Bureau of Business Research Publications

The Economic Impact of the University of Nebraska-Lincoln Athletic Department

Eric Thompson — Mon, 10 Nov 2008 12:21:16 PST

When the University of Nebraska-Lincoln’s Memorial Stadium is filled for Cornhusker home games (as it has been for an NCAA-record 268 consecutive times since 1962), millions of dollars of economic activity are generated through ticket sales, broadcast rights, and concession sales. This spending and attendance indicate that Cornhusker football provides a popular, high-quality product that creates a high level of consumer demand. Cornhusker football also creates a large ripple effect in the economies of Lincoln, Omaha, and elsewhere in the state of Nebraska as fans attending Husker games spend at restaurants, hotels, retail stores, gasoline service stations, and other businesses on their way to and from games.

But Memorial Stadium and the Husker football program are just the largest elements in the economic activity generated by the overall UNL athletic department. The department also generates revenue in other sports and expends millions of dollars each year in wages and salaries, benefits, purchases from businesses, and student tuition and housing—in addition to funding major capital construction projects, such as the expansion of Memorial Stadium, without using state tax dollar funding.

This report by UNL’s Bureau of Business Research estimates the economic impact from each of these sources during the 2004-2005 fiscal year. Note, however, that the report does not include the impact from fans who spend money in Lincoln on football game days, but do not attend the games. Key findings of the study are summarized below.

Bureau of Business Research 2006-07 Annual Report

Eric Thompson — Mon, 10 Nov 2008 12:21:15 PST

The Bureau of Business Research (BBR) is pleased to publish its second annual report. The annual report is one of the important ways in which the Bureau fulfills its mission to monitor and analyze the Nebraska economy. The 2006-07 Annual Report contains articles that address many of the major economic trends and policy issues facing the state.

In publishing this report, we draw on expertise from the College of Business Administration at the University of Nebraska–Lincoln, the University of Nebraska Rural Initiative, Creighton University, the University of Nebraska at Omaha, the UNL Panhandle Research and Extension Center, and the Nebraska Business Forecast Council. Our authors include faculty members and graduate students from the Department of Economics, plus many others. One of the strengths of the BBR is that we are able to bring together some of the best economists in the state to work on our projects.

Where Have All the Packing Plants Gone? The New Meat Geography in Rural America

Mark Drabenstott et al. — Mon, 10 Nov 2008 12:21:15 PST

The meat industry is an economic powerhouse for rural America - accounting for roughly one of every 16 rural manufacturing jobs. Moreover, this rural powerhouse is adding jobs at a fast clip, with recent growth of 8.5 percent a year versus just 1.2 percent a year for all rural manufacturing industries. Finally, rural America has captured a commanding 52 percent of all meat industry jobs, far above the level of a decade ago.

While all these figures are welcome news to rural areas eager to expand employment, geographic shifts under way in the industry raise fresh doubts over which rural communities will land new meat plants. Once concentrated in midwestern urban centers like Chicago, the meat industry is now most often found in rural towns and hamlets - and often far from the Midwest. Poultry processing has moved to the Southeast. Beef packing plants have moved to the Great Plains. And pork packing plants have begun moving out of the Corn Belt to the Southeast and Great Plains, but where they go next is highly uncertain, with the future location of hog production itself very much in question (Drabenstott).

What geographic shifts lie ahead for the meat processing industry? And what do the shifts in this powerhouse industry mean for the future of the rural economy? This article reviews some critical trends in the meat industry by examining for the first time a special database on the industry - the Longitudinal Research Database (LRD) maintained by the Bureau of the Census. The first section shows that the meat industry has moved to new regions over the past three decades, has concentrated to a considerable degree within those regions, and has consolidated in bigger plants. The second section considers what the trends mean for rural America. The article concludes that the meat industry is likely to concentrate geographically even more in the future, promising a new source of economic growth for some rural communities while leaving many others behind. Yet even in areas where the industry does locate, a sharp drop in industry wages raises new questions about its local economic impact.

The Economic Impact of the Nebraska Early Care and Education Industry

Eric Thompson et al. — Mon, 10 Nov 2008 12:21:13 PST

The early care and education industry has both current and long-term economic consequences for the Nebraska economy. The long-term impact is to help to educate and develop children into productive and higher earning adults. This impact is well understood. As stated by Nobel Prize winning economist James Heckman, “Early advantages cumulate; so do early disadvantages… redirecting additional funds toward the early years, before the start of traditional schooling, is a sound investment in the productivity and safety of our society” (Heckman and Masterov, 2005).

In addition to these long-term impacts, the early care and education industry also has current impacts on the economy. These are less well understood, but also are significant. What are these current impacts? First, each year the early care and education industry brings additional jobs and earnings into the state economy as it draws external funds to the state, in the form of federal dollars to support early care. This represents a substantial economic impact on the state economy. Second, and more fundamentally, the early care and education industry provides more parents with an opportunity to work. This increases the workforce available to the Nebraska economy, a critical issue in a state where an aging population may limit future growth in the work force, and where labor force participation rates are already among the highest in the nation. This study focuses on these current impacts that early care and education has on the Nebraska economy. Throughout, estimates are based on what was measurable in the available data, and may be underestimates to the extent that data are unavailable. The following key conclusions were reached:

• The early care and education industry statewide provides services to 100,000 Nebraska children, employs over 12,000 Nebraska workers (including the selfemployed), and generates hundreds of millions of dollars of revenue.

• The industry is not only large; it also has a substantial impact on the current economy of Nebraska. The federal funds that Nebraska receives to support the early care and education industry has a statewide economic impact of $241 million, including $87 million in annual earnings by approximately 6,100 workers.

• The early care and education industry expands the size of the Nebraska labor force. For example, consider two government programs that provide resources to parents for early care. The Federal Child and Dependent Care Tax Credit program allows an additional 1,400 mostly middle income married women in Nebraska to hold full-time jobs. The Child Care and Development Fund (CCDF) allows an additional 2,500 lower income single mothers to hold either part-time or full-time jobs in Nebraska. These programs also allow additional lower income married parents, or middle income single parents to work. However, existing economic research does not permit us to estimate these effects.

• Research indicates that early care and education providers, particularly nonprofit providers, also receive significant private in-kind donations to support their services. Research further indicates that non-profit early care and education providers have used these donations to lower the cost of early care services to parents or to increase the quality of care.

• Programs that support early care generate new tax revenues. The economic and labor market impact of the CCDF program generates additional income, sales, and property tax revenue for the State of Nebraska. The additional revenue amounts to $16 to $18 million per year. This is equivalent to two-thirds to three-quarters of the $24.1 million annual allocation by the State of Nebraska to the CCDF. This implies that the cost to the people of Nebraska to 1) help lower income parents obtain early care and education for their children, and 2) allow lower income parents to build their skills and earnings capacity through work is one-third as large as it would appear when simply looking at the state outlay for the CCDF program.

The implications of the report, however, are broader than simply the merits and costs of the Child Care and Development Fund, or other programs that receive the support of state government. The broader implication is that the early care and education industry is a significant infrastructure industry for the Nebraska economy. It should remain an important focus for monitoring and input not just by government but also by volunteer organizations, foundations, and private business.

The Growth Dividend: How Has It Been Allocated?

Eric Thompson — Mon, 10 Nov 2008 12:21:12 PST

A growing economy and population in Lincoln, Nebraska have generated an expanding tax base for the city. Growth has been especially rapid in the property tax base. As noted in a recent report by the UNL Bureau of Business Research (2005), the average new housing unit generates annual property taxes for the City of Lincoln substantially greater than does the average existing housing unit. This additional property value is referred to as the “growth dividend” in the Bureau of Business Research report. This growth dividend is available for a variety of uses, including capital outlays on infrastructure, tax relief, or increases in non-capital expenditures by the City of Lincoln. This report examined how the city’s growth dividend has been allocated. The main findings of the report are as follows:

• Government expenditures rose at roughly the same rate as personal income in Lincoln during the 1990 to 2005 period. In other words, city government is approximately the same share of the Lincoln economy in 2005 as it was in 1990.

• There was a significant decline in the City of Lincoln’s property tax levy during the period. The city’s wheel tax, however, increased in the mid-1990s.

• At the same time that expenditures rose and property tax rates fell, the city also was able to rapidly increase capital outlay on infrastructure beginning in 1999. Much of the increase in capital outlay was for road infrastructure. Capital investment in roads occurred in both new neighborhoods and in existing areas such as downtown neighborhoods surrounding the Antelope Valley Project.

• Lincoln’s property and sales tax base, including the growth dividend, contributed to capital outlay for parks, fire, library, storm sewer infrastructure, and street lights, but did not contribute to other types of infrastructure for streets and highways.

• The increase in capital outlay for streets and highways was largely fueled by rapid increases in intergovernmental transfers to the city, although local funding sources also expanded during the 1990 to 2005 period. The city raised the wheel tax, instituted impact fees, and increased property taxes for the county-wide Railroad Transportation Safety District (RTSD). Part of the increase in wheel tax, however, was devoted to fund snow removal, rather than street infrastructure.

• Options to maintain capital spending at the current level could include efforts to maintain recent large increases in intergovernmental transfers. Another approach would be for the City of Lincoln to allocate a larger portion of the growth dividend toward funding street and highway infrastructure while continuing to also use a portion for tax relief or non-capital expenditures.

Big Box Stores: Their Impacts on the Economy and Tips for Competing

Sean Golden et al. — Mon, 10 Nov 2008 12:21:11 PST

This is a study in three parts: the general impact of Wal-Mart and big box stores on the economy; an empirical look at Wal-Mart’s impacts on 15 Nebraska communities; and a review of research on ways that local retailers can compete against big box stores.

Part one suggests that Wal-Mart has both positive and negative impacts on the economy. Wal-Mart helps increase productivity and causes consumer prices to fall. Further, a number of studies found that employment increased in communities that received a new Wal-Mart store. However, other studies found that entry of a Wal-Mart failed to lead to net increases in local employment, and one study found a correlation between Wal-Mart locations and rising local poverty rates. More generally Wal-Mart entry increased concerns in many communities about the changes it may cause to the size and structure of the retail industry.

Part two shows that entry of a Wal-Mart does not seem to have a significant effect on retail employment, but can impact the number of retail establishments in rural Nebraska communities. Wal-Mart’s effect is also visible in general merchandising, particularly with respect to the level for employment.

In part three, four strategies are suggested for competing against Wal-Mart and other big box stores. They are improving service quality, improving merchandising, improving marketing, and improving management of marketing information.

Preliminary Economic Impact Analysis for the Lincoln Arena Task Force

Eric Thompson — Mon, 10 Nov 2008 12:21:10 PST

The entertainment industry is part of the growing service sector in the state and national economy. The industry both creates employment opportunities and contributes to the quality of life within communities. To fully grow the entertainment industry, however, a city requires appropriate venues to host entertainment events. In the City of Lincoln, Nebraska, there has been a recent proposal to develop a new arena facility for this growing City. The following report addresses some of the economic consequences of developing a new arena in Lincoln. In particular, the report estimates the potential economic impact of the proposed project, that is, the net increase in business receipts, employment and income the project can bring to Lincoln. Analysis is conducted both for the construction phase of the project as well as the annual impact when the proposed arena is in operation.

This preliminary study, however, does not address some of the other economic consequences of the proposed arena. First, the current study is not a fiscal analysis. There is no attempt to estimate the changes in revenues and expenses to the City of Lincoln due to the arena project. These issues are only discussed as they pertain to the economic impact. Second, the current study also is not a benefit-cost analysis. The study does not consider the economic consequences of the arena’s contribution to the City’s quality-of-life.

The Impact of Growth on Quality of Life and Fiscal Conditions in Lincoln, Nebraska

Eric Thompson — Mon, 10 Nov 2008 12:21:09 PST

While growth has moderated in the last few years, the 1990s were a period of rising employment and population in Lincoln, Nebraska. The city and metropolitan area experienced sustained and steady growth, roughly on par with the expansion of other mid-sized cities throughout the United States. The growth brought changes to the city, which raised questions about what benefits and costs might have resulted from these changes.

This following study by the UNL Bureau of Business Research examines some of the implications of growth for Lincoln, Nebraska. The study examines how growth in the 1990s and early 2000s affected wages and poverty in the city, as well as how growth impacted the level of retail and services activity. The study also considers some of the costs of growth, such as increased commuting times. Fiscal issues such as changes in the tax revenues and in the need for public infrastructure that result from economic and demographic growth are examined.

Overall, the study finds that growth was accompanied by a number of benefits influencing both the standard of living and quality of life. These benefits should be considered in tandem with any costs of growth such as increased congestion and commuting times or any fiscal costs of growth. Some of the main conclusions of the study are:

• Average real earnings per job grew 14.0% in Lincoln from 1990 to 2002 versus 11.1% nationally. Employment growth in Lincoln contributed to this faster growth in real earnings, where real growth refers to growth in constant dollars, i.e., after adjusting for inflation. We estimate that job growth in Lincoln from 1990 to 2002 helped Lincoln metropolitan area workers increase average real wages $0.70 per hour.

• Employment growth also helped reduce poverty in Lincoln. We estimate that between 1,200 and 2,700 fewer persons were in poverty in Lincoln from 1990 to 2002 due to local job growth.

• Population growth increased retail options for Lincoln residents that helped Lincoln retain and attract more consumer spending and sales tax revenue per household. The City of Lincoln receives an estimated $1.1 million more in sales tax revenue each year from additional sales retained in Lincoln or increases in real per capita income.

• Incremental property tax revenues to the City of Lincoln due to the higher value of new housing units are similar to the costs of providing arterial streets, neighborhood parks and trails, and capital for police, fire, and library services to new households. Incremental tax revenues may even be higher once the sales tax revenue generated during new home construction is taken into account. Similar findings might be expected for other taxing jurisdictions that receive funding from property tax revenues (such as Lancaster County or the Lincoln School District), though this study did not specifically examine these jurisdictions.

• There are, however, additional capital costs for providing utility services such as water and wastewater to new households. A portion of these higher costs would be paid by new homeowners through hookup fees and the part of their monthly water and wastewater bill payments that is used to fund capital costs.

• While most growth in the Lincoln metropolitan area occurs in the City of Lincoln, other development patterns are possible. In particular, the Lincoln area could experience a pattern of leapfrog development where growth continues to occur within the metropolitan area but is concentrated outside the City of Lincoln in nearby cities or unincorporated places. Under such leapfrog development, spending requirements for arterial road construction could increase in the City of Lincoln even as the tax base to support that infrastructure does not grow.

Economic Impact Analysis: The Potential Impact of an NHRA Drag Racing Facility in Lancaster County

Eric Thompson et al. — Mon, 10 Nov 2008 12:21:07 PST

Entertainment venues are an important component to the quality of life in cities and states. Venues provide local residents with an opportunity to attend events that interest them without requiring them to travel to another city. This saves local residents money and allows residents to attend more events. Both factors increase the quality of life for local citizens, in much the same way that having more local shopping options raises the quality of life.

Lincoln’s need for new entertainment venues to improve the quality of life and to retain or attract younger residents has been a recent topic of discussion in the city. For example, a new arena and other facilities have been discussed for the downtown area. This analysis considers another potential entertainment venue for the Lincoln area: a National Hot Rod Association (NHRA) Motorplex Facility. In particular, Nebraska Motorplex has recently proposed developing and operating a motorplex venue in Lancaster County. This analysis considers the annual economic impact of such a NHRA Motorplex Facility. That is, the jobs, income, and economic activity that would be generated each year as a drag racing facility attracts visitors to the Lincoln area or helps retain the spending of local motorsports enthusiasts within the county. Such an economic impact would be in addition to the quality-of-life benefits discussed above.

The economic impact estimate focuses on the potential “tourism” impact of the drag racing facility due to the spending at area restaurants, lodging places, and retail outlets either by 1) tourists attracted to the area, or 2) local residents who would otherwise travel out of town to Topeka, Denver, or other regional tracks to attend or participate in drag racing events. The report uses conservative assumptions and focuses on the tourist impact.

The Effect of a Smoke-Free Ordinance on Eating and Drinking Places in Lincoln, Nebraska

Mary McGarvey et al. — Mon, 10 Nov 2008 12:21:06 PST

The Lincoln Smoking Regulation Act which prohibited smoking in most public places and places of employment in Lincoln, Nebraska including restaurants and bars was implemented in January 2005. This report examines the impact of the ordinance on the following measures of business activity in Lincoln:

• Sales revenue of eating and drinking places

• Employment of eating and drinking places

• Gross revenues from keno.

We examine the impact of the ordinance during the year 2005, the first year that the ordinance was in effect. While restaurant and bar activity in Lincoln rose during 2005 by some measures, we focus on performance relative to Omaha in order to isolate the impact of Lincoln’s ordinance. The estimated first-year impacts of the ordinance were as follows.

Evaluating Roads as Investments: A Primer on Benefit-Cost and Economic-Impact Analysis

Eric Thompson et al. — Mon, 10 Nov 2008 12:21:05 PST

Kansas and neighboring states spend billions of dollars on roads. Do the huge expenditures represent good investments? The taxpaying public will never know because public decision makers rarely analyze road projects as investments. A disciplined use of benefit-cost analysis can close this knowledge gap.

Roadways constitute an economically vital form of transportation infrastructure that have the potential to contribute to the productivity and economic growth of state economies—if the economic benefits of the roadways exceed their cost. Benefit-cost analysis totals the annual user benefits derived from road projects and compares these benefits with the total costs related to construction. The analysis, therefore, identifies road projects that have an acceptable or unacceptable return on investment. Consistent and appropriate use of benefit-cost analysis could allow states to allocate road spending to only the highest valued projects, thereby helping to assure that taxpayers’ money generates an acceptable return on investment.

If You Build It, Will They Come? An Examination of Public Highway Investments And Economic Growth

Eric Thompson — Mon, 10 Nov 2008 12:21:02 PST

Economic research studies in general have not found that more highways lead to a larger economy in states and regions. Over the last three decades, the presence of more highway capital in a state has not been found to attract more private capital to the economy. Most studies have not found that highways, and new investment in highways, increase the level of employment or labor earnings in the economy overall. Finally, most studies have found that the presence of more highways in a state has done little over the last three decades to make state economies more productive.

To be sure, studies find localized effects. All but the most remote rural counties grew after receiving major investments in interstate and state highways, particularly in key sectors such as manufacturing. This localized growth tended to be part of a reorganization of industry within the larger economy, however, rather than net growth. Counties receiving a highway investment grew, but neighboring counties declined as business activity was drawn toward the highway. No overall growth was observed for states or regions.

What explains these findings? The problem may be a tendency to over-invest in the highway system—in other words, the problem has been a failure to ration investment to only the most critical projects. Public roads and highways can contribute to the efficient functioning of the economy, and recent capital investments have undoubtedly included many worthy projects, including investments to maintain and rebuild the existing highway system as it depreciates over time. But there also may have been too many unnecessary investments in new and expanded highways. The net result is that additions to highway capital stock during the last three decades (over and above maintenance and upkeep) on the whole have not contributed to greater economic activity.

Public highway investments must be limited to high value investments because these investments are funded with tax dollars. Public highway investments can only grow the economy if investments are worth their cost in terms of taxation. The bottom line is that highways must encourage economic activity at least as much as taxation discourages it. If public highway investments cannot be effectively rationed, overinvestment will discourage private sector activity. But if government and government agencies can limit highway capital investments to needed maintenance and rehabilitation projects and critical new investments that are worth their cost in terms of taxation, public highways can make a clear contribution to productivity in state and regional economies.

The performance of states in allocating highway funds is critical. Highways have accounted for between one-quarter and one-third of state and local government capital outlays over the last two decades (United States Department of Commerce, 2001; 2004). State highway capital investments alone accounted for half of the $100 billion that states spend on the road and highway system (U.S. Department of Transportation, 2004). States and regions must focus on rationing highway investments to only high value projects where the benefits of the projects exceed their costs.

Estimating Demand for Business Recycling Services in Two Nebraska Cities

Eric Thompson et al. — Mon, 10 Nov 2008 12:21:00 PST

Creating opportunities for business recycling is an important priority for the State of Nebraska and communities throughout the state. In particular, there is a need to expand opportunities in smaller communities that do not always have the infrastructure or markets for recycling found in the state’s largest cities such as Omaha and Lincoln. With this in mind, the following report, sponsored by WasteCap Nebraska and the Nebraska Department of Environmental Quality, uses a survey of businesses to evaluate business attitudes toward recycling, current recycling efforts, and the level of need and interest for recycling training and services in two mid-size Nebraska cities: Grand Island and Columbus.

Survey results, in general, tended to be very consistent from city to city. And, while survey results reflect the unique industrial make-up, existing recycling arrangements, and attitudes toward recycling found in each of the two case cities, the results also should be instructive about business attitudes and practices for recycling in other regions of the state, particularly in other mid-size Nebraska cities.

In Chapter 2 and 3 of this report, survey results are presented in aggregate and by type of industry. Results are based on a 55% survey response rate in Columbus and a 40% response rate in Grand Island, Nebraska. These are high response rates relative to the 20% to 30% response rates typically achieved in mail surveys. These high rates ensure the reliability of study results and also demonstrate significant interest among businesses on the topic of recycling.

The survey results did not differ in any clear and consistent way by type of industry, with the exception that manufacturers on average did tend to be more interested in and more likely to undertake recycling initiatives. The main differences found in the surveys instead arise between small businesses and large businesses. For example, only about one-third of small businesses find recycling and waste reduction to be important or very important versus more than half of large businesses. Large businesses also were much more likely to have a recycling or waste reduction program and recycled a wider variety of materials. Further, large businesses were much more likely to be willing to purchase equipment or pay for recycling services, though both small and large businesses were willing to devote man-hours to recycling efforts.

Report of the Attorney General’s Task Force On Motor Fuel Pricing in Nebraska

Ernest P. Goss et al. — Mon, 10 Nov 2008 12:20:59 PST

In the wake of the devastation of Hurricanes Katrina and Rita, Nebraskans experienced a dramatic increase in the price of motor fuels. Although Nebraska was not impacted directly by the physical effects of these storms, damage to critical production, refining, and transportation facilities in the Gulf Coast region sent shock waves throughout the country. Attorney General Jon Bruning convened this task force for the purpose of studying these price movements and to analyze whether price-gouging activity may be occurring.

Motor vehicle fuels are a vital commodity. Businesses and consumers depend on a network of oil producers, refiners, and retailers and an extensive transportation system to provide these fuels for daily use. This network extends far beyond Nebraska borders and links oil producers, refiners, retailers, and consumers across the entire globe.

Careful scrutiny of the pricing and delivery of petroleum products is not a singular phenomenon limited to Nebraska. On a federal level, the Federal Trade Commission (FTC) regularly examines the petroleum industry to address concerns about concentration in production and refining and issues affecting retail pricing. Other states also have undertaken investigations, with Florida recently concluding a study addressing antitrust concerns in that state. These studies have not found violations of law, and they generally have found competitive markets affected by worldwide conditions. Growing global demand has led to increasing dependence on imported crude oil products, and disruptions in supplies–whether from political or natural causes–quickly are assimilated into market prices on a worldwide scale.

This study is unique in focusing on Nebraska markets. No refineries currently operate in Nebraska. Motor fuels for sale in retail establishments in Nebraska come primarily through pipelines, which depend heavily on refinery operations in the Gulf Coast region for supplies. An extensive network of retail establishments serves Nebraska consumers and businesses, but these retailers generally can be characterized as price takers dependent upon other suppliers for their inventory. After laying a foundation for understanding national price trends, this study analyzes price data from a sample of establishments throughout different geographic regions of the state. This analysis focuses on price and gross margin behavior during a period of approximately one year, including the months immediately preceding and following Hurricanes Katrina and Rita.

This study begins with a discussion of legal questions that are basic to defining price gouging. After analyzing the general principles for price determination in a market economy, Part 1 outlines legal constraints from both federal and state law that affect price-setting functions. It compares statutes from other states with Nebraska law and examines the concept of unconscionability in proscribing certain commercial behavior. It concludes that retail price behavior in Nebraska is unlikely to meet a standard of unconscionability under the current Nebraska statute.

Part 2 examines U.S. Energy Information Agency data to determine factors contributing to volatility in oil and refined gasoline prices. Additionally, we investigate the profitability of twenty-one major independent oil companies during the period before and after the hurricanes struck.

Part 3 examines gasoline and diesel price fluctuations in individual Nebraska cities both before and after Hurricanes Katrina and Rita struck the Gulf Coast region. We examine how prices in Nebraska react to the natural disasters in the Gulf Coast. We also examine whether any particular brands (or stations) commonly led price increases and declines in Nebraska cities.

Omaha Area Projections to 2050 The 2007 Update FINAL REPORT

Eric Thompson et al. — Mon, 10 Nov 2008 12:20:58 PST

The Omaha area is in a period of sustained expansion. Population, employment, housing stock, and commercial and industrial space are growing together both in the City of Omaha and in surrounding communities and counties. This pattern of growth is likely to continue over the next few decades, but the pace and nature of growth is in question. In particular, it is unclear whether growth in the Omaha area will accelerate from its current pace, or moderate. Also in question is the degree to which growth will occur in core counties like Douglas and Sarpy or suburban and exurban areas of neighboring counties.

To address these questions, the City of Omaha contracted with the University of Nebraska-Lincoln Bureau of Business Research to prepare a long-term outlook for the Omaha Area economy. This report updates previous studies by the Bureau of Business Research that provided an economic outlook for the Omaha area. Following up on the most recent study in 2003, we estimate growth in a 12-county region in both Nebraska and Iowa through the year 2050. The region includes Douglas, Sarpy, and 6 other adjacent Nebraska Counties, and Pottawattamie County and 3 adjacent Iowa counties.

Our analysis begins by tracking the progress of the Omaha area economy over the last few decades and by studying a group of peer metropolitan areas from the middle-part of the United States. Omaha’s recent performance has been characterized by strong employment growth, and a moderate tendency for population to diffuse outward within the Omaha area. The latter point must be tempered, however, with the observation that the central county of the Omaha area (Douglas) has continued to add population at a healthy rate, in contrast to the pattern in some metropolitan areas.

Figure ES.1 shows an example of the strength of the Omaha economy. The figure shows manufacturing job growth in the Omaha area and the United States. Omaha has had periods of both job loss and job gain from 1990 to 2006, but has consistently outperformed the nation. There were only two years out of the 17-year period when national employment grew faster. This is the sort of consistent strength we has seen in many of Omaha’s key industries. Along with the relative strength of key industries such as manufacturing, there has been rapid growth in employment in services, finance, construction, and retail trade industries. The net result is that the Omaha metropolitan area has averaged 1.8% employment growth since 1969.