the Board June 10,2003 Board of Supervisors Assessment of Economic Impacts of taut-Area-workers at Contra Costa County's Major Oil Refineries Page 2 BACKGROUND i REASON FOR RECOMMENDATION At the December 3, 2002 the continued:public hearing on a proposedContractor Safety Amendment to the County's Industrial Safety Ordinance, County Ordinance Cade Chapter 450-8, the Board of Supervisors directed the Community Development Department to study and report on the economic impacts of out-of-area workers at Contra Costa County major oil refineries. In response to this directive, the Community Development department contacted the University of California at Berkeley to gauge their interest in conducting this study.They were contacted because U.C. Berkeley's Institute of Industrial Relations had previously prepared a study in 1989 for the Board of Supervisors examining the impact of out-of-area workers in nor'-residential construction using the USS-POSCO Steel Plant Modernization as a case study. The principal investigator for the 1989 study is no longer,affiliated with the university, but did recommend U.C. Berkeley's Department of City and Regional Planning would be interested in conducting the economic impact study. The Department subsequently contracted with Professor'Karen Chapple, U.C. Berkeley, Department of City and Regional Planning, to undertake the 'assessment of economic impacts of out-of-area workers at major Contra Costa County oil refineries. U.C. Berkeley's Department of City and Regional Planning agreed to conduct this study pro bono. Attached'for the Board's review and comment, is the study undertaken by graduate students from the Department of City and Regional Planning, U.C. Berkeley, under the direction of Professor Karen Chapple (See attached Exhibit "A"),. The report shows that the petroleum refining industry plays a significant role in Contra Costa County's economy and that the use of out-of-area workers at major refinery construction or "turnaround" projects can have moderate to significant "leakage'.' impacts as expenditures that normally occur within the area now occur elsewhere. This diminished local spending in turn reduces the industry's positive impacts on the Contra Costa County economy. This study provides a framework for further research into economic impacts to Contra Costa County from hiring out-of-area workers. Subsequent to the submittal of this report by U.C. Berkeley,the Department received a letter from the Committee for Industrial Safety, signed by the four major oil refinery managers, explaining their positionon the oil refineries' participation in this study (See attached Exhibit 'B"). Attachments (2) Exhibit "A": ASSESSMENT OF ECONOMIC IMPACTS OF OUT-OF-AREA WORKERS AT MAJOR CONTRA' COSTA COUNTY REFINERIES, June 2 2003, U.C. Berkeley, Department of City and Regional Planning Exhibit "B": Letter to Dennis Barry,Community Development Director,from the Committee for Industrial Safety, dated June 2, 2003, received by the Community Development Department on June 4, 2003 G:\Advance Planning\adv-planZoard Orders\BOARD ORDER economic Impact out of area workers oil reflnenesaoc Exhibit "A" Assessment of Economic Impacts of Out-of-Area Workers at Major Contra Gosh County Refineries. PRODUCED BY: Nadya Chinoy Dabby Melissa Edwards Alex Lantsberg University of California, Berkeley Department of City and Regional Planning SUBMITTED.TUNE 2,2003 TO: Dennis M. Barry,AICP Community Development Director Contra Costa County TABLE OF CONTENTS TABLE OF CONTENTS .. . ......... ....... . ......... ....... ........ ..... ..:. ....,.. ........ ....... : ....,....... 1 TABLE OF FIGURES.... ........ ,2 EXECUTIVE SUMMARY........... . .. ...,,......3 SECTION 1. OVERVIEW AND METHODOLOGY............. .... ...........................................4 PURPOSE OF REPORT 4. METHODS 4 Literature Review 4 Secondary Data Economic Modeling 7 Employment and Payroll Scenarios 8 Defining Out-of-Area Workers q Interviews g AssuMPTZONs AND LwTATIoNs 10 SECTION 2. ECONOMIC IMPACT OF REFINING INDUSTRY EMPLOYMENT IN CONTRA COSTA COUNTY.. ................ .. ........ ....... . ......... ......... .........14 Assuly noNs 14 Base Level Employment and Payroll Scenarios 14 IMPACTS 14 Employment: 14 Labor Income 14 Industry Output 15 IndirectBusiness Taxes: 15 SECTION 3. OCCUPATIONAL PROFILE OF OUT-OF-AREA CONTRACT WORKERS ... .16 WORK OPPORTUNITIES FOR OUT-OF-AREA WORKERS 16 PROPORTIONS OF(AUT-OF-AREA WORKERS 16 SECTION 4. ESTIMATING ECONOMIC IMPACT OF OUT-OF-AREA.TIRING....,.,17 Assu pnoNs 17 Area-Worker Scenarios 17 Consumer Expenditure Patterns 17 Impact:Scenarios 17 IN2ACTS 18 SECTION5, CONCLUSIONS.... ........ ......... ......... ......... ......... ......... ......:........... .........22 AREAS FOR FURTHER RESEARCH 22 APPENDIX .......... . ... ..,, .. .. .. .23 SUPPLEMENTAL DATA TABLES 23 LIST OF INTERVIEWEES 27 Rey Interviewees 27 Union Interviewees 27 Final Report---June 2003 Department of City and Regional Planning, UC Berkeley TABLE OF FIGURES Table 1. Base Level Payroll and Employment Scenarios......... ......... ......... ................ ....... ...... 4 Table 2. Local v lion-Local Consumer Expenditure Categories........ .............. .... .. ............ .... 11 Table 3. Economic Impacts from Refinery Employee Household Expenditures... ..... .... ..... ... 15 Table 4. Average Expenditures by Income ..... ...... ... ..... ....... .... 17 Tables 5 & 6. Total Estimated FTE of Out-of-Area WorkersinRefinery Turnarounds.;........ .. 18 Figure 1. Estimated Employment Impacts of Hiring Out-of-Area Workers at One Refinery per Year... ......... ............ . ..... ......... ........: ........ .. ...... ...... ... ......... ........ ............ ...... 19 Figure 2. Estimated Impacts of Out-of-Area Workers on Output ....... ........ ......... .... . ......... 19 Figure 3. Estimated Impacts of Hiring Out-of--Area Workers on Business Taxes ........... .......20 Tables 7 & 8. Total Estimated Expenditure Impacts of Out-of-Area vs. Local Workers.. .........20 Table A-1. Petroleum Refining Self-Reported Employment, Occupations, and Wages in Contra Costa County...... ........: ............. ..........: .... ........ .............. .... ....... .............. ....23 Table A-2. Aggregate Income by Annual Income Category for Baseline Impact Calculation Scenarios........ ....... ...... ........ ......... ......... ........ ........ .... .... . ........ ......... .. ....... 24 Final Report—,June 2003 2 Department of City and Regional Planning, UC Berkeley' EXECUTIVE SUMMARY This report was prepared by the University of California Department of City and Regional Planning at the request of the Contra Costa Community DevelopmentDepartment and the Contra Costa County Board of Supervisors. Its purpose is to examine the economic impact of out-of-area contract employment at the county's four largest refineries. This report shows that the petroleum refining industry plays a significant role in Contra Costa County's economy and that use of out-of-'area workers at major refinery construction or "turnaround"projects can have moderate tosignificant"leakage"impacts as expenditures that that normally occur within the study area now occur elsewhere. This diminished local spending in tum reduces the industry's positive impacts on the Contra Costa County economy. It should be noted that the use of out-of--area workers occurs primarily during temporary construction projects and for a variety of reasons. These may include, among others,the inability to fill demand from the local labor pool and the decreased''costs from hiring from areas with lower wage rates. It may not always'be possible to have a 100%local labor workforce at major projects. The most significant reductions are to output and business taxes. For example,a "turnaround"project in one refinery lasting only 4 weeks and using only 250 additional workers results in a leakage of$640,000 dollars of output and almost$30,000 in indirect business taxes, while a more intense activity level of all four major refineries performing large turnarounds in one year results in a leakage of over$12 million in output and over'$700,000 in indirect business taxes. Overall,refining is the County's largest industrial spender, sixth in indirect business tax payments,and ninth in employee compensation-all the more impressive because of its relatively small share of the County's total employment. The household expenditures of refinery employees reverberate'throughout the Contra Costa County economy, contributing significantly to countywide output, employment;labor income, and indirect business taxes. Skilled trade and labor positions,which are the subject of the Industrial Safety'Ordinance,provide about'26.5%of these total impacts. Depending on total employment in various scenarios,the impact of all spending is responsible for an additional: ■ $265 to$493 million in total output by county businesses; ■ 2061 to 3838 jobs within the county;,, • $72 to $134 million in labor"income that is additionally re spent in the area; and ■ $12 to 23 million mn indirect business taxes. This study provides a framework for farther research into economic impacts to Contra Costa County from the hiring of out-of--area workers. Findings from this study could be supplemented by additional relevant primary data with the cooperation of all relevant stakeholders, such as unions,contractors,refineries, and public agencies. Final Report—June 2003 3 Department of City and Regional Planning, UC Berkeley SECTION 1 . OVERVIEW AND METHODOLOGY Purpose of Report At the requestof the Contra Costa County Board of Supervisors,the Contra Costa County Community Development,Depaxtment(hereafter referred to as',',the Community Development Departmenf undertook a'study of the econlomic impact of out-of area contract employment at the county's four largest refineries. In turn,the Cornrnunity Development Department contacted the Department of City and Regional Planning(DCR-P)at the University of California at Berkeley; DCRP agreed to coicluet this study pro Bono under the direction of the Community Development Dep artment in April'and May of 2003. This report presents the findings.from this study. The four refineries analyzed for the purpose of this report are Chevron(Richmond), Phillips (Rodeo), Shell(>Vlartinez)'and Tesoro C76lden Eagle (Avon). This,report presents data regarding out-of-area contract workers and then uses this information to describe the socio- economicimpact of out-of area contract employment. Where certain data were''not available, this report utilizes ranges and depicts possible scenarios;these ranges and scenarios can then''be used for policy-making where appropriate. Before outlining the economic impacts of out-of-area workers,this report describes the study methodology,,assumptions,and data limitations. Methods Literature Review Several recent studies have been done in various states concerning the impacts of refineries on local economies. Studies in Alaska(2001),Louisiana(2001) and Delaware(2002) assess the impact of the referies on state and local tax revenues,local spending,income and employment. Due to the size of the refining industries in these locations,they provide'a sizeable portion of the tax revenue and employment,not only in the cities in which they are located,but also across the state. The study in the available literature whose purpose,is most comparable to this one was completed in Lake Charles,'Louisiana. That study looked at the impacts of out-of- area contract workers on local spending. They found that the conttact workers greatly increased local spending in Lake Charles, and boosted the local economy.' A 2001 study conunissianed by the Western States Petroleum Association(WPA)also found substantial economic benefZts" from the petroleum industry, although it analyzed overall direct and indirect job'creation from the refineries rather than the specific impact of'out-of'areaworkers! Both of these aforementioned studies--the We State Petroleum Association study and the Lake Charles study---looked at the financial contributions made to charitable institutions by the refineries. A review of the literature indicates that the existence of-refineries in a locale can result in both benefits and losses for the local and regional economies. The purpose of this The WSPA report stated that there were 3,800 employees at the Contra Costa County refineries in 1997;the three different employment estimates used in this report(described later in this section)encompass this figure. WSPA's 1997 figure was estimated to generate from l to 3 indirect jobs in support of refining,transportation and marketing for every direct job in refining(the 3,800 referenced above). Final Report--,June 2003 4 Department of City and Regional Planning, UC Berkeley study,notwithstanding, is decidedly narrower: it explores the economic impact on Contra Costa County and on the nine•-•:•,county Bay Area ofout-of-areaemployment at the refineries. A less recent study is often referenced in the context of Contra Costa County refineries: it was produced for the Contra Costa County Board of Supervisors in 1990. "This report is entitled The Impact of Out-of-Area Workersin Non-Residential Construction on Contra Costa County: t1 Case Study of the HISS-POSCO Modernization and was conducted by Carlos Davidson at the Center for Labor Research and Education,Institute of Industrial Relations,University of California at Berkeley. There are significant differences between the methodologies of that prior report and this study. In particular,these differences relate to the definition out-of-area-workers, the secondary data sources utilized and the understanding of relevant economic impacts. The methodologies of this study are discussed in greater detail in the following sections on secondary data, interviews,and models used. Because the methodologies are not strictly comparable, caution should be used when attempting to compare the reports' results. Secondary Hata Various secondary data sources were used for this report. Secondary sources are data that have been produced for a variety of different purposes other than the project'at hand. These data are then used to extrapolate relevant information for the specific project. The bulb of these secondary data sources were used to develop an understanding of employment at the four refineries. In particular, it was necessary to determine the number of employees, the positions occupied by those employees'and the estimated earnings of those employees. These sources were also used to understand expected spending patterns and the resultant economic impacts. The specific secondary data examined for this report are as follows:z (1) California Employment Development Department(EDD)--The EDD tracks historic average monthly employment by industry group at the county and Metropolitan Statistical Area(M.SA)levels,3 identifies the prevalence of specific occupations within industry groups,and tracks average wages by occupation at the county and MSA levels. This sector is defined according to the North American Industrial Classification System(NAICS);the petroleum and coal manufacturing sector is NAICS 324. This data was used to(i)develop an estimate of overall employment'at the four largest refineries in Contra Costa County and(ii)calculate the baseline wage income that corresponded to employment figures. (2) County Business Patterns(GBP), US Department'of Commerce—The CBP data reveal the number of employees by industry,the number of establishments, and the total wages. All of these figures are for the payroll period that includes March 12th of the reference year, CBP also provides an annual payroll figure. The industry analyzed for CBP data was NAICS 32411,petroleum refineries. These data were used to determine the total number of employees at the four largest refineries. According to the CBP,Contra'Costa!County had five refineries operating in 2001- 2 It should be noted that attempts to get.more precise secondary data from the Contra Costa County Assessor's Office regarding employment figures were unsuccessful due to legal restrictions preventing release of the data. 3 The MSA is a US'Census Bureau category that represents multiple counties. Final Report—June 2003 5 Department of City and Regional Planning, UC Berkeley the four refineries which:,are,the subject of this study and one small firm with between 20 and 49 employees. It should be noted that the CBP employment figures were provided as ranges,not as exact figures. The"median convention"technique,where the number of employees per firm is estimated to be the category median,was used to translate these ranges into actual numbers. The fifth refinery in the CBP data was given a value of 34.5 and subtracted from the overall employment figure to arrive at the total employment by the four refineries. This proportion was then used to calculate the otheremployment scenarios, as described below. (3) DIPLAN—I PL4N is a proprietary economic modeling package used to measure the economic impacts of specific events through input output analysis and is further described below. RvTLAN's industry employment estimate is based on three data sources. In general,Bureau of Labor Statistics (BLS)Covered Employees and gages (ES202)data provides the county-level industry structure for the IMPLAN database. CBP data is used to make non-disclosure adjustments to E8202'data,while Regional Economic Information System data is used for control totals. Wages are given and? include all payroll costs,including employee benefits. Average wages for the baseline impact scenarios(see below)are based on FvIPLAN data. MLA1 's estimate of employment is higher than that calculated solely through the EDD occupation and wage data. It is also based on all payroll costs,in employee benefits. Wage income had to be calculated'from this aggregate figure by discounting the total by the BLS estimate of employee benefit expenses mentioned above. (4) Public Use Microdata Sample(`PUMA), US Census Bureau—This 2000 data set presents detailed self-reported information regarding employee residence,commute and migration patterns,race, gender,industry and occupation,wage and income, household, educational,and other demographic data for a 1%sample of the households within'a geographic reference area. Following an examination of these data,however,it was concluded that it would not be very useful for this particular study. Specifically,the PUMS'data provided an employment estimate somewhere between the CB and IIVIi'LAN data,therefore it was not used for this report,because it fell between the low and middle scenarios'(see below): Also of note,the I'lfl�IS occupational composition was significantly different than proved by the EDD data. The data is provided for nformational purposes m an appendix to this report. (5) Employer Costs for Employee Compensation 1986-1999; Bureau of Labor.Statistics— This data set was used to calculate the additional employee benefit expense incurred by the refineries. Because IMPLAN(see below)includes employee benefits as part of its total employee compensation value,i#!is pori of distinguish between direct wages and benefits so that income effects can be accurately modeled throughout the economy. (6) Consumer Expenditure.Data, Bureau of Labor Statistics'(BLS)---The Consumer Expenditure Data uses national information to produce a report that details how consumers spend their money, These spending patterns are presented by income category as well as by occupation type. These data were used to develop a model of how out-of-area contract workers at the refineries could be expected to spend their wages. This report does'not analyze the impact of these out-of-area workers' spending in their"home"regions (i.e., outside of the nine-county Bay Area)". Final Report--June 2003 6 Department of City and Regional Planning, UC Berkeley EconomicModeling IMPLAN economic modeling software extrapolates a specific economic event's impact on a region``»from national input-output data that is supplemented by state and county level,data to correct for regional differences. Economic modeling is particularly useful to policymakers because it allows them to see how their decisions are likely to reverberate throughout the economy. Since, economic modeling fundamentally relies on a series of assumptions,this report's use of conservative estimates of base levels for the modeling scenarios provides confidence that projections capture the overall range of possibilities. Input-output accounting describes the commodity flows from producers to intermediate and final consumers. The total industry inputs of commodities, services, employment compensation,value added, and imparts are equal to the total value of the commodities produced. Purchases for final'use(final demand), drive the model as producers purchase goods and services from other producers who, in tum,must purchase commodities to provide for the producers who are selling to final demand. Outside impacts, such as.purchases from out-of-area suppliers or out-of-area household expenditures are referred to as leakages This cycle of indirect purchases continues until leakages from the region stop the cycle.' RViPLAN's detailed county level input-output matrices make it an ideal package for analyzing changes resulting from discrete economic events. Data files include annual information for up to 528 different industries—generally to the 3 or 4 digit SIC code level, and 21 different economic variables. INTLAN also includes a"social account`matrix"that allows the modeling of household and government expenditures and revenues. This ensures that any impact analysis considers effects throughout the county's economy. This method was used to assess the multiplier effect of the hiring of out-of-area contract workers at the four refineries. In the input-output model,mathematically derived multipliers uniquely describe the change of output for each and every industry asa.result of producing one dollar of final demand,which are unique to each industry.In this case,impacts solely within Contra Costa County were computed. Impacts outside of the region are not included in the, multiplier effect,based on the notion that economic development is regional in nature. In this study,leakages would primarily include spending in workers''"home", region(i.e'., outside of the Contra Costa County). Multipliers can be calculated for a variety of impacts such as employment,total business output,personal and total income, and business taxes among others. The total multiplier effect refers to the imlract of an initial round of spending—in this case,the wages paid to out-of--area contract workers--and the impact of the subsequent re-spending of those initial dollars within the region. Each,"round" of spending generated by the initial round contributes to the total multiplier effect is made up of three components. The first and largest is the "direct" impact and simply the;spending by the refinery employees. The"indirect"impact is the business-to- business spending resulting from the direct expenditures and considerably smaller. The household expenditures of the employees of indirect spenders make up the"induced"portion of Final Report—June 2003 7 Department of City and Regional Planning, UC Berkeley ............................... .......... .......... ................... the multiplier and can be larger than the indirect multiplier. In general,the greater the interaction with the regional economy, the greater is the multiplier4. Employment and Payroll Scenarios As alluded to above, data from the aforementioned secondary data sources yielded a wide range of estimates for total employment. This variability in estimates can be caused by'a number of factors, such as different reporting requirements and non-disclosure apreements among others, and should not be considered out-of-the-ordinary. In order to address this issue, a range of employment scenarios were developed to ascertain more accurately the range of possible economic impacts resulting from refinery payrolls. These scenarios were created based on the varying estimates of employment and payroll expenses provided by the County Business Patterns,IMPLAN-, , and EDD data,then used to establish baseline payroll amounts and the 5 ranges of impacts from the household expenditures of refinery employees. ■ Scenario I is based on the County Business Patterns estimate of total employment and EDD industry occuDational and wage data,and is the most conservative for the three employment and wage scenarios. Overall employment was calculated by applying the employment proportions estimated:from the County Business Patterns for the petroleum-refining;portion of the petroleum.and coal manufacturing sector. Payroll income amounts were calculated by applying the occupational prop ortions to the overall employment estimates and multiplying those values by the average annual income for the occupation. This constitutes the Iow!'scenario for employment. ■ Scenario 2 is calculated based on EMPLANT -s proprietary database described in Section 1. EDD wage estimates are not used in this scenario. Income categories are instead developed by applying the proportion of wage income accruing to each occupation to UVIPLAN's total estimated wages. Average incomes for all positions are higher than in scenarios I and 3 ■ Scenario 3 is based on EDD industry specific employment occupationaL and income data and uses the same methods as Scenario 1. Total wage expense for ernployees,at Contra Costa County's four largest refineries ranges scenario.between$207.5 and$3 86.3 million on depending the employment enan o. Skilled trade and labor positions earn about 85%of the industry average wage. Together they comprise 31%of the overall refinery employment but receive only 26%of the total wages. Their total annual earnings range from$54.2 million to $100.8 million. The large number of lower paid workers earning less than the industry average causes this discrepancy. Table I summarizes the values used to calculate the baseline impacts of the major refiners' payroll expenditures. Detailed tables by occupation and projected aggregate annual income can be found in the appendix at the end of this report. 4 A detailed description of the IMPLANT model and how multipliers are calculated is available at the website of the Minnesota ITVTLAN Group at www-iTjV1_an-com The interviewees gave the impression that many of these skilled trade workers earn wages higher that the occupational average,however a conservative approach was chosen to use the average value due to the absence of any other corroborating industry specific data. Final Report—June 2003 8 Department of City and Regional Planning, UC Berkeley Table I. Base Level Payroll and Employment Scenarios Scenario'i Scenario 2 Scenario 3 Employees at major Contra Costa refineries 3,421 5,546 6,371 Total Payroll;for refinery employees $207,498,485 $384,275,106 $3$6,431,109 Payroll with Benefits $275,142,992 $509,548;791 $512,407,651 Average Annual Income for refinery employees $60,654 $69,290 $60,654 Skilled Trade Workers at refineries 1,056 1,713 1,967 Total Payroll for skilled trade workers and laborers $54,137,233 $100,259,001 $100,821,511 Payroll with Benefits $71,7851970 $132,943,435 $133,689,324 Average annul income for skilled trade workers and laborers $51,248 $58,545 $51,248 Benefits ex lanae 32.6°l0 32.6% 32.6°l0 Sources Scenarios(1)US Census&CA EDD,(2)IMPLAN&CA EDD,and(3)CA EDD; Bureau of Labor Statistics Defining Out-of-Area Workers For the purposes of this report, out'-of-area workers are defined as workers from outside of the nine county Bay Area.'There are two principal reasons for utilizing this definition of out- of-area workers: (i) this definition acknowledges the interconnected nature of the Bay Area economy and(ii)'it represents a standardized definition/criteria,which is thus compatible with other potential data sources and relevant analyses. Interviews The intended designn of this study entailed telephone interviews with four different key groups. These four groups are as follows:,(i)refinery representatives from each of the four refineries,'(ii)union contractors that represent the union out-of-area.workers at the refineries; (iii)''independent/nonunion contractors who hire out-cif-area workers at the refineries; and(iv) other persons who have relevant expertise and/or knowledge'regarding these refineries. Attempts to interview these four groups,:however,were not entirely successful.' In fact, DCRP was only able to complete interviews with two of these four groups: the union contractors and the other persons who have relevant expertise and/or knowledge. Interviews with refinery representatives and independent/nonunion contractors were attempted but ultimately unsuccessful,despite multiple efforts from DCRP. It is likely that a confluence of factors prohibited the completion of these interviews, including the following: difficulty in collecting the data that was requested,worries about revealing what was perceived as confidential information, concerns about the intent of the study in the current political`environinent''of Contra Costa County, and/or time constraints. In the absence of some essential data that would have been gathered from these interviews—particularly,the proportion and number of mdependent/nonunion contract workers who are from out-of-area,and the total hours worked by 6 In other words,out-of-area-workers are those from outside of Alameda,Contra Costa,Marin,Napa,San Francisco, San Mateo,Santa Clara, Solano and Sonoma counties;- Final Report—,June 2003 9 Department of City and Regional Planning, UC Berkeley ................. ................... contract workers (both union andindep.endent/nonunion) over the course of a year—some assumptions were made about possible ranges into which these figure fall. Using those ranges, computations were made for low,medium, and high scenarios. Ten telephone interviews were conducted with unions who represent refinery workers. While data from the Contra Costa County Building Trades Council Data indicated that there are 14 unions who represent workers from the refineries, four of these unions could not,be contacted, they are thus not included in this report. These unions were asked to respond to questions regarding positions occupied by out-of-area contract workers, the number and proportion of those workers relative to local workers, the wage level/range associated with those positions the duration of the position(year-round or a shorter duration) and the benefits afforded,to these out- of-area contract workers. The data gathered from these interviews regarding contract union workers' occupational positions and wages is not utilized in this report,however. Originally, it In unions and the refineries would be available. was anticipated that comparable data from both the u le. P Because data from the refineries was not made available,it was determined that reliance on union data would resultiri an incomplete data and would not be relied upon for this report. Instead, figures from the EDD for wage levels were used and various scenarios regarding the proportion of out-of-area workers were developed. DCRP also contacted various people who have regular contact with the refineries to gain a fuller picture of the situation. These,people included: a re finery public relations contractor, a refinery lobbyist, a Contra Costa County Building Trades Council staff member, a Building Trades Council attorney,the Contra Costa County Assessor, Contra Costa County Community Development Department staff, and'a Philadelphia-based refinery worker. These conversations took place over the phone and did not follow an established protocol. Instead, information was elicited that was particular to each contact. This information included: basic descriptions ofhow, when and why the refineries use contract workers;particular issues that were of concern to the refineries,their contractors and/or the county as a whole; suggestions regarding available,data; and/or rewminendations,of other potential contacts. Because the information elicited was not designed to be representative,a content analysis of these conversations was not performed. Instead,this information served to inform the evolution of the research design., The list of interviewees is provided in the appendix. Assumptions and.Limitations Certain assumptions were-made in order to produce meaningful analysis of the.existing data. Making these assumptions explicit helps ensure that the study remains replicable, and elucidates potential limitations. The assumptions,of this study include: ■ —Because out-of-area workers are, definition, Consumer expenditure patterns ion, transitory and rooted in another community.:certain assumptions were made about what out-of-area workers would purchase locally,and what they would purchase in their region of origin. Purchases in their region,of origin represent"leakage' and are notincluded in the multiplier effect. The following table(1)presents the categories Final Report—June 2003 10 Department of City and Regional Planning, UC Berkeley that are included as local expenditures and those that were understood to represent non-local expenditures.7 Table 2. Local v Non-Local Consumer Expenditure Categories Local Expenditures(included in Non-Local Expenditures(not included in multiplier) multiplier) o Alcoholic beverages o Apparel and services o Entertainment o Cash contributions o Food o Education o Housekeeping supplies o Health care o Housing{rented,other} o Household operations o Personal care; products and,services o Housing (owned,household furnishings o Tobacco products and smoking supplies and equipment) o Transportation(gas and motor oil) o Personal insurance and pensions(life o Utilities,fuels and public services and other personal Insurance, pensions and Social Security) o Reading o Transportation(vehicle purchases, other vehicle expenses,public transportation) o Miscellaneous ■ Cost burdens and savings due to out vf--area workers---Various potential cost burdens/savings incurred by the County were explored clue to the presence of out-of- area ut-ofarea workers. These included'educational casts borne by the county for children of out-of-area workers;health care costs borne by the county for out-of-area workers' who may not have health care;and unemployment costs for supporting unemployed local residents who could potentially be employed by the refineries,but which instead hire out-of-area.workers'. It was determined that these cost burdens would be minimal based on the following information: o Education---Reports from union contractors indicate that out-of-area workers do not tend to bring their children with them. It was thus assumed that the costs of educating out-of-area workers' children would thus be insignificant. Moreover,this research indicated that even if this were to be an issue,the data regarding schoolchildren's residency status(i.e.,how long the child has lived in the local area) is only available on an individual school basis. Collecting that data from each school in the county would therefore also have been beyond the scope of this project. a' Health costs Due to the temporary nature of the turnarounds,these workers were unlikely to generate a significant impact on the health care system in Contra Costa County. a Unemployment benefits Under direction of the Community Development Department,it was assumed that the local unemployed persons would not These categories are based on the BLS Consumer Expenditure Survey,as expounded upon earlier. Final Report--June 2003 1� Department of City and Regional Planning, UC Berkeley have the qualifications for employment at the refineries. Potential costs to the County for unemployment insurance payments were not calculated. ■ IIVMPLANmodeling IMPLAN's model is based on national trends, supplemented,' with state and LISA level'data in order to adjust for local patterns. Except where noted,IMPLAN's assumptions were used as applicable to Contra Costa County. ■ Industry Structure':Based on knowledge of the structure of the refining industry in Contra Costa County,it was assumed that the four largest firms in the CBP data were, in fact,the four largest refineries on which this study is focused. The proportions developed using CBP data were applied to calculate employment from the EDD data. Employee benefits were assumed to be identical for each scenario. • Occupational composition of contract workforce--For the purposes of this report, it was assumed that contract workers occupy only the blue-collar occupational positions within the refineries(i.e.,no contract workers in higher-level management or technical positions). These occupational positions are as follows. c Boilermakers o Control and Valve Installers and Repairers c Electricians o First-Line Supervisors/Managers of Mechanics,Installers,and Repairers o First-Line SupervsorsllManagers of Production and Operating Workers o General Maintenance and Repair Workers o Heavy and Tractor-Trailer Track Drivers o Inspectors,Testers, Sorters,Samplers and Weighers o Installation,Maintenance,and Repair Workers o Machinists' o Petroleum Pump System Operators, Refinery Operators and Gaugers o Plumbers,Pipefitters,and Stearnfitters The employment figures for blue-collar workers were then used as the basis for -of--area workers. Implicitly,then,it was also computing various proportions of out assumed that the relative'proportions of each occupation are the same among contract workers (local and out-of area) as among the overall workforce(contract and non- contract). • 2080-hour work—year—Annual figures for out-of-area contract workers' earnings and their impacts on the region(i.e,multiplier effects)are computed based on a 2080 hour work year.$ ■ Types of contract-worker projects---T sere are various types of refinery projects that require contract workers,including turnarounds, construction,maintenance, and/or follow-up work after arefinery accident. As mentioned previously,however,t data from the refineries regarding the nature ofthese projects was unavailable— particularly,the average,duration and,frequency of these projects per year. For the purposes of this report,then,certain assumptions about these projects were made. All s This computation was necessary because original wage figures are calculated on an annual basis while construction projects generally last for only a fraction of a year. Final Report--,lune 2003 12 Department of City and Regional Planning, UC Berkeley of the calculations in this report analyze only the impact of turnarounds(and not of the other projects),the most conservative approach. On turnaround per year per refinery was assumed( a total of four turnarounds per year)with durations of four, six,or twelve weeps. This study is thus limited by the aforementioned assumptions. There are, furthermore, some additional limitations that should be clarified. Regarding secondary data sources,it should be noted.that 2002 data are not available at the time of writing this report., The majority of the data used in this report are for 2001,the'most recent year available; the exceptions are the Consumer Expenditure Survey data,which is an average for 2000-01, and the RAPLAN data is for 1999. The following sections provide a picture of the refinery,industry's overall contribution to the County's economy,and how the economy is impacted.by the use of use of non-local labor at major refinery projects. Specifically,Section 2 will outline the overall economic contribution of refinery employees' household expenditures to the output,employment,labor,income, and business taxes: Section 3 discusses how the total number of workers was calculated.:Section 4 discusses the economic impact of out-of-area workers at refinery projects in relation to the impacts of an all-local workforce: 9 Because less is known about the nature of contract-worker projects that are not turnarounds,it was not passible to make reasonable assumptions upon which to base calculations. Final Report—June'2003 13 Department of City and Regional Planning,UC Berkeley SECTION 2. ECONOMIC IMPACT OVREFINING INDUSTRY EmPL OYMENT IN CONTRA COSTA OUNTY The purpose of this section is to establish an overall picture of the economic impacts to Centra Costa County's economy resulting from the wages paid to refinery employees. Economic modeling is conducted using RAPLAN:software, as .escribed in Section 1 above. The calculation includes employment, labor income, and indirect business tax impacts.resulting from the industry's normal operations,as well''as the impacts attributable soler to:: e skilled trade and laborer positions affected by the ISO. Assumptions Base Level Employment and Payroll Scenarios The baseline payroll amounts established in the three scenarios described in Section 1 were used to calculate the range of impacts from the household expenditures of refinery employees. These figures are used to compare and contrast the relative significasnce optdne impact of out-of-area Workers. Impacts The household expenditures of refinery employees reverberate throughout the local and regional economy, adding new jabs,local income,countywide industry output,and tax revenue. These are summarized in Table 3 below. Employment: The total indirect and induced employment resulting from the householdexpenditures of the employees of Contra Costa's major refineries ranges between 2,061 and 3, 838 jobs,with between 537 and 1005 of those jobs attributable to skilled trades and laborer positions. The industry's employment impacts in this analysis are significantly lower than the findings of the Western States Petroleum Association report,which estimated nearly 50,000 direct and indirect jobs resulting from the refineries in Contra Costa and.Solano Counties. This is likely the result of more conservative assumptions.'nQ Labor Income As a result these expenditures total labor income from all refinery workers ranges between$71.7 million and$133.5 million dollars, depending on the scenario. Labor income from the skilled trades and laborer employees is between$18.8 million and$35.2 million. This constitutes about 26.5% ofthe total labor income effect resulting from the employees of the four major refineries. �0 For example,the wSPA report;considered retail gasoline station workers and marketing positions to be related to the presence of the refining industry while MPLAN limited employment effects strictly to the employment increases resulting from the expenditures of refinery wage income throughout the economy. Final Report—June 2003 14 Department of City and Regional Planning, UC Berkeley Industry Output This figure shows the increases in total output as a result of employee household spending. This effect is most pronounced on county industries that sell a'large proportion of their goods or services to local residents. Refinery payrolls spur between$12.1 and$22.6 million of additional output. Skilled trades and laborers contribute'between$3.2 and$5.9 million of this impact. Indirect Business Taxes: Total taxes generated as a result of employee household spending;are between$12.1 and $22.6 million,with skilled trades people and laborers contributing between$3.2'and$5.9 million The calculation of indirect business taxes'is based upon the Bureau;of Economic Analysis's Gross State Product series,which gives state-level estimates of taxes by industry classification. Table 3. Economic'Impacts from Refinery Employee Household'Expenditures Scenario 1 Scenario 2 Scenario 3': Total Employment 2,061 3,817 31838 Total Employment from STL*'Household Spending 537 1,005 1,000 Total Labor income71,713,196 132,808,688 133,553,799 Total Labor Income from STL Household Spending 18,883,593 35,320,946 35,169,579 Total Output' 264,951,135 490,674,080 493,427,039 Total Output from STL Household Spending 69,200,619 129,429,197 128,874,532 Total Indirect Business Tax 12,149,125 20,499,472 22,625,706 Total indirect Business Tax from STL Household Spending 3,182,894 5,953,118 5,927,605 Sources-(1)US Census&CA Employment Development Department;(2)IMI'I,AN&CA EDD;(3)CA EDD *-STL:Skilled Trades and Laborers Final Report—June 2003 15 Department of City and Regional Planning, UC Berkeley ............... SECTION 3. OCCUPATIONAL PROFILE OF OUT-OF-AREACONTRACT WORKERS Work Opportunities for Out-of-Area Workers Out-of-area workers are employed in Contra Costa refineries for a variety of reasons. Without interviews with the refineries themselves,it is not possible to be exhaustive,about all of the different mechanisms and reasons out-of-area contract workers come to work in the refineries. Nonetheless, some of the basics regarding this process were determined through interviews from, other sources. The refineries may need contract workers for a variety of projects, including-turnarounds (where refinery operations --or a certain part of those operations—are temporarily halted so that cleaning and maintenance can be performed), construction projects, and general maintenance. It is assumed that additional skilled trades:workers and laborers are brought on in the same proportions as they deployed throughout the refinery. There are two primary,paths of entry into contract employment for out-of-area workers: independent/nonunion contractors and union contractors. It is not clear alto how the independent/nonunion contractors locate their workers. It is known that the unions interviewed sharea common policyo n the hiring of out-of-area workers(meaning union members from outside of the nine-countyBay Area). Under this policy,the unions first attempt to fill all positions locally. If there are not enough members locally to meet the refineries' stated need for workers,then the unions pull in, out,of-area workers. Primarily, the reason that there may not be sufficient numbers of local union members to meet the refineries' need is because the refineries sometimes need a large:number of workers quite immediately. There is no reason to believe that the independent/nonumon contractors have different reasons for hiring out-of-area workers,but no definitive data on their policies Was available at the time of writing. Proportions of Out-of-Area Workers Based upon information from key interviews,it was estimated that approximately 50%of all workers brought in for a turnaround were considered out-of-area. This assumption was used for both union and non-union workers. As mentioned abov , it was assumed that contract workers occupyonly the blue-collar positions listed in Section 1. Based on occupational wage data from the Bureau of Labor Statistics,those occupations fell into three income categories: 10%are in the$30,000 to $39,999 category, 12%in the$40,000 to $49,999 category, and 78% in the$50,000 to $69,999 category. It was assumed that these proportions were also valid for workers hired for the turnarounds. These th income categories were used with e 2000-2001 Consumer Expenditure Survey to calculate the impact of local spending of out-of-area workers. The following section presents analysis regarding the economic impact of the hiring of these out-of-area workers. This analysis takes into account the occupational positions,and wages of these workers. Final Report—June 2003 16 Department of City and Regional Planning, UC Berkeley ................... ............ SECTION 4. ESTIMATING ECONOMIC IMPACT OF OUT-OF-AREA HIRING Assumptions Area-Worker Scenarios To determine the economicimpact of out-of area hiring due to consumer expenditures, several scenarios were used. Overall,two area-worker scenarios were used. The first scenario (the"out-of-area worker" scenario)'assessed the value of consumer'.expenditures assuming that 50% of the workers were out-of-area. The second scenario (the"all local worker"scenario) assessed the value of consumer expenditures assuming that 100'/0 of the workforce was hired' locally. The difference between these area-worker scenarios'represents the"leakage"of expenditures and other revenues due to out-of-area hiring. Additional impact scenarios devised within these two..larger scenarios are discussed later in this section.`` Consumer Expenditure Patterns As previously shown in Table 2, assumptions were made about which goods and services out-of-area workers were likely to purchase locally and which goods and services they were likely to purchase in their region of origin. Table 4 shows the average expenditures made by local and out-of-'area workers based on these assumptions. The table shows, as would be expected,that out-of-area workers spend a much smaller proportion of their income locally than local workers. In fact,the workers that hold positions used by the refineries during turnaround spend less than 40%of their total income in Contra Costa County. Further analysis will show that this disparity in expenditures results in significant revenue leakages for Contra Costa County. Table 4. Average Expenditures by Income Total Avg. All Local 4©A Income Income Workers Workers $30,000 to$39,999 $34,113 $29,762 $11,587 $40,000 to$49,999 $43,732 $35,383 $12,947 $50,000 to$69,000 $57,331 $41,676 $13,565 Source:Consumer Expenditure:Survey,Bureau of Labor.Statistics. Impact Scenarios As previously mentioned, since precise data was not available from the refineries about their turnaround processes, several'impact scenarios were developed to estimate impacts of out- of-.area hiring on Contra Costa County. Based on information from key informants, it was estimated that a turnaround at a refinery typically lasts anywhere from 1 to 3 months,with an average of 6 weeks, and can employ from 500 to 1000 workers. As mentioned above, it was assumed there was only one turnaround per refinery,per year. Assuming for the out-of-area scenario that 50%of all turnaround workers were out-of- area, from 250 to 500 workers would be employed in a typical refinery turnaround. Also includedisa mid-range estimate of 350 workers, for a total of three scenarios. These figures Final Report—June 2003 17 Department of City and Regional Planning, UC Berkeley .......... were multiplied by four to get the impacts of a turnaround at the four refineries in one year., These figures were ad Aill_�time�equiv ency workers(FTE) for justed to estimate the number o al these short estimated-term employees. Impacts were also est ated for the all-local-worker scenario where all of these workers were hired locally. The following tables illustrate the total FTE estimated for each of the above scenarios. Tables 5&6. Total Estimated FTE of Out-of-Area Workers in Refinery Turnarounds one Refinery Number of Workers Length of Turnaround in Work Hours* 250 350 500 4 weeks (160 wk hrs) 19 27 38 6 weeks (240 wk hrs) 29 40 58 12 weeks (480 wk hrs) 58 81 115 Four Refineries Number of workers Length of Turnaround in Work Hours* 1000 1400: 2000 4 weeks(160 wk Mrs} 77 108 154 6 weeks(240 wk,Mrs} 115 162 231 12 weeks 480 WK brs) 231 323 462 *2080 work hours per year Impacts The impacts of hiring out-of-area workers,as opposed to local workers can result in significant leakages for the Contra Costa County economy. Figures.;1 through 3 show the leakage of jobs, output and business taxes from hiring 50%out-of area workers as opposed to hiring all of the workers locally in various These charts-represent the impacts of one ag refinery. They show that the leakage impacts of out-of-area workers in employment,business taxes, and output increase as the size and durati0 n of the turnaround increases. A similar linear increase was foundwhen measuring the impact at all four refineries. On the low end, one.turnaround in one refinery.lasting only 4 weeks and using only 250 workers would result in a leakage of 5 jobs, $640,000 dollars of output and almost$30,000 in indirect business taxes. The high-end scenario,which involves all four refineries performing large turnarounds in one year,would result in a leakage of 121 jobs, over$12 million in output and over$700,0.00 in indirect business taxes. Final Report--June 2003 18 Department of City and Regional Planning, UC Berkeley Figure 1. Estimated Employment Impactsof Hiring Out Workers at One Refinery ger Year 50 4 Out of Area Impacts 40 ■Contra Costa Impacts 35 30 25 20 15 10 5 4(250) 6(250) 6(500j 12(500) Weeks in Turnaround'(#of Workers) Figure 2. Estimated Impacts of Out-of-Area Workers on Output 7 - 6 Out of Area Impact u� ■Contra Costa Impacts O w. n C 4 O 3 c - CL a 2 - 0 ' 1 0 4(250) 6(250) 12(500) 12(500) Weeks In Turnaround(#of Workers) Final Report---,June 2003 19 Department of City and Regional Panning, UC Berkeley Figure 3. Estimated Impacts of firing Out-of-Area Workers on Basinem Taxes 300 12 250 Q ®Out of Area Impacts 0 IItContra Costa Impacts 200 G }. 150 c 100 F- va t� m 5o 4(25€) 6,(250} '6{5130} 12°1500) Weeks in Turnaround (#Workers) Tables 7 and 8provide the total impacts for all scenarios. On.the low end,one turnaround in one refinery lasting only 4 weeks and.using only 250 workers would result in leakage of 5 jobs, $640,000 dollars of output and ahnost$30,000 in indirect business taxes. The high-end scenario, which involves'all four refineries performing large turnarounds in one year, would result in a leakage of 121 jobs, over$12 million in output and over 7003000 in in business taxes. Tables 7,&S. Total Estimated Expenditure Impacts of Out-of-Area vs.Local Workers One Refinery Weeks in indirect Business Turnaround Labor Income Jobs OutputTaxes (#of Workers) 50%60A 100%Local 50%©oa 100%Local 50%n©A t00%Local 5001*dOA' 104'i�Lacat 4{25tt} $0208 $" 3,43 -5 $322,885 $964,947 �$14,843W $44,373+ 4(3510); $126,348 $296,361 4 11 $458,835 $1,371,240 $21,OS3' $63,058 6(250) 1134,1)03 $402,092 4 12 $492,827 $1,472,814 $22,655 $67,728 4(500) $176,416 $526,$78 5 15 $645,773 $1,869,894 $29,686 $88,748 6(3510) $185,700 $554,608 5 16 $679,760 42.,031,468 $31,248' $93,417 fi(500) $;269,266 $804,183 8 23 $085,653 $2,945;629 $45,311 $135;455 12{250} $269,266 $804,1 i33 8 23 $985,658 $2,945;629 $45,311' $135,455 12(350)' $376,044 $1,123,082 11 32 $1,376,516 $4,113,722 $63,279 $190,171 12 500 $533,890 $1,994,469 15 45 $1{95x4,314 $x,840,469 $89,840 $268576 Fina; Report-June 2003 20 Department of City and Regional Planning, UC Berkeley Four Refineries Weeks in Indirect Business TurnaroundLabor Income Jobs Output Taxes (#of Workers) 50%OOA 9001 Local 50%OOA 100%Local 50%OOA 100%Local 50%OOA 100%Local 4 (1000) $357,473 $1,067,621 10 30 $1,308,538 $3,910,575 $60,154 $179,829` 4 (1400) $501,392' $1,497,623 14 43 $1,835;,354 $5,484,964 $84,372 $252,228" 6 (1000) $533,890 $1;594,500 15 45 $1,954,314 $5,840,469 $89,840 $268,576 4 (2000) $714,947 $2;135,244 20 61 $2,617,079 $7,821,151 $1207307 $359,658 6 ('1400) $752,086' $1,976,165 21 64 $2,753,030 $7,227,444 $126,558 $378,342 $11,731;72 6 (2000) $1,072,419 $3,202,864 31 91 $3,925,617 7 $180,461 $539,488 $11,731,,72 12(1000) $1,072,419 $3;202,864 31 91 $3,925,617 " 7 $180,461 $539,488 $16,403,76 12`(1400) $1,499,531 $4,478,374 43 127 $5,489,066 9 $252,333 $754,333 $20,463,45 $1,078,97 12 (20001 $2,144,839 $6,405,730 61 182 $7,851;,232 2 $360,923 5 While the multiplier effects on employment may at most only contribute to 121 extra jobs, the impacts on Output and business taxes are more pronounced. Most significant are the losses to Contra Costa County through output. By hiring workers locally;,.local businesses could stand to gain millions in output. The high-end figure of$12 million would only result from large, 3-month turnarounds at all 4 refineries,but substantial leakage figures of$3-5 million would occur on moderately sized 4 to 6 week projects. An increase in output from local businesses would also result in a substantial increase in taxes to the county. Increased local spending primarily generates sales taxes for>.a host of public services and moderate estimates put the amount of leakage between roughly$50,000 and $250,000, again;.depending on the length and intensity of the construction project. Final Report--June 2003 21 Department of City and Regional Planning, UC Berkeley SECTION 5. CONCLUSIONS By examining the major impacts of out-of-area workers, this study provides a solid framework for gauging the impacts of out-of-area workers in Contra Costa County. Overall,it is clear that the petroleum refining industry plays a significant role in Contra Costa County's economy". The data suggests that the hiring of more local workers during temporary construction projects would increase the gains in employment,business taxes, and output to Contra Costa County and the cities within Contra Costa County through leakage reductions. The most significant impacts would come from increases in business taxes.and output. It should be noted that the reasons for hiring out-of-area workers by the refineries may include, among others, the inability to fill demand from the local labor pool and the decreased costs from hiring from areas with lower wage rates. However, as mentioned in Section 3,this is also an assumption that cannot be confirmed without more information from the refineries. Areas for further research Due to the limitations of this and any study,there are several areas that could benefit from further research. Impacts from this study could be supplemented by a study to collect additional relevant primary data. This study could be one designed with the cooperation of all relevant stakeholders, such as unions, contractors,refineries,and public agencies. Overall,:furtherresearch should take into account additional information from the stakeholders to make more precise estimates of the following: --'l) Length and scale of turnarounds 2) Percent of out-of-area workers in a typical turnaround 3) Occupational and wage composition of turnaround workers 4) Spending patterns and service demands of out-of-area turnaround workers This could even allow the research to betailoredto estimate impacts over a particular year. In addition, a larger study might also include estimates of any potential impacts on the schools and health care system of Contra Costa County. While this study estimated that these impacts are likely to be small, further investigation should be done to assess the actual scale of these factors. Refuting is the County's largest industrial spender,sixth in indirect business tax payments,and ninth in employee compensation-a figure all the more impressive because of its relatively small share of the County's total employment. Final Report—June 2003 22 Department of City and Regional Planning, UC Berkeley APPENDIX Supplemental data Tables Table A-1. Petroleum Refining Self-Reported Employment,';Occupations and Wages in Contra Costa County AverageAggregate Number in Wage Wage Occupation industry Income Income' Marketing and sales managers,' 65 86,000 5,590,000 Purchasing managers 11`8 60,000 7,080,000 Managers,all other 290 78,669 22,814,000 Management analysts 238 65,597 15,612,000 Accountants and auditors 92 138,000 12,696,000 Computer scientists and systems analysts 263 77,779 20,456,000 Computer programmers 291 64,914 18,890,000 Computer software engineers 172 82,238 14,145,000 Network and computer systems administrators 92 57,000 5,244,000 Chemical engineers 224 72,746 16,295,000 Computer hardware engineers 131 60,000 7,860,000 Industrial engineers,including health and safety 119' 60,000 7,140,000 Chemists and materials'scientists 159 64,000 10,176,000 Paralegals and legal assistants 79 61,000 4,819,000 Miscellaneous media and communication workers 79 18,000 1,422,000 Other healthcare'practitioners and technical occupations 79 58,000 4,582,000 Sales representatives,wholesale and manufacturing 79 34,300 2,709,700 First-line supervisors/managers of office and administrative 158' 12,000 1,896,000 Court,municipal, and license clerks 27 50,000 1,350,000 Customer service representatives 106 43,000 4,558,000 Receptionists and information clerks 132' 32,700 4,316,400 Production,planning,and expediting clerks 106 68,000 7,208,000 Office clerks, general 79 36,500 2,883,500 Office and administrative support workers,all other 92 125,000 11,500,000 First-line supervisors/managers of construction trades and extraction industries 158 69,000 10,902,000 Electricians 39 61,000 2,379,000 First-line supervisors/managers of mechanics, installers, and repairers' 53 71,000 3,763,000 Industrial and refractory machinery mechanics 79 72,000 5,688,000 First-line's supervisors/managers of production and operating 593 49,730 29,490,000. Computer control programmers and operators 106 70,000 7,420,000 Machinists 79 11Z000 8,848,000 Welding,soldering, and brazing workers 945 75,000 10,875,000 Miscellaneous plant and system operators 475 74,459 35,368,000 Chemical processing machine setters, operators, and tenders 198 65,000 72,870,000 Production workers, all°other 185 77,081 14,260,000 Driverlsales workers and truck drivers 79 43,000 3,397,000 Laborers and freight, stock, and material movers, hand 80 35,000 2,800,000 Machine'feeders and offbearers 225 72,000 16,200,000 TOTAL 5,764 65,146 375,502,600 TOTAL 5TW 2,494 65,862 164,260,000 Source:US Census Bureau, 1%Public Use Microdata Sample Final Report-June 2003 23 Department of City and Regional Planning, UC Berkeley Table A-2. Aggregate Income by Annual Income Category for Baseline impact Calculation Scenarios Occupation description Scenario 20,000– 30,000– 40,000- 50,000– Over 29,999 39,999 49,999 69,999 70,000 Accountants and Auditors Scenario 1 9,195,525 Scenario 2 17,029,576 Scenario.3 17,125,122 Bollermakers Scenario 1 915,331 Scenario 2 1,695,139 Scenario 3 1,704,650 Bookkeeping,Accounting, and Scenario 1 1,889,286 Auditing Clerks Scenario 2 3,498,848 Scenario 3 3,518,479 Business Operations Scenario 1 14,812,339 Specialists, All Other Scenario 2 27,431,589 Scenario 3 27,585,495 Chemists. Scenario l 1,499,406 Scenario 2 2,776,812 Scenario 3 2,792,391 Compliance Officers, Except Scenario 1 1,356,448 Agriculture,Construction, Scenario 2 2,512,063 Health and Safety, and Transportation Scenario 3 2,526,157 Computer Programmers Scenario 1 3,918,343 Scenario 2 7,258,543 Scenario 3 7,297,256 Computer Specialists,All Scenario 1 1,601,264 Other Scenario 2 2,965,448 Scenario 3 2,982,086 Computer Systems Analysts Scenario 1 11,186,593 Scenario 2 20,716,918 Scenario 3 20,833,152 Control and Valve Installers Scenario 1 1,228,938 and Repairers, Except Scenario 2 2;275,922 Mechanical Saar Scenario 3 2,288,891 Customer Service Scenario 1 1,752,292 Representatives Scenario 2 3,245,143 Scenario 3 3,263,350 Drafters,Engineering,,and Scenario 1 3;499,830 Mapping Technicians,All Scenario 2 6;481,480 Other Scenario 3 6,517,845 Electricians Scenario 1 1,695,284 Scenario 2` 3,139,567 Scenario 3 3,152,182 Engineering Managers Scenario 1 5,601,033 Scenario 2 1,0,372,787 Scenario 3 10,430,984 Final Report—,June 2003 24 Department of City and 'Regional Planning, UC Berkeley Occupation tlC#t1 Description Scenario 20,000- 30,000- 40,000- 50,000- Over 29,999 39,999 49,999 691999 70,000 Engineers,All Other Scenario 1 14,131,609 Scenario 2 26,170,916 Scenario'3 26,317,750' Executive Secretaries and Scenario 1 2,161,064 Administrative Assistants Scenario 2 4,002,165 Scenario 3 4,024,620 Financial Analysts Scenario 1 3,392,624 Scenario 2 6,282,943 Scenario 3. 6,318,194 Financial Managers Scenario 1 2,349,515 Scenario 2 4,351,165 Scenario 3' 4,375,577 Financial Specialists,All Other Scenario l 4,747,890 Scenario 2 8,792,817 Scenario'3 8,842,149 Financial, Information, & Scenario,l 971,220 Record Clerks,All Other Scenario 2 1,798,642 Scenario,3 1,808,734 First-Line Scenario'1 3,269,818 Supervisors/Managers of Scenario 2 6,055,512 Mechanics;, Installers, and Repairers Scenario'3 6,089148:7 First-Une Scenario 1 1,961,999 Supervisors/Managers of Scenario 2 3,633,507 Non'-Retail Sales Workers Scenario 3 3,653,893 First-Line Scenario 1 1,280,420 Supervisors/Managers of Scenario 2 2,371,264 Office and Administrative Support Workers Scenario'3 2,384,568 First-Line Scenario 1 4,291,646 Supervisors/Managers of Scenario 2 7,947,878 Production and Operating Workers Scenario 3 7,992,470 General and Operations Scenario 1 2,383,905 Managers Scenario 2 4,414,853 Scenario'3 4,439,623 Geological and Petroleum Scenario 1 1,147,667 Technicians Scenario 2 2,125,413 Scenario 3 2,137,337 Geoscientists, Except Scenario 1 1,803,594 Hydrologists and Scenario 2 3,340,152 Geographers Scenario 3 3,358,892 Human Resources Assistants, Scenario 1 991,370 Except Payroll and Scenario 2 1,835,960' Timekeeping Scenario 3 1,846,261 Human Resources Managers Scenario 1 2,007,184 Scenario 2 3,717,187 Scenario 3 3,738,043 Industrial Engineers' Scenario 1 3,708,045 Scenario 2 6,867,084 Final Report--June 2003 25 Department of City and Regional Planning,UC Berkeley Occupation Description Scenario 20;000- 30,000— 40,000— 50,000- Over 29,999 391999 49,999 69,999 70,000 Scenario 6,905,612 Inspectors, Testers, Sorters, Scenario 1 1,712,094 Samplers, and Weighers Scenario 2 3,170,698 Scenario 3 3,188,487 Installation,Maintenance, and Scenario 1 1,165,633 Repair Workers,All Other Scenario 2 2,158,685 Scenario 3 2,170,796 Lawyers Scenario 1 5,156,843 Scenario 2 9,550,172 Scenario 3 9,603,754 Life, Physical, and Social Scenario 1 3,773,661 Science Technicians,All Scenario 2 8,988;600 Other Scenario 3 7,027,810 Machinists Scenario 1 2,210,208 Scenario 2 4,093,176 Scenario 3 4,116,141 Maintenance and Repair Scenario'1' 1,009,953 Workers, General Scenario 2 1,870,375 Scenario 3' 1,880,868 Management Analysts Scenario 1 11,223,373 Scenario 2 20,785,033 Scenario 3 20,901,649 Managers,All Other Scenario 1 6,263,129 Scenario 2 11,598,950 Scenario 3 11,664,026 Marketing Managers Scenario 1 2,492,112 Scenario 2 4,515,247 Scenario 3 4,641,141 Office Clerks, General Scenario 1 2,153,688 Scenario 2 3,988,504 Scenario 3 4,010,882 Paralegals and Legal Scenario 1 9,306,740 Assistants' Scenario 2 2,420,006 Scenario 3 2,433,584 Payroll and Timekeeping Scenario 1 95$,754 Clerks Scenario 2 1,775,556 Scenario 3 1,785,518 Petroleum Engineers Scenario 1 6,693,851 Scenario 2 12,396,622 Scenario 3 12,466,174 Petroleum Pump System Scenario 1 34,122,315 Operators,Refinery Scenario 2 63,192,539 Operators, and Gaugers Scenario 3 63,547,085 Physical Scientists,All Other Scenario 1 4,024,494 Scenario 2 7,453;129 Scenario 3 7,494,945 Plumbers, Pipefitters, and Scenario 1 1,374,260 Steamfitters Scenario 2 2,545,050. Scenario 3 2,559,329, Final Report--June 2003 26 Department of City and Regional Planning, UC Berkeley occupation Description Scenario 20,000_' 30,000 w 40,000— 501000— Over 29,999 39,999 49,999 69,999 70,000 Public Relations Specialists" Scenario 1 '1,377,730 Scenario 2 2,551,476 Scenario 3 2,565,791 Pump Operators, Except Scenario 1 110,801 Wellhead Pumpers Scenario 2 205,197 Scenario 3 206,348 Purchasing Agents, Except Scenario;! 1,392,715 Wholesale, Retail,and Scenario 2 2,579,226 Farm Products Scenario 3 2,593,697 Receptionists and Information Scenario 1 667,776 Clerks Scenario 2 1,236,662 Scenario 3 1,243,621 Sales and Related Workers, Scenario 1 2,709,360 All Other Scenario 2 5,017,577 Scenario 3 5,045,729 Sales Managers Scenario 1 2,429,039 Scenario,2 4,498,438 Scenario;3 4,523,677 Training and development Scenario 1 1,387,523 Specialists Scenario 2 2,569,611 Scenario 3 2,584,028 Truck Drivers, Heavy and Scenario 1 1,030,952 Tractor-Trailer Scenario 2 1,909,263 Scenario 3 1,919,975 Total Scenario 1 2,821,464 10,2130,300'17,609,174 89,532,887 87,334,6611 165,969,69161,738,70 Total Scenario 2 5,225,187 18,890,362 32,611,165 0 3 166,739,97162,646,14 Total Scenario 3 5,254,503 18,996,347 32,794,132 8 9 List of Interviewees Key Interviewees 1. Tom Adams,Attorney for the Contra Costa County Building Trades Council 2. Dennis Barry, Contra Costa County Community Development Department 3. Greg Feere, Contra'Costa County Building Trades Council 4. Gus Kramer, Contra Costa County.Assessor 5. Patrick Roche,Contra Costa County Community Development Department, 6. Jeff Small, Sunoco'Philadelphia Refinery engineer 7. Tom Stewart,Inform Public Relations 8. Eric Zell, Zell and:Associates Union Interviewees 1. Boilermakers Local 549,Fred Fields and Tom Baca 2. Brick and Tile Layers Local 3, Greg Miranda 3_ Carpenters Local 152,Dennis McWhorter,negligible OOA workers Final Report---June-2003 27 Department of City and Regional Planning, UC Berkeley 4. Cement Masons Local 300,Leslie Trapps S. Electricians Local 302,Michael Yarbrough,negligible OOA workers 6. Iron Workers Local 378, Don Zampa, negligible OOA workers 7. Laborers Local 324,Randy Le Moine 8. Laborers Local 67, Jerry Rodarte 9. Sheet Metal Workers Local 104,Kevin Van Buskirk,negligible(SOA workers 10. Stearnfitters Local 342,Larry Blevins Unable to reach: 1. Asbestos Workers Local 16, Steve Steele 2. Operating Engineers Local 3, "Aralt Powers 3. Painters Local 741, Elmer Kennessey 4. Teamsters Local 315, Dale Robbins --June 2003 Final Report 28 Department of City and Regional Planning, UC Berkeley Exhibit "B" .0001_ 03 JUN COMMITTEE FOR INDUSTRIAL SAFETY T,7 . B a x _7"'_1_1 June 2, 2003 MARTINEZ, CA 94533 Mr. Dennis $arxy Director Contra. Costa County Community Development Department 651 Fine Street, 4th Floor, North Wing Martinez, CA 94553 Dear Mr. Barry: We'want'to reiterate our pledge to participate and provide reasonably necessary information for the proposed "Study of Economic Impact of Out-of-County Contraet Ernployment at Contra Costa OilRefineries." However, eve<bel'eve that there has been some confusion regarding both the information nee e., a d'"the scope of the study. Moreover,,we d6.o' tb4ieve that the traeframe set for the study (complet op i`rnid-June) is realistic. After reviewing your May 7, 2003 e-mail'message to Erio` Zell, the revised information request from C Berkeley, and the Scope of Work'prepared for the study we 6ffer-tlie following comments: ■ Whenever there is moretltan one on company participating in a project, issues of antitrns'arse Accordingly, an`internal.review and discussf of the requested information in this oontext is required. • In many cases, the requested infbrmation not information that is readily available..to us, but is information.that needs to be asse .bled an of o, taMed from contractors. Assignments ofthis'nata e,take tete, especially when the number ofwark-ers for urhic information is requested is in the thousands • We do not understand the relevance of some of the requested information: --- Why is information being requested regarding workers living outside the nine Bay Area counties, as opposed to outside of Contra Costa County? We previously understood that the study was to discuss economic impacts on Contra Costa County, not on the Bay Area. --- What is the releNTance of whether:workers are members of the Building Trades, California Contractors Group, or some other organization? Again, we understood that the study was to measure economic unpacts in the county based on the residence of the worker, not his or her union affiliation. Of a more general nature, we question whether the study would be more meaningful and valuable if its scope is broadened. Specifically, we question why.the study is limited to oil refineries? There are many other industries and/or entities that could be included in the study that would be as relevant to'review as our companies. For instance, why doesn't the study evaluate the economic impacts within the county of the county's employment of workers residing outside the county-- specifically general county employees, the county fire districts and sheriffs department? We suggest these public entities as a potential example because they are large employers, should have the information needed available for the study, and cooperation with LTC Berkeley should be assured. The results of such an expanded study should provide a meaningful comparison of the impacts of hiring out-of-county residents for at least portions of the public and private sectors. Such a comparison should be helpful in whatever ultimate use will be made of the study. M-. -.?3?: We suggest that a meeting be set up with you, Professor Daubi,;and aur representatives to discuss the scope of the study and the information needed for it to proceed. Please feel free to contact Eric Zell regarding this letter and the proposed meeting. Thank you for your time and effort on this matter. Vica Willie Chiang AamirFarid General Managers General Manager Rodeo Refinery Shell Oil Products Conoco Phillips U.S. Bay Valley Complex Bill Haywood Gai/RFisher President General Manager, External California and Southwest Region Affairs General Manager Richmond Refinery Golden Eagle Refinery Chevron Products Company cc: The Honorable Mark DeSaulnier The Honorable John;Gioia The Honorable Federal Glover The Honorable 'Gayle Uikema Mr. John Sweeten REPORT ON ECONOMIC IMPACTS S OF OUT-OF-AREA WORKERS AT MAJOR CONTRA COSTA COUNTY REFINERIES Board of Supervisors Contra Cosh County R ,dune 10, 2003' 11:00 AM TO: BOARD OF SUPERVISORS Contra FROM DENNIS M. BARRY, AICD Costa COMMUNITY DEVELOPMENT DIRECTOR r County DATE: JUNE 10, 2003 SUBJECT: REPORT ON ECONOMIC IMPACTS OF OUT-OF AREA WORKERS AT MAJOR CONTRA COSTA'COUNTY REFINERIES SPECIFIC REQUEST(S) OR RECON MEN CATION(S) & BACKGROUND AND JUSTIFICATION RECOMMENDATIONS ACCEPT the report prepared by University of California at Berkeley, Department of City and RegionalPlanning,assessing the economic impacts of out-of-area workers at major Centra Creta County refineries. FISCAL IIPACfi None. CONTINUED ON ATTACHMENT: X YES SIGNATURE , RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD C©MMITT APPROVE OTHER SIGNATURES ACTION OF 8OARD ON' APPROVED AS RECOMMENDED OTHER VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE AND UNANIMOUS(ABSENT CORRECT COPY OF AN >ACT'ION TAKEN AND AYES: NOES: ENTERED ON THE MINUTES OF THE BOARD OF ABSENT: ABSTAIN: SUPERVISOR S ON THE DA'T'E SHOWN Contact:<Patrick Roche CDC-AP,P1h#`825-335-1242` ATTESTED cc: CAO JOHN SWEETEN, CLERK.`OF THE BOARD OF Clerk of the Board SUPERVISORS AND COUNTY ADMINISTRATOR County Counsel W.Walker,Health Service Director' R.Sawvy r,Health Services Dept. BY ,DEPUTY Press Box—Clerk of the Board June 10, 2003 Board of Supervisors Assessment of Economic impacts of Out-Area-Workers at Contra Costa County's Major Oil Refineries Page 2 BACKGROUND /REASON FOR RECOMMENDATION At the December 3, 2002 the continued public hearing on a proposed Contractor Safety Amendment to the County's:Industrial Safety''Ordinance, County Ordinance Code Chapter'450-8, the Board''of Supervisors directed the Community Development Department to study and report on the economic impacts of out-of-area workers at Contra Costa County major oil refineries. In response to this directive,the Community Development Department contacted the University of California at Berkeley to gauge their interest in conducting this study.They were contacted because U.C. Berkeley's'Inst itute of Industrial Relations had previously prepared a study in 1989 for the Board of Supervisors examining the impact of out-of-area workers in non-residential construction using the USS-POSCO Steel Plant Modernization as a case study. The principal investigator for the 1989 study is no longer affiliated with the university, but did recommend U.C. Berkeley's'Department of City and Regional Punning would be interested in conducting the economic impact study. The Department subsequently contracted with Professor.Karen Chapple, U.C. Berkeley, Department of City and Regional Planning, to undertake the assessment of economic impacts of out-of-area workers at major Contra Costa County ail refineries. U.C.Berkeley's Department of City and Regional Planning agreed to conduct this study pro bono. Attached for the Board's review and comment, is the study undertaken by graduate students from the Department of City and Regional Planning, U.C. Berkeley, under the directionof Professor Karen Chapple (See attached Exhibit "A"}. The report shows that the petroleum refining industry plays a significant role in Contra Costa County's economy and that the use of out-of-area workers at major refinery construction or "turnaround" projects can have moderate to significant "leakage" impacts as expenditures that normally occur within the area now occur elsewhere. This diminished local spending in turn reduces the industry's positive impacts on the Contra Costa County economy. This study provides a framework for further research into economic impacts to Contra Costa County from hiring out-of-area'workers. Subsequent to the submittal of this report by U.C. Berkeley,the Department received a'letter from the Committee for Industrial Safety, signed by the four major oil refinery managers, explaining their position on the oil refineries' participation in this study (See attached Exhibit "B"). Attachments (2) Exhibit "A ASSESSMENT OF ECONOMIC IMPACTS OF OUT-OF-AREA WORKERS AT MAJOR CONTRA' COSTA COUNTY REFINERIES, Jove 2 2003, U.C. Berkeley, Department of City and Regional Planning Exhibit "B": Letter to Dennis Barry,Community Development Director,from the Committee for Industrial Safety, dated June 2,2003, received by the Communi#y Development Department on June 4, 2003 GAAdvance PlannlrQWv-plan\Board Orders\BOARD ORDER economic impact out of area workers oil refinedes.doc Exhibit "A Assessmentof Economic Impacts of Out-of-Area Workers at Major Contra Costa County Refineries. PRODUCED BY. Nadya Ch noy Dabby Y Melissa Edwards Alex Lantsberg University of California, Berkeley Department of City and Regional'Planning SUBMITTED JUNE 2,2003 To: Dennis M.Barry,.AICP Community Development Director Contra Costa County TABLE OF €ONTENTS TABLEOF CONTENTS . .. ................... ...... ............., ...........................................1 TABLE OF FIGURES.. ........ . . ............. ......... ................. . .2 EXECUTIVE SU IA AARIIY. .. ........... . .. ... ...............................................3 SECTION 1. OVERVIEW AND METHODOLOGY..............................................................4 PURPOSE OF REPORT 4 METHODS 4 .Literature Review 4 Secondary Data 5 Economic Modeling 7 .Employment and Payroll,Scenarios Defining Out-of-Area Workers 9 Interviews 9 ASSUMP'noNs AND LmTATiONS1 SECTION 2. ECONOMIC IMPACT OF RE WNG INDUSTRY EMPLOYMENT IN CONTRA COSTA COUNTY.................................................. ..14 ASSUMPTIONS 14 Ease Level Employment and Payroll,Scenarios 14 IMPACTS 14 Employment: 14 Labor Income 14 1`ndustry Output 15 Indirect.Business Taxes; 15 SECTION 3. OCCUPATIONAL PROFILE OF OUT-OF-AREA CONTRACT" WORKERS...........................................N..... .......................................................16 WORK OPPOR'TUN=S FOR OUT-oF-AREA WORKERS 16 PROPORTIONS OF 0'uT-OF-AREA WORKERS 16 SECTION 4. ESTIMATING ECONOMIC IMPACT OF OUT-OF-AREA HIRING .......17 ASSUNfl MONS 17 :Area-Worker Scenarios 17 ;Consumer Expenditure Patterns 17 :Impact Scenarios 17 IMPACTS 19 SECTION5. CONCLUSIONS............. ...................................................................................22 AREAS FOR FURTHER RESEARCH 22 APPENDIX ...............................................................................................................................23 SuPPLEmENT.AL DATA TABLES- 23 LIST OF I2MRVIEWEES 27 :Key Interviewees 27 Union Interviewees 27 Final Report—June 2003 fi Department of City and Regional Planning, UC Berkeley TABLE OF FIGURES Table 1. Base Level Payroll and Employment Scenarios......... .......... ........ ........: ......... ...........9 Table 2. Local v Aron-Local Consumer Expenditure Categories................................................. 11 Table 3. Economic Impacts from Refinery Employee Household Expenditures....,, ....... ........ 15 Table 4. Average Expenditures by Income..... ..................................... ....... ........ ............. ..... 17 Tables 5 & 6. Total Estimated FTE of Out-of-Area Workers in Refinery Turnarounds.. ... .... 1 Figure 1. Estimated Employment Impacts of Hiring Out-of-Area Workers at One Refinery per Year>.............................................................................................................................. 19 Figure 2. Estimated Impacts of Out-of-Area Workers on Output...... ......... .............. ........... .. 19 Figure 3. Estimated Impacts of Hiring Out-of-Area Workers on Business Taxes .......... ........20 Tables 7 & 8. Total Estimated Expenditure Impacts of Out-of-Area vs. Local Workers. .,...,... 20 Table A-1. Petroleum Refining Self-Reported Employment, Occupations, and Wages in Contra CostaCounty.............. . .............. ............ .....: .................... ............ . !................ 23 Table A-2. Aggregate Income by AnnualIncome Category for Baseline Impact Calculation Scenarios. ......... .......... .. ...... ......... ...... .... .............. .... .....,...... .... ..... ............... 24 Final Report--June 2003 2 Department of City and Regional Planning, UC Berkeley EXECUTIVE SUMMARY This report was prepared by the University of California Department of City and. Regional Planning at the request of the Contra Costa Community Development Department and the ContraCosta'County Board of Supervisors. Its purpose is to examine the economic impact of out-of-area contract employment at the county's four largest refineries. This report shows that the petroleum refining industry plays!a significant role in Contra Costa County's economy and that use of out-of-area workers at major refinery construction or "turnaround"projects can have moderate to significant!"leakage"impacts as expenditures that that normally occur within the study area now occur elsewhere. This diminished'local spending in turn reduces the industry's positive impacts on the Contra Costa County economy. It should be noted that the use of out-of-area workers occurs primarily during temporary construction projects and for a variety of reasons. These may include,among others,the inability to fill demand'from the local-labor pool'and the decreased casts from hiring from areas with lower wage rates. It may not always be passible to have a 100%local labor workforce at major projects. The most significant reductions are to output and business taxes. For example, a 'turnaround"project in one refinery lasting only'4 weeks and using only 250 additional workers results in a leakage of$640,040 dollars of output and almost$30,040 in indirect business taxes, while a more intense activity level of all four major refineries perfommaing large turnarounds in one year results in a leakage of over$12 million in output and over$740,000 in indirect business taxes. Overall,refining is the County's largest industrial spender,sixth in indirect business tax payments,and ninth in employee compensation---all the more impressive because of its relatively small share of the County's total employment. The household expenditures of refinery employees reverberate throughout the Contra Costa County economy, contributing significantly to countywide output,employment,labor income, and indirect business taxes. Skilled trade and labor positions,which are the subject of the Industrial Safety Ordinance,provide)about 26.5%of these total impacts. Depending on total employment in various scenarios, the impact of all spending is responsible for an additional: • $265 to$493 million in total output by county businesses; ■ 2061 to 3838 jobs within the county; • $72 to$134 million in labor income that is additionally respent in the area;and • $12 to 23 million in indirect business taxes. This study provides a framework for further research into economic impacts to Contra Costa County from the hiring of out-of-area workers. Findings from this study could be supplemented by additional relevant primary data with the cooperation of all relevant stakeholders, such as unions,,'contractors,refineries,and public agencies. Final Report—June 2003 3 Department of City and Regional Planning, UC Berkeley SECTION 1. OVERVIEW AND METHODOLOGY Purpose:of Report At the request of the ContraCosta.County Board of Supervisors,the Contra Costa County Community Development Department(hereafter referred to as"rhe Community Development Department)undertook a study of the economic impact of out-of-area contract'' employment at the county's four largest refineries. In turn,the Community Development Department contacted the Department of City and Regional Planning(DCRP)at the University of California at Berkeley,DCR.P agreed to conduct this study pro bono under the direction of the Community Development Department in April and May of 2003. This report presents the findings from this study. The four refineries analyzed for the purpose of this report are Chevron.(Richmond), Phillips(Rodeo); Shell'(Martinez) and Tesoro Golden Eagle(Avon). This report presents data regarding out-of-'area contract workers and then uses this information to describe the socio- economic impact of out-of-area contract employment. Where certain data were not available,' this report'utilizes ranges and:depicts possible scenarios;these ranges and scenarios can then be used for policy-making where appropriate. Before outlining the economic impacts of out-of-area workers,this report describes'the study methodology, assumptions,and data limitations. Methods Literature Review Several recent studies have been done in various states concerning the impacts of refineries on local economies. Studies in Alaska(2001),Louisiana(2001) and Delaware(2002) assess the impact of the refineries on state and local talc revenues,local spending,income and employment. Due to the size of the refining industries'in these locations,they provide a sizeable portion of the tax revenue and employment,not only in the cities in which they are located,but also across the state. The study in the available literature whose purpose is most comparable to this one was completed in Lake Charles,Louisiana. That study looked at the impacts of but-of- area contract workers on local spending. They found that the contract workers greatly increased local spending in Lake'Charles, and boosted the local economy. A 2001 study commissioned'by the Western States Petroleum Association(WSPA)also found substantial'economic benefits from the petroleum industry,'although it analyzed overall direct and indirect job creation from the refineries rather than the specific impact of out-of-area workers. Both of these aforementioned studies—the Western State Petroleum Association study and the Lake Charles study—looked at the financial contributions made to charitable institutions by the refineries. A review of the literature indicates that the existence of refineries in a locale can result in both benefits and losses for the local and regional economies. The purpose of this i The WSPA report stated that there were 3,800 employees at the Contra Costa County refineries in 1997;the three different employment estimates used in this report(described later in this section)encompass this figure. WSPA's 1997 figure was estimated to generate from l to 3 indirect jobs in support ofrefining,transportation and marketing for every direct job in refining(the 3, 800 referenced above). Final Report--June 2103 4 Department of City and"Regional Planning,UC Berkeley study,notwithstanding,':is decidedly narrower: it°explores the economic impact on Contra Costa County and on the nine-county Bay Area of out-of-area employment at the refineries. A less recent study is often referenced in the context of Contra Costa County refineries: it was produced for the Contra Costa County Board of Supervisors in 1990. This report is entitled: The Impact of Out-of-Area Parkers'in Non-Residential Construction on Contra Costa County:A Case,study of the USS-POSCO Modernization and was conducted by Carlos Davidson at the Center for Labor Research and.Education,Institute of Industrial Relations,University of California at Berkeley. 'There are significant differences between the methodologies of that prier report and this study. In particular,these differences relate to the definition out-of-area'-workers, the secondary data sources utilized and the understanding of relevant economic impacts. The methodologies of this study,are discussed in greater detail in the following sections on secondary data,interviews, and models used. Because the methodologies are not strictly comparable, caution should be used when attempting to compare the reports' results. Secondary data Various secondary data sources were used for this report. Secondary sources are data that have beenproduced for a variety of different purposes other than the project at hand. These data are then used to extrapolate relevant information for the specific project. The bulk of these secondary data sources were used to develop an understanding of employment at the four refineries. In particular,it was necessary to determine the number of employees, the positions occupied by those employees and the estimated earnings of those employees. These sources were also used to understand expected spending patterns and the resultant economic impacts. The specific secondary data sets examined for this report are as follows: ' (1)'California Employment Development Department(EDD)The EDD tracks historic average monthly employment by industry group at the county and Metropolitan Statistical Area(MSA)levels,3 identifies the prevalence of specific occupations within industry groups,and tracks average wages by occupation at the county and` MSA levels.. This sector is defined according to the North American Industrial Classification System(NAICS);the petroleum and coal manufacturing sector is NAILS 324. This data was used to(i)develop an estimate of overall employment at the four largest refineries in Contra Costa County and(ii) calculate the baseline wage' income that corresponded to employment figures. (2) County Business Patterns (CBP), US Department of Commerce—The CBP data reveal the number of employees by industry,the number of establishments, and the total wages. All of these figures are for the payroll period that includes March 12th of the reference year;CBP also provides'an annual payroll figure. The industry analyzed for CBP data was NAILS 32411,petroleum refineries'. These data were used to determine the total number of employees at the four largest refineries. According to the CBP, Contra Costa County had five refineries„operating in 2001— 2 It should be noted that attempts to get more precise secondary data from the Contra Costa County Assessor's Office regarding employment figures were unsuccessful due to legal restrictions;preventing release of the data. 3 The MSA is a US Census Bureau category that represents mmltiple counties. Final Report—June 2003 Department of City and Regional Planning, UC Berkeley the four refineries which are the subject of this study and one small.firm with between; 20 and 49 employees. It should be noted that the CBP employment figures were provided as ranges,not as exact f gores. The"median convention"technique,where the number of employees per firm is estimated to be the category median,was used to translate these ranges into actual numbers. The fife refinery in the CBP data was given a value of 34.5 and subtracted from the overall employment figure to arrive at the total employment by the four refineries. This proportion was then used to calculate the other employment scenarios, as described below. (3)' IMPLA —DIL LAN is a'proprietary econonuc modeling package used to measure the economic impacts'of specific events through input-output analysis and is linther described below. RAPLAN's industry employment estimate is based on three data sources. In general,Bureau of Labor Statistics (BLS) Covered Employees and Wages (ES202)data provides the county-level industry structure for the RA PLAN database. CBP data is used to make non-disclosure adjustments to ES202 data,while Regional Economic Information System data is used for control totals. Wages are given and include all payroll costs,'`including employee benefits. Average wages for the baseline impact scenarios(see below)are based on I1VTLAN data. 11VIPLAN's estimate of employment is higher than that calculated solely though the EDD occupation and wage data. It is also based on all payroll',costs,including employee benefits. Wage income had to be calculated from this aggregate figure by discounting the total by the BLS estimate of employee benefit expenses mentioned above. (4) .Public Use Microdata Sample'(PDMS), US Census Bureau—This 2000 data set ti presents detailed self-reported information regarding employee residence,commute and migration patterns,rase, gender,industry and occupation,wage and income, household,educational, and other demographic data for a 1%sample;of the households within a geographic reference area. Following an examination of these data,however,it was concluded that it would not be very useful for this particular study. Specifically,the PUNTS data provided an employment estimate somewhere between the CBP and"IAN data;therefore it was not used for this report,because it fell between the low and middle scenarios(see below). Also of note,the PUNTS occupational composition was significantly different than proved by the EDI)data. The data is provided for informational purposes in an appendix to this report. (5) Employer Costs for Employee Compensation 1986-1999, Bureau of Labor Statistics— This data set was used to calculate the additional employee benefit expense incurred by the refineries. Because DAMAN(see below)includes employee benefits as part of its total employee compensation value,it is important to distinguish between direct wages and benefits so that income effects can be accurately modeled throughout the economy. (6) Consumer Expenditure Data,.Bureau cif Labor Statistics (BLS)The Consumer Expenditure Data uses national information to produce a report that details bow consumers spend'their money.' These spending patterns are presented by income category as well as by occupation type. 'These data were used to develop a model of how out area contract workers at the refineries'could be expected to spend their wages. This report does not analyze the impact of these out-of-area workers' spending in their"home"regions(i.e.,outside of the nine-county Bay Asea). Final Report— Pune 2003 6 Department of City and Regional Planning,UC Berkeley EconomicModeling 1MPLAN economic modeling software extrapolates a'specific economic event's impact on a region'from national input-output data that is supplemented by state and county level data to correct for regional differences. Economic modeling is particularly useful to policytnakers because it allows them to see how their decisions are likely to reverberate throughout the economy. Since,'economic modeling fundamentally relies on a series of assumptions,this report's use of conservative estimates of base levels for the modeling scenarios provides confidence that projections capture the overall range of possibilities; Input-output accounting describes the commodity flows from producers to intermediate and final consumers. The total industry inputs of commodities,services, employment compensation,value added„ and imports are equal to the total value of the commodities' produced. Purchases for final use (final demand),drive the model as producers purchase goods and services from other'producers who,inturn,must purchase commodities to provide for the producers who are selling to final demand. Outside impacts,such as purchases from out-of-area suppliers or out-.cif--area household expenditures are referred to as leakages'. This cycle of indirect purchases continues until leakages from the region stop the cycle. ROPLAN's detailed county level input-output matrices make it an ideal package for analyzing changes resulting from discrete economic events. Data files include annual information for up to 528 different industries--generally to the 3 or 4 digit,SIC code level, and 21 different economic variables. IMPLAN also includes a"social account`maU&'that allows the modeling of household and government expenditures and revenues. This ensures that any impact analysis considers effects throughout the county's economy. This method was used to assess the multiplier effect of the hiring of out-of-area contract workers at the four refineries. In the input'.-output model,mathematically derived multipliers uniquely describe the change of output for each and every industry as a result of producing one dollar of final demand,which are unique to each lindustry. In this case,impacts solely within Contra Costa Countywere computed. Impacts outside of the region are not included in the multiplies effect,based on the notion that economic development is regional in nature. In this study,leakages would primarily include spending in workers' "home"region(i.e., outside of the Contra Costa County). Multipliers can be calculated for a variety of impacts such as employment,total business output,personal and total income,and business taxes among others. The total multiplier effect refers to the impact of an initial round of spending—in this case,the wages paid to out-of-area contract workers—and the impact of the subsequent re-spending of those initial collars within the region. Each"round"of spending generated by the initial round contributes to the total multiplier effect is made up of three components'. The first and largest is the"direct"impact and simply the spending by the refinery employees. The"indirect"impact is the business-to- business spending resulting from the direct expenditures and considerably smaller. The household expenditures of the employees of indirect spenders'make up the"induced"portion of Final Report—June 2003 7, Department of City and Regional Planning, UC Berkeley the multiplier and can be larger than the indirect;,multiplier. In general,the greater the interaction with the regional economy, the greater is the multiplier.¢ Employment and Payroll Scenarios As alluded to above,data from the aforementioned secondary data sources yielded a wide range of estimates for total employment. This variability in estimates can be caused by a number of factors,such as different reporting requirements and non-disclosure agreements, among others, and should not be considered out-of-the-ordinary. In order to address this issue; a range of employment scenarios were developed to ascertain more accurately the range of possible economic impacts resulting from refinery payrolls. These scenarios were created based on the varying estimates of employment and payroll expenses'provided by the County Business Patterns, lMPLAN,and EDD data,then used to establish baseline payroll amounts and the ranges of impacts from'the household expenditures of refinery employees5 Scenario 1 is based on the County Business Patterns estimate of total employment and EDD industry occupational anal wage data and is the most conservative for the three employment and wage scenarios. Overall employment Was calculated by applying the employment proportions estimated from the County Business Patterns for the petroleum-refining portion of the petroleum and coal manufacturing sector. Payroll income amounts were calculated by applying:the occupational proportions to the overall employment estimates and multiplying those values by the average annual income for the occupation. This constitutes the"low"scenario for employment. Scenario 2 is calculated based on 1MPLAN's proprietary input-output database described in Section 1. EDD wage estimates are not used in this scenario. Income categories are instead developed by applying the proportion of wage income accruing to each occupation to Hv1PLAN's total estimated wages. Average incomes for all positions are higher than in scenarios'I and 3 Scenario 3 is based on ETU industry specific employment,occupational, and income data and uses the same methods as Scenario 1. Total wage expense for employees at Contra Crista County's four largest refineries ranges between$207.5 and$386.3 million, depending on the employment scenario. Skilled trade and labor positions earn about 85%of the industry average wage. Together they comprise 31% of the overall refinery employment but receive only 26%of the total.wages. ''Their total annual earnings range from$54.2 million to$100.8 million. The large number of lower paid workers earning less than the industry average causes this discrepancy. Table 1 summarizes the values used to calculate the baseline bnpacts of the major refiners' payroll expenditures. Detailed tables by occupation and projected aggregate annual income can be'found'in the appendix at the end of this report. a A detailed description of the RVTLAN model and how multipliers are calculated is available at the website of the Minnesota IMPLAN Group at www,1=1au.com. $ The interviewees gave the impression that many of these skilled trade workers earn wages higher that the occupational average,however a conservative approach was chosen to use the average value due to the absence of any other corroborating industry specific data. Final Report--June 2003 8 Department of City and Regional Planning, UC Berkeley Fable 1. Base Level Payroll and Employment Scenarios Scenario 1 Scenario 2 Scenario 3 Employees at major Contra Costa refineries 3,421 5,54.6 6,371 Total Payroll for refinery employees $207,498,485 $384,2750106 $386,431,109 Payroll with Benefits $275,142,992 $509,548,791 $512,407,651; Average Annual Income for refinery employees $60,654 $69,290 $60,654 Skilled Trade.Workers at refineries 1,056 1,713 1,967 Total Payroll for skilled trade workers and laborers $54,137,233 $100,259,001 $100,821,511: Payroll with Senefits $71,785,970 $132,943,435 $133,689,324 Average annual Income for skilled trade workers and laborers $51,248 $58,545 $51,248' l3enef"rts expense 32.6% 32.6% 32.6% Sources-Scenarios(.l)US.Census&CA EDD,(2)RAPLAN&CA EDD,and(3)CA EDD; Bureau of Labor Statistics Defining Out-of-Area Workers For the purposes of this report,out-cif-area workers are defined as workers from outside of the nine-county Bay Area."There are two principal reasons for utilizing this definition of out- of-area workers: (i)this definition acknowledges'the interconnected nature of the Bay Area economy,and(ii)it represents a standardized definition/criteria,which is thus compatible with other potential data sources and relevant analyses. Interviews The intended design of this study entailed telephone interviews with four different key groups. These four groups areas follows:'(i)refinery representatives from each of the four' refineries;(ii)union,contractors that represent the union out-cif-are,!workers at the refineries;.. (iii)independent/nonunion contractors who hire out-of-'area workers at the refineries; and(iv); other persons who have relevant expertise'and/or knowledge regarding these refineries.' Attempts to interview'these four groups,however,were not entirely successful. In fact, DCRP was only able to complete interviews with two of these four groups:the union contractors and the other persons who have relevant expertise and/or knowledge. Interviews with refinery representatives I and independent/nonunion'contractors were attempted but ultimately unsuccessful,despite multiple efforts from DCRP. It is likely that a confluence of factors prohibited the completion of these interviews,including the following; difficulty in collecting the data.that was requested,worries about revealing what was perceived as confidential information; concerns about the intent of the study in the current political environment of Contra Casts County,and/or time constraints. In the absence of some essential data that would have been gathered from these interviewu"articularly,the proportion and number of independent/nonunion contract workers who are from out-of-area,and the total hours worked by 6 In other words,out-of-area-workers are those from outside of Alameda,Contra Costa,Marin,Napa,San Francisco, San Mateo,Santa Clara,Solano and Sonoma counties. Final Report--June 2003 g Department of City and Regional Planning, UC Berkeley ........... ............ . ............. . ....... .... ...... ..... ....................... have the qualifications for employment at the refineries. Potential costs to the County for unemployment insurance payments were not calculated. IMPLAN modeling– RvfPLAN's model is based on national trends, supplemented with state and MSA level data in order to adjust for local patterns. Except where noted,IMPLAN'sassumptions were used as applicable to Contra.Costa County. • Industry Structure—Based on knowledge of the structure of the refining industry in Contra Costa County,it was assumed that the four largest firmsin the CBP data were, in fact,the four largest refineries on which this study is focused. The proportions developed using CBP data were applied to calculate employment from the EDD data. Employee benefits were assumed to be identical for each scenario. Occupational composition of contract workforce—For the purposes of this report, it was assumed that contract workers occupy only the blue-collar occupationalp ositions within the refineries (i..,e.,no contract workers in higher-level. management or . technical positions). These occupational positions areas follows-, o Boilerinakers o Control and Valve Installers and Repairers o Electricians o First-Line Supervisors/Managers of Mechanics,Installers,and Repairers o First-Line Supervisors/Managers of Production and Operating Workers o Genual Maintenance and Repair Workers o Heavy and Tractor-Trailer Truck Drivers o Inspectors,Testers,Sorters, Samplers and Weighers o Installation,Maintenance, and Repair Workers o Machinists o Petroleum Pump System Operators Refinery Operators and Gaugers o Plumbers,Pipefitters, and Steanifitters The employment figures for blue-collar workers were then used as the basis for computing various proportions of out-of-area workers. hnphcitly,,then,it was also assumed that the relative proportions of each occupation are the same among contract workers(local and out-of area)as among the overall workforce(contract and non- contract). ■ 2080-hour work-vear—Annual figures for out-of-area contract workers' earnings and their impacts on the region(i.e. multiplier effects) are computed based on a 2090 hour work year8. • Types of contract-workerprojects—There are various types of refinery projects that -require contract workers,including turnarounds, construction,maintenance,and/or follow-up work after a refinery accident As mentioned previously,however,t data from th&refitezies regarding the nature of these projects was unavailable— particularly;the average duration and frequency 0 ard f these projects per year. For the purposes of this report,then,certain.assumptions about these projects were made. All This computation was necessary because original wage figures are calculated on an annual basis while construction projects generally last for only a fraction of a year. Final Report—June 2003 12 Department of City and Regional Planning, UC Berkeley ......................................................................................... .................. .......................................... ........................... ............. of the calculations in this report analyze only the impact of turnarounds(and not of the other projects), the most conservative approach. One turnaround per year per refinery was assumed(a total of four turnarounds per year)with durations of four, six,:or twelve weeks. This study is thus limited by the aforementioned assumptions. 'There are,fi -thermore, some additional limitations that should be clarified. Regarding secondary data sources,it should be noted that 2002 data are not available at the time ofwriting this report. The majority of the data used in this report are for 2001,the most recent year available;the exceptions are the Consumer Expenditure Survey data,which is an average for 2000-�01,and the RAPLAN data is for 1999: The following sections provide a picture of the refinery industry's overall contribution to the County's economy and hove the economy is impacted by the use of use of non-local labor at major refineryprojects. Specifically,Section.2 will outline the overall economic contribution of refinery employees' household expenditures to the output,employment,labor income,and business!taxes.; Section 3 discusses how the total number of workers was calculated. Section 4 discusses the economic impact of out-of--area workers at refinery projects in relation to the impacts of an all-local workforce. 9 Because less is known about the nature of contract-worker projects that are not tutuarounds,it was not passible to make reasonable assumptions upon which to base calculations. Final Report--June 2003 13 Department of City and Regional Planning,UC Berkeley SECTION 2. ECONOMIC MPACT OF REFINING INDUSTRY EMPLOYMENT IN CONTRA COSTA COUNTY The purpose of this section is to establish an overall picture of the economic impactsto Contra Costa County's economy resulting from the wages paid to refinery employees. Economic modeling is conducted using IIVPLAN software, as described in Section'l above. The calculation includes employment, labor income, and indirect business tax Iimpacts resulting from the industry's normal operations, asvell"'as the impacts attributable soler to the skilled trade and laborer positions affected by the ISO. Assumptions' Base Level Errmployment and Payroll Scenarios The baseline payroll'amounts established in the three scenarios described in Section 1 were used to calculate the range of impacts from the household expenditures of refinery employees. These figures are used to compare and contrast the relative significance of the impact of out-of-area'workers. Impacts The household expenditures of refinery employees reverberate throughout the local and y regional economy, adding new jobs,local income, countvwi industry output,and tax revenue. These are summarized in Table 3 below. Employment: The total indirect and induced employment resulting'from the household expenditures of the employees of Contra Costa's major refineries ranges between 2,061 and 3,838 jobs,with between 537 and 10105 of those jobs attributable to skilled trades and laborer positions. The« industry's employment impacts in this analysis are significantly louver than the findings of the Western States Petroleum Association report,which estimated nearly 50,000 direct and indirect jobs resulting from the refineries in Contra Costa and Solano Counties. This is likely the result of more conservative assumptions.10 Labor Income As a result these expenditures total labor income from all refinery workers ranges between$71.7 million and$133.5 million dollars, depending on the scenario. Labor income from the skilled trades and laborer'employees is between$18.8 million and$35.2 million.. This constitutes about 26.5%of the total labor income effect resulting from the employees of the tour major refineries. '°For example,the WSPA report;considered retail gasoline statim workers and marketing positions to be related to the presence of the refining industry while lAVLAN limited employment effects strictly to the employment increases resulting from the expenditures of refinery wage mcome throughout the economy. Final Report—.lune 2003 14 Department of City and Regional Planning, UC Berkeley; _. ................ ,.__N ,. Industry Output This figure shows the increases in total output as a result of employee household spending. This effect is most pronounced on county industries that sell a large proportion of their goods or services to local residents. Refinery payrolls spur between$12.1 and$22.6 million of additional output. Skilled trades and laborers contribute between$3.2 and$5.9 million of this impact. Indirect Business Taxes:; Total taxes generated as a result of employee household spending are between$12.1 and $22.6 million,with skilled trades people and laborers contributing;between$3.2 and$5.9 million The calculation of indirect business taxes is based upon the Bureau of Economic Analysis's Grass State Product series,which gives Mate-level estimates of takes by industry classification. Table 3. Economic Impacts from Refinery Employee Household Expenditures Scenariol Scenario'2 Scenario 3 Total Employment 2,061 30817 3,838 Total Employment from STL* Household' Spending 837 1,005 1,000 Total Labor,Income 71,713,196 132180$,666 133,553,799 Total Labor Income from STL Household Spending 18,883,593 35,320,946 35,1691579 Total rOutput 264,951,135 494,674,080 4933,427,039 Total output from STL Household Spending 69,200,619 129,429,197 128,874,532 Total lndireot Business Taut 12,149,12.5 20,499,472 22,625,706 Total Indirect Business Tax from STL Household $.pending 3,182,894 5,953,118 5,927,605 Sources-(1)ITS Census,&CA;cloyment Development Department;(2)BQLAN&CA EDD;(3)CA EDD *-STL:Skilled'Trades and Laborers Final Report—June 2003 15 Department of City and Regional Planning, UC Berkeley ` SECTION 3. OCCUPATIONAL PROFILE OF OUT-QFwAREA CONTRACT WORKERS Work Opportunities for Out-of-Area Workers" Out-of-area workers are employed in Contra Costa refineries for a variety of reasons, Without interviews with the refineries themselves,it is not possible to be exhaustive about all of the different mechanisms and reasons out-of--area contract workers come to work in the refineries. Nonetheless, some of the basics regarding this process were determined through interviews from other sources. The refineries may need contract workers for a variety of projects,including turnarounds (where refinery operations--or a certain Mart of those operations--are temporarily halted so that cleaning and maintenance can be performed),construction projects, and general maintenance. It is assumed that additional skilled trades workers and laborers are brought on in the same proportions as they deployed throughout the refinery.' There'are two primary paths of entry into contract employment for out-of-area workers'. independent/nonunion contractors and union contractors. It is not clear as to how the independent/nonunion contractors locate their workers. It is known that the unions interviewed share a common policy on the hiring of out-of-area workers(mean.ng union members from p outside of the nine-county.Bay Area). Linder this policy,the unions first attempt to fits ail positions locally. If there are not enough members locally to meet the refineries' stated need for workers, then the unions pull in out-of-area workers. Primarily,the reason that there may not be sufficient numbers of local union members to:meet the refineries' need is because the refineries sometimes need a large number of workers quite immediately. There is no reason to believe that the independent/nonuuion contractors have different reasons for faring oiztf area workers,but no defnutive data,on their policies was available at the time of writing. Proportions of Out-of-Area Workers Based upon information from key interviews,it was estimated that approximately 50°x©of all workers brought it for a turnaround were considered out-of-ares.. This assumption was used for both union and non-union.workers. As mentioned above, it was assumed that contract workers occupy only the blue-collar positions listed in Section 1. Based on occupational wage data from the Bureau of Labor Statistics,those occupations fell into three income categories: 10°lo are in the$30,000 to $39,999 category, 12%in the $40,000 to $49,999 category,and 78% in the$50,000 to $69,999 category. It was assumed that these proportions were also valid for workers hired for the turnarounds. These income categories were used with the 2400-2001 Consumer Expenditure Survey to calculate the impact of local spending of out-of-area workers. The following section presents analysis;regarding the economic impact of the hiring of these out-of-area wormers. This analysis takes into account the occupational positions, and wages of these workers. Final Report—Juste 2003 16 Department of City and'Regional Planning, UC Berkeley . ::.::,:.....»,: .,i -WINi X13._-zip!! ku Ia01, NIII_-.II�Lx,e ptl: >lq3$ SECTION,4. ESTIMATING ECONOMIC IMPACT OF OUT-OF-AREA HIRING Assumptions Area-Worker Scenadds To determine the economic impact of out-of area hiring due to consumer expenditures, several scenarios were used: Overall, two area-worker scenarios were used. The first scenario (the"out-of-area worker" scenario) assessed the value of consumer expenditures assuming that 50% of the workers were out-of-area. The second scenario (the"all local worker"scenario) assessed the value of consumer expenditures assuming that 100%of the workforce was hired' locally. The difference between these area worker scenarios represents the"leafage"of expenditures and other revenues dine to out-of-area hiring. Additional impact scenarios devised within these two larger scenarios are discussed'+later in this section. Consumer Expenditure Patterns As previously shown in Table 2,:assumptions were made about which goods and services out-of-area workers were likely to purchase locally and which goods,.and services they were likely to purchase in their region of origin. Table 4 shows the average expenditures made by local and out-of-area workers based on these assumptions. The table shows,as would be expected,that out-of-area workers spend a much smaller proportion of their income locallythan local workers. In fact,the workers that hold positions used by the refineries during turnaround spend less than:40%of their total income in Centra Costa County. Further analysis will show that this disparity in expenditures results in significant revenue leakages for Contra Costa County. Table 4. Average Expenditures by Income Total Avg,. Att tw = ooA Income Income Workers Workers $30,000 to$39,999 $34,113 $29,762 $11;587 $40,000 to$49,999 $43,732 $35,383 $12,947 $K000 to$69,000 $57,.331 $41,676 $13,555 Source:Consumer Expenditure survey,Bureau of Labor statistics. Impact Scenarios As previously mentioned,since precise data was not available from the refineries about their turnaround processes,several impact scenarios were developed to estimate impacts of out- of-area hiring on Contra Costa.County. Based on information from key inf6rmants, it was estimated that a turnaround at a refinery typically lasts anywhere from 1 to 3 months,with an average of 6 weeks,and can employ from 500 to 1000 workers. As mentioned above,it was assumed there was only one turnaround per refinery,per year. Assuming for the out'-of=area scenario that 50%of all turnaround workers were out-of- area, ut-ofarea, from 250 to 500 workers would be employed in a typical refinery turnaround. Also included is a mid-range estimate of 350 workers, for total of three scenarios. These figures Final Report—June 2003 17 Department of City and Regional Planning,UC Berkeley I_J 11 were multiplied by four to get the impacts of a turnaround at the,four refneries>in one year. These figures were adjusted to estirnata the number,of1hil-time equivalency workers(FTE) for these short-term employees. Impacts were also estimated for the all-local-worker scenario where all of these workers were hired locally. The following tables illustrate the total FTE estimated for each of the above scenarios. Tables 5& 6. Total Estimated FTE of Out-of-Area Workers in Refinery Turnarounds Ono Refinery: Number of Workers Length of,Turnaround In.Work Hours* 250 350 5,00 4 weeks(160 wk hrs) 19 27 38 6 weeks.(240 wk hrs) 29 40 58 12 weeks(480 wk hrs) 58 81 115 Four Refineries Number of workers Length of Turnaround In Work Hours* 1000 1400, 2000 4 weeks(1,60 wk hrs) 77 108 154 6 weeks(240 wk hrs) 115 162 231 12 weeks(480 wk hrs 231 231 323 462 *2090 work hours per year lmpacts' The impacts of hiring out-of-area workers as opposed to local workers can result in significant leakages for the Contra Costa County economy. Figures 1ou thr gh 3 show the leakage of jobs,:,output and business taxes from hiring 500/o out-of-area workers as opposed to locally in various:scenarios. hiring all of the workers I These ebarts-represent the irnpacts of one refinery. They show that the leakage impacts of out-of-area workers in employment,business taxes,and outputincrease as the size and duration.of the turnaround increases. A similar linear increase was found when measuring the impact at all four refineries., On the low end,one turnaround in one ref riery lasting only,4 weeks and using only 250 workers would result in a leakage of 5 jobs,$640,000 dollars of output and almost$30,000 in indirect business taxes. The high-end scenario,which involves all four refineries performing large turnarounds in one year,would result in a leakage of 121 jobs, over$12 million in output and over$700,000 in indirect business taxes. Final Report--June 2003 18 Department of City and Regional Planning, UC Berkeley .......................... Figure 1. Estimated Employment Impacts of Hiring Out-of-Area Workers at One Refinery per Year so 45 Out of Area Impacts 40 Contra Costa Impacts 3s n a 20 '15 10 4(250) 6(250) 6(500) 12(500) Weeks In Turnaround (#ofWorkers) Figure 2. Estimated Impacts of Out-of-Area Workers an Output 7 - 6 - 8 6 ®out of/area Impact ■Contra Costa Impacts C G' 4 3 C' CL 2 0 4(250) 6(250) 12(500) 12(500) Weeks in Turnaround(#of Workers) Final report--June 2003 19 Department of City and Regional Planning, UC Berkeley Figure 3. Estimated Impacts of Hiring Qut-of Area Workers on Business Taxes 300 12 ra I' 0 254 Mout of Area Impacts MContra Costa impacts 204 a� 154 ta 144 t- ra m c 54 4-(250) 6;(254} 6(540) 12'(544} Weeks in Turnaround Workers) m Tables 7 and 8 provide the total impacts for all scenarios. On the low end,one turnaround in one refinery lasting only 4 weeks and using only 250 workers would result in;a leakage of 5 jobs, $640,040 dollars of output and almost$30,000 in indirect business taxes. The high-end scenario,which involves all four refineries performing large turnarounds in one year, would result in a leakage of 121 jabs, over$12 million in output and over$700,000 in indirect business taxes. Tables T&8. Total Estimated Expenditure Impacts of Quit-of-Area vs.Local Workers` One Refinery Weeks in indirect Business Turnaround Labor income Jobs Output Taxes (#of " Workers) 50%©aA 700II.Local 50%oaA 100%cocas 50%OOA 100%LocalSOY*avA 100%;Local 4(250) $88208 $263,439 3 8 $322,865 $964,947 $14,843 $44,373 4(350)' $125,348 $296,361 4 11 $458,838 $1,371,240 $2 1,M3 $63,058 6(250) $13093 $402,092 4 12 $492,827 $1,472,814 $22,655 $67;728 4(50Q) $176,416 $526.47,o 5 15 $645,773 $1869,894 $29,685 $88,748 6(35€x) 185,700 $554,608 $67 ,76f} 'x,031,468 $31,248 $03,417 6(500) $26906 $804,183 8 Z3 $985,653 $2,94 ,629 :$45,311 $135,455 12{250} $269,266 $804,1.63 8 23 $985,653 $2,946,629 $45,311 $135,455 'i2(350) $376,044 $1,123,0182 11 32 $1,376,516 $4,113,722 $63,279 $190,171 12 500 $533,890 $1,5942469 15 45 $1,954,314 $5,840,469 29,841) $268,576 Final Report--June 2003 20 Department of City and Regional Planning,UC Berkeley Four Refineries Weeks in indirect Business Turnaround Labor income Jobs Output Taxes (#of Workers) SO%OOA IOVI Local SO!OOA VOYS Local W%OOA 1M Local 50%GOA 1001 Local 4(1000) $357,473 $1,067,621 10 30 $1,308,538 $3,910,575 $60,154 $179,829 4 (1400) $501,392 $1,487,623 14 43 $1,835,354 $5,484,964 $84,372 $252,228 6 (1000)' $533,890 $1,5194,500 15 45 $1,954,314 $5,840,469 $89,840 $268,576 4%(2000) $714,947 $2,135,244 20 61 $2,617,079 $7,821,151 $120,367 $359,658 6 (1400); $752,086 $1,976,165 21 64 $21753iO30'$7,227,444 $126,558 $378,342 $11,731,72 6(2000) $1,€72,419 $3,202,864 31 91 $3,925,617; 7' $180,461 $539,488 $11,731,72 12(1000) $11072,419 $3,202,864 31 91 $3,925,617 7' $180,461 $535,488 ` $16,403,76 12(1400) $1,499,531 $4,478,374 43 127 $5,489,066 9 $252,333 $754,333 $20,463,45 $1,078,97 12 2000; $2,144,839 $6,405,730 61 182 $7,851,232 2' $360,923 5 While the multiplier effects on employment may at most only contribute to 121 extra jobs,the impacts on output and business taxes are more pronounced. Most significant are the losses to Contra Costa County throughoutput. By hiring workers'locally,local businesses could stand to gain millions in output. The high-end figure of$12 million would only result from large,3-month turnarounds at all 4 refineries,but substantial leakage figures of$3-5 million would occur on moderately sized'4 to f week projects. An increase in output from local businesses would also result in a substantial increase in taxes to the county. Increased local spending primarily generates sales taxes fora host of public services and moderate estimates put the amount of leakage between roughly$50,000 and $250,000,again depending on the length and intensity of the construction project. Final Report--,lune 2DO3 21 Department of City and Regional Planning, UC Berkeley SECTIONS CONCLUSIONS By examining the major impacts of out-of-area workers,this study provides a solid framework for gauging the impacts of out-of-area workers in Contra Costa County Overall,it is clear that the petroleum refining industry plays a significant rale in Contra Costa County's my The data suggests that the hiring of more local workers during temporary construction projects would increase the gains in employment, business taxes,and output to Contra Costa County and the cities within Contra Costa County through leakage reductions. The most significant impacts would come From increases in business taxes and output. It should be noted that the reasons for hiring cut-of-area workers by the refineries may include,among others,the inability to fill demand from the local labor pool and the decreased casts from hiring from areas with rawer wage rates. However, as mentioned in Section 3,this is also an assumption that cannot be confirmed without more information from the refineries. Areas for further research Due to the limitations of this and any study, there are several areas that could benefit from mer research. Impacts from this`study could be supplemented by a study to collect additional relevant primary data. This study could benue designed with the cooperation of all relevant stakeholders,,such as unions,contractors,refineries,and public agencies. Y Overall, mer research should take into account additional information from the stakeholders to make more precise estimates of the following; 1) :Length and scale of turnarounds 2) Percent of out-of-area workers in a typical turnaround 3) Occupational and wage composition of turnaround workers 4) Spending patterns and service demands of out-of-area turnaround workers This could even allow the research to be tailored to estimate impacts over a particular year. In addition, a larger study might also include estimates of any potential impacts on thei schools and health care system of Contra Costa.County. While this study estimated that these impacts are likely to be small, mer investigation should be done to assess the actual scale of these factors. ' Refining is the County's largest industrial spender,sixth in indirect business tax payments,and ninth in employee compensation-a figure all the more impressive because of its relatively small share of the County's total employment. Final Report--Jure 2003 22 Department of City and'Regional Planning,UC Berkeley .... ........... ...a...:.:c. APPENDIX Supplemental Data Tables TableA-1. Petroleum Refining Self-Reported Employment,Occupations,and Wages 3n Contra Costa County Average Aggregate Number In Wage Wage; Occupation Industry Income Income Marketing and sales managers 65 88,000 5,590,000 Purchasing managers 118 60,000 7,080,000 Managers,all other 290 78,669 221814,000 Management analysts 238 85,597 15,612,000 Accountants and auditors 92 138,000 12,696,000 Computer scientists and systems analysts 263 77,779 20,456,000 Computer programmers 291 64,914 18,890,000 Computer software engineers 172 82,238 14,145,000 Network and computer systems adn-dnistrators 92 57,000 5,244,000 Chemical engineers 224 72,746 16,295,000 Computer hardware engineers 131 60,000 7,860,000 Industrial engineers,including health and safety 119 60,000 7,140,000 Chemists and materials scientists 159 64,000 10,176,000 Paralegals and legal assistants 79 61,000 4,819;000' Miscellaneous media and communication workers 79 18,000 1,422,000 Other he practitioners and technical occupations 79 58,000 4,582;000 Sales representatives,wholesale and manufacturing 79 34,300 2,709,700 First-line supervisorstmanagers of office and administrative 158 12,000 1,896,000 Court,municipai, and license clerks 27 50,000 1,350,000 Customer service representatives 106 4300 4,558,000 Receptionists and Information clerks 132 32,700 4,315,4(30' Production,planning,and expediting clerks 106 68,000 7,208,000 Office clerks,general 79 36,500 2,883,500 Office and administrative support workers,all other 92 125,000 11,500,000 First-fine supervisorslmanagers Of construction trades and extraction Industries 158 69,000 10,902,000 Electricians 39 61$000 2,379,000 First-line supervIsoralmanagers of mechanics,installers, and repairers 53 71,000 3,763,000 Industrial and refractory machinery mechanics 79 72,000 5,688,000' First-line supervisors/managers of production and operating 593 49,730 29,490,000 Computer control programmers and operators 106 70,000 7,420,000 Machinists 79 112,4300 8,848,000 Welding,soldering, and bra2 ng workers 945 75,000 10,875,000 Miscellaneous plant and system operators 475 74,459 35,368,000 Chemical processing machine setters, operators, and tenders 908 65,000 12,871,,000 Production workers, all other 185 77,081 14,260,000 Driver-sales workers and truck drivers 79 43,000 3,397,000 Laborers and freight, stock, and material movers,hard 80 35,1100 2,8011,000 Machine feeders and offbearars 225 72,000 16,200,000 TOTAL x,764 65,146 375,502,6Q43 TOTAL ST#+1/ 1,494 65,862 164,260,000 Source.US Census Bureau, 1%Public Use N icrodata Sample Final Report-June 2003 23 Department of City and Regional Planning,UC Berkeley Table A-2, Aggregate Income by Annual Income Category for Baseline Impact Calculation Scenarios Occupation Description Scenario 20,000– 30,000-- 40,000– 50,000– Over 29,999 39,999 491999 69,999 7OA00 Accountants and Auditors Scenario 1 9,195,525 Scenario 2 17,029,576 Scenario 3'' 17,125,122 Boilerrnakers Scenario 1 915,331 Scenario 2 1,695,139 Scenario 3' 1,704,650 Bookkeeping,Accounting, and Scenario 1 1,889,286 Auditing Clerks Scenario 2; 3,498,848 Scenario 3 3,518,479 Business Operations Scenario 1 14,812,339 Specialists,All Other Scenario 2. 27,431,589 Scenario 3 27,585,495 Chemists' Scenario 1' 1,499,406 Scenario 2 2,776,812 Scenario 3 2,792,391 Compliance Officers,Except Scenario 1 1,356,448 Agriculture,Construction, Scenario 2 2,512,063 Health and Safety,and Transportation Scenario 3 2,526,157 Computer Programmers Scenario 1 3,918,343 Scenario 2; 7,256,543 Scenario 3` 7,297,256 Computer Specialists,All Scenario 1 1,601,264 Other'' Scenario 2 215,448 Scenario 3;' 2,962,086 Computer Systems Analysts Scenario 1 11,186,593 Scenario 2 20,7161918 Scenario 3' 20,633,152 Control and Valve installers Scenario 1 1,228,938 and Repairers, Except Scenario 2' 2,275,922 Mechanical boor Scenario 3 2,288,691 Customer Service Scenario 1 11752,292 Representatives Scenario 2 3,245,143 Scenario 3 3,263,350 Drafters,''Engineering,and Scenario 1 3,499,830 Mapping Technicians,All Scenario 2 6,48'1,4811 Other Scenario 3 6,517,84v Electricians Scenario 1 1,695,284 Scenario 2'' 3,139,567 Scenario 3: 3,157,182 Engineering Managers Scenario 1' 5,501,033 Scenario 2 10,372,787 Scenario 3 10,430;984 Final Report—.lure 2003 24 Department of City and Regional Planning, UC Berkeley occupation Scenario 20,000-� S5,060– 40,000- 50,000– Over 29,999 39,999 49,999 69,999 70,000 Engineers,All other Scenario 1 14,131,609 Scenario 2 26,170,916 Scenario 3 26,317,750 Executive Secretaries and Scenario 1 2,161,064 Administrative Assistants Scenario 2 4,002,165 Scenario 3 4,024,620 Financial Analysts Scenario 1' 3,392,624 Scenario 2 6,282,943 Scenario 3 6,318,194 Financial ManagersScenario 1 2,3491515 Scenario 2 4,351,165 Scenario 3 4,375,577 Financial Specialists,All Other Scenario`1 4,747,836 Scenario 2 8,792,817 Scenario 3 8,842,149 Financial, Information,& Scenario 1 971,220 Record Clerks,All Other Scenario 1,798,642 Scenario 3 1,808,734 First-Una Scenario 1 3,269,818 Supervisors/Managers of Scenario 2 6,055,512 Mechanics, Installers, and Repairers Scenario 3 6,089,487 v Fast-Lire Scenario 1 1,961,999 Supervisors/Managers of Scenario 2 3,633,507 Non-Retail Sales Workers Scenario 3 3,653,893 First-Line Scenario 1 1,280,420 Supervisors/Managers of Scenario 2 2,371,264 Office and Administrative Support Workers Scenario 3 2,384,568 First-Line Scenario 1 4,291,646 Supervisors/Managers of Scenario 2 7,947,878 Production and Operating Workers Scenario 3 7,992,470 General and Operations Scenario 1 2,383,905 Managers: Scenario 2 4,414,853 Scenario 3 4,439,623 Geological and Petroleum Scenario 1 1,147,667 Technicians Scenario 2 2,125,413 Scenario 3 2,137,337 Geocientists, Except Scenario 1 1,803,594' Hydrologists and Scenario 2 3,340,152 Geographers Scenario 3 3,358,892 Human Resources Assistants, Scenario 1 991,370 Except Payroll and Scenario 2 1,835,960 Timekeeping Scenario 3 1,846,261 Human Resources Managers Scenario 1 2,007,184 Scenario 2 3,717,187 Scenario 3 3,738,043. Industrial Engineers Scenario 1 3,7€8,045 Scenario 2 6,867,084 Final Report—June 2003 25 Department of City and Regional Planning, UC Berkeley Occupation Descriptlon' Scenario 20,000.. 3%000-� 40,DOC3— 5Q,000- Over 291999 35,999 49,989 69,599 7000 Scenario 3 6,905,672 Inspectors, Testers,Sorters, Scenario 7 1,712,094 Samplers,and Weighers Scenario 2 3,170,698 Scenario 3 3,188,487 Installation,Maintenance, and Scenario 7 1,766,633 Repair Workers,All Either Scenario'2 2,758,585 Scenario 3 2,770,798 Lawyers ,Scenario 7 5,186,843 Scenario"2 9,580,172 Scenario'3 9,603,754 Life, Pt3yslcal,and Social Scenario 1 3,773,661 Science Technicians,All Scenario 2 6,988,800 Either Scenario 3 7,027,810 Machinists Scenario,1 2,210,2038 Scenario:2 4,093,176 Scenario 3 4,116,141 Maintenance and Repair Scenario 1 1,009,953 Workers,General' Scenario 2 1,879,375 Scenario 3 1,880,868 Management Analysts Scenario 1 11,223,373 Scenario 2 20,785,033 Scenario 3 20,901,649 Managers,All Other` Scenario 1 6,263 729 Scenario 271,898,950 Scenario 3 11.664j026 Marketing Managers Scenario 1 2,492172 Scenario 2 " 4j616,247 Scenario 34,547;1 #7 Office Clerks,General Scenario 1 2,153,688 Scenario 2 3,988,504 Scenario 3 4,010,882'' Paralegals and Legal Scenario 1 7,3116,740' Assistants scenario 2 2,420,006 :scenario 3 2,433,884 Payroll and Timekeeping Scenario 1 958,754 Clerks Scenario 2 1,775,556 Scenario 3 1,785,518 Petroleum Engineers Scenario 1 6,693,851 Scenario 2 12,396,622 Scenario 3 12,468,174 Petroleum Pimp System Scenario 7 34,722,315 Operators, Refinery Scenario 2 63,192,539 Operators,and Gaugers Scenario 3 63,547,085' Physical Scientists,All Other Scenario 1 4,024;494 Scenario 7,453;729 Scenario 3 7,494,045 Plumbers, Pipefitters,and Scenario 1 7,374,260 Stearnfitters Scenario 2 2,545,050 Scenario 3 2,559,329 Final Report--.tune 2003 26 Department of City and Regional Planning, UC Berkeley __._ Occupation Description Scenario 20,660:: 5 000 a 40,000-� 50,1900- Over 29,999 39,999 491599 69,999 70,OOD Public Relations Specialists Scenario 1 1,377,730 Scenario 2 2,551,476 Scenario 3 2,565,791 Pump Operators,Except Scenario 1 110,801 Wellhead Pumpers Scenario 2 205,197 Scenario 3 206,348 Purchasing Agents, Except Scenario 1 1,392,715 Wholesale, Retail,and Scenario 2 2,579,226 Farm Products Scenario 3 2,593,697 Receptionists and Information Scenario 1 667,776 Clerks Scenario::2 1,236,682 Scenario 3 1,243,621 Sales and Related Workers, Scenario 1 2,709,360 All Other Scenario 2 5,017,577 Scenario 3 5,045,725 Sales Managers Scenario 1 2,429,039 Scenario;2 4,498,438 Scenario 3 4,523,677 Training and Development Scenario 1 1,387,523 Specialists Scenario 2 2,569,611 Scenario 3 2,584,028 Truck givers, Heavy and Scenario 1 1,030,952 Tractor Traller Scenario 2 1,909,263 Scenario'3 1,919,975 Total Scenario 1 2,821,454 10,208,30017,609,174 99,532,887 87,334,6611 165,809,69161,738,70 Total Scenario 2 5,225,187 18,890,362 32,611,165 0 3 166,739,97162,646,14 Total Scenario 3 5,254,503 18,996,347 32,794,132 a 9 East of interviewees Key Interviewees 1. Tom Adams,Attorney for the Contra Costa CountyBuild ng Trades Council' 2. Dennis'Barry,Contra.Costa County Community Development Department 3. Coreg Feere,Contra Costa County Building Trades Council 4. Gus:€gamer,Contra Costa County Assessor 5. Patrick Roche,Contra Costa County Community Development Department 6. Jeff Small,Sunoco Philadelphia Refinery engineer 7. Tom Stewart,inform Public Relations 8. Eric Zell,Zell and Associates Union Interviewees 1. Boilermakers Local 549,Fred Fields and Tom Baca 2. Brick and Tile Layers Local 3, Greg Miranda 3. Carpenters Local 152,Dennis McWhorter,negligible OOA workers Final Deport-June 2003 27 Department of City and Regional Planning,UC Berkeley 4. Cement Masons Local 300,Leslie Trapps 5? Electricians Local 302,Michael Yarbrough,negligible'OO workers 6 Iron Workers Local 378,Don Zarnpa,negligible ODA workers 7. Laborers Local 324,Randy Le Moine 8. Laborers Local 67, Jerry Rodarte 9 Sheet Metal Workers Local 104,Kevin Van Buskirk,negligible OOA workers 10. Stearrfitters Local 342,Lary Blevins Unable to reach: 1. Asbestos Workers Local 16,'Steve Steele' 2. OperatingEngineers Local 3,Walt Powers 3. Painters Local 741,Elmer Kennessey 4. Teamsters Local'315,Dale Robbins Final Report--June 2003 28 Department of City and Regional Planning, UC Berkeley Exhibit "B" a 03 JUN jl /■`2 COMMITTEE FOR; r _ INDUSTRIAL SAFETY P. O . BOX 71 1- June 2, 200 MARTINEZ CA 94533' Mr. Dennis Barry Director Contra Costa County Community Development Department 6151 Pine Street, 4th Floor, North Wing Martinez, CA 94553 Dear Mr. Barry: We want to reiterate our pledge to participate and provide reasonablynecessary information for the proposed "Study of Economic Impact of Out-of-Cqunty Contraet Employment at Contra, Costa Oil Refineries."' HoweV. we elle e tha' ' ere_leas been some confusion regarding both the information needed\anc��e scope of the study. Moreover,ue do,aot_e�lieve that the timeframe set for the study'(complegjomid-June) is realistic. After reviewing your May 7, 2003 e-mail message to Enc Zell, the revised information request f1 VC Berkeley, and Scope of Work prepared for the study offer the following Y comments. ■ Whenever there is mgrr _ bne oil company participatingin a protect, issues-ofrant't ist a _0 S Accordingly, an internal review and disusszan'of the requested information in thisd ■ In many cases, the requested Inform t10 xs riot; information that is readily available-to us, but is information that needs to be asserbled andlo obtaed from contractors. Assignments o t 's,na- . ,e,. e tune, especially when the number of`workers;for v2ncli information is requested is in the thousands. ■ We do not understand the relevance of some of the requested information: Why is information being requested regarding workers living outside the nine Bay Area counties, as opposed to outside of Contra Costa County? We previously understood that the study was to discuss economic impacts on Contra.Costa County, not on the Bay Area. What is the relevance of whether workers are members of the Building Trades, California Contractors Group, or some other organization? Again., we understood that the.study was to measure' economic impacts in the county based on the residence of the worker, not his or her union affiliation. Of a more general nature, we question whether the study would be more meanindul and valuable if its scope is broadened. Specifically, we question why the study is limited to oil refineries? There are manyother'industries and/or entities that could be included in the study that would be as relevant to review as our companies. For instance, why doesn't the study evaluate the economic impacts within the county of the county's employment of workers residing outside the county- specifically general county employees, the county fire districts and sheriffs department? We suggest these public entities as a potential example because they are large employers, should have the information needed available for the study, and cooperation.with UC Berkeley should be assured. The results of such an expanded study should provide a meaningful comparison of the impacts of hiring out-of-county residents for at least portions of the public and private sectors. Such comparison should be helpful in whatever ultimate use will be made of the study. We suggest that a meeting be set up with you, Professor' Daubi,; and our representatives to discuss the scope of the study and the information needed for it to proceed. Please feel free to contact Eric Zell regarding this letter and the proposed meeting. Thank you for your time and effort on this matter. Willie Chiang, Aamir Farid General Manager General Manager Rodeo Refinery Shell Oil Products Conoco Phillips U.S. Bay Valley Complex Y Bill Haywood G R. Fisher President General Manager, External California and Southwest Region Affairs General Manager Richmond Refinery Golden Eagle Refinery Chevron Products Company cc: The Honorable Mark DeSauloier The Honorable John Gioia The Honorable Federal Glover The Honorable Gayle Uikema Mr. John Sweeten