The buck starts here
Berkeley a key player in Bay Area economy

By Marie Felde,Public Affairs

Alex Hutchinson makes a campus delivery for Give Something Back, an Oakland- based office-supply company that does business with UC Berkeley. Peg Skorpinski photo

16 January 2002 | A study examining the contribution of UC Berkeley to the Bay Area economy has found that the campus is the fifth largest employer in the Bay Area and its research and educational enterprise brings more than one-half billion dollars in new money into the regional economy annually.

The report, “Building the Bay Area’s Future: A Study of the Economic Impact of the University of California, Berkeley,” was prepared for the campus by Sedway Group, a San Francisco-based consulting firm.

It provides updated data for the first time in 13 years on the campus’s purchasing, employment and research impacts. It also examines the campus’s significant role in the regional economy by generating jobs and personal income and by supplying a constant source of new ideas and highly skilled workers that help to keep the Bay Area a leading center for innovation.

The report analyzes the economic impact of the campus on the Bay Area, the East Bay and the city of Berkeley using data from 1998-99, the most recent year for which it was available.

It found that when compared with three other leading research universities — Harvard, Johns Hopkins and Columbia — Berkeley’s impact on its local economy is more significant. Although all three comparison institutions are major employers and sources of cultural, educational and community service benefits in their regions, the report said, Berkeley generated more indirect and induced spending than Harvard or Johns Hopkins and more total jobs than either Harvard or Columbia.

Berkeley’s most significant impact, however, “is best understood if the university is viewed not in isolation, but as part of a network of academic and research institutions that have helped define the Bay Area,” the report noted.

Berkeley, together with Stanford University, UC San Francisco and the national research laboratories, has a greater impact over time on the region than the sum of their individual parts, it said. Chancellor Berdahl noted that the campus commissioned the study more than a year ago, when the Bay Area was enjoying an economic boom. “Now, we are feeling the effects of a recession,” he said. “But this report shows that whatever the climate, Berkeley is a major contributor to the vitality of the Bay Area economy and in the quality of life we enjoy here.”

While the campus is not immune from swings in the economy, and is planning for potential cutbacks in state funding this year, the report noted that the campus and its workforce are “somewhat buffered from downturns in the local economy, as most of the jobs are funded from revenue sources outside of the Bay Area that are not market dependent.”

Further, the report noted, the Bay Area benefits from the campus’s enterprise because Berkeley is an effective generator of new money into the regional economy. The report found that in 1998-99 the campus drew 75 percent of its $1.2 billion in revenue from outside the Bay Area, but that seven out of every $10 it spends is spent in the Bay Area. As a result, the campus makes a net contribution to the Bay Area economy of more than a half billion dollars annually.

In addition to the direct economic benefits of the campus’s payroll and spending, are the benefits that its well-educated work force provides the region.

“The highly skilled personnel (the campus’s) colleges and schools supply are perhaps UC Berkeley’s most significant contribution to the Bay Area economy,” said the report.

The report also looked at construction spending and the role it plays in the creation of jobs and new business for contractors and other local vendors. The campus is in the midst of major building program focused on seismic rehabilitation, student housing and new science and engineering facilities.

Currently, the campus has 98 major projects underway with project costs estimated at $766 million. Upcoming capital projects total an additional $259 million.

The wide range of cultural, educational and community service benefits UC Berkeley provides the Bay Area, including the campus’s active role in K-12 outreach, is also examined. Campus spending on outreach has averaged $2.8 million a year, the report said.

Other benefits ranged from Cal Performances and the Lawrence Hall of Science, to intercollegiate athletic events and youth sports programs, to the contributions of thousands of student volunteers involved with Cal Corps, the campus’s public service center.

“What you see in these findings, and what is particularly gratifying, is that the enterprise we call UC Berkeley is more tightly woven into the fabric of life in the Bay Area, and especially in the East Bay, than most people may realize,” said Chancellor Berdahl.

The complete report may be viewed online at www.berkeley.edu/econimpact.

The new report details the Berkeley campus’s impact —
including jobs and personal income — on the local and regional economy. Here a few of its findings, based on 1998-99 data:

In the Bay Area
Job, salaries, wages
• The campus is the third largest employer in the East Bay, fifth in the Bay Area, employing 13,520 blue-collar, white-collar and professional workers.

• UC Berkeley paid out $603 million in salary and wages; 98 percent of which went directly to Bay Area residents.

• For every $1 million the campus spends, it generates more than 20 jobs. In 1998-99, campus spending generated an additional 17,500 jobs in Bay Area business and industry.

Payroll, goods and services
• The campus generates $1.1 billion annually in personal income in the Bay Area.

• For every dollar the campus spends, it generates another 67 cents in spending. In 1998-99, the campus spent $842 million in the Bay Area, generating a total of $1.4 billion in direct and induced spending.

• The campus does business with 2,400 vendors, 40 percent of who are owners of small businesses.

Research dollars
• Funding for research totaled more than $432 million. The largest source of support is the federal government.

In the city of Berkeley
• Half of the city’s total population is either employed by the campus, retired from the campus or a student currently enrolled at the campus.

• Campus spending generates more than $374 million annually in personal income in the city of Berkeley.

• Nearly one in five people who is employed in the city is employed at the campus.

• Campus employs more people than are employed by the next eight largest employers in the city combined.

• UC Berkeley students spend more than $170 million annually in the city.

• The campus directly purchases more than $68.5 million a year from Berkeley-based businesses, many of which are small and owned by women and minorities.

Says Deborah Badhia, director of the nonprofit Downtown Berkeley Association: “Because of the university, our BART station is one of the busiest in the Bay Area in terms of foot traffic. Ten thousand people disembark daily and other thousands arrive by bus. The downtown has great foot traffic and customer base.”

Harder to quantify in terms of dollar-value, but equally important to the life of the city, are the contributions the campus makes to the cultural richness of the city and the social and educational welfare of its families. Many Berkeley children get their first introduction to the arts through programs offered by the university’s Berkeley Art Museum or Cal Performances.

The university has provided more than $2.8 million a year in educational outreach and sends more than 2,000 volunteers annually to assist students in K-12 schools in Berkeley and other parts of Alameda and Contra Costa counties.