EXAMPLE 3. A Discussion of Indirect Employment 

 (Source: Reference 9) 



The number of indirect jobs at an OCS facility are small 

 relative to the number of direct workers. Few of the principal 

 products required for OCS operations are manufactured in large 

 quantities within the study area. According to data provided 

 in the U.S. Input-Output Table (U.S. Office of Business Economics, 

 1969), major direct and indirect suppliers of petroleum production 

 include the inorganic chemicals, petroleum refining, primary 

 steel, electrical apparatus, gaskets and seals, oil field 

 machinery and paint industries. Of these industries, the study 

 area has significant chemicals and electrical apparatus production 

 facilities and a petroleum refining complex in Gloucester County. 

 However, these firms are but a small fraction of the number of 

 suppliers located in Louisiana and Texas, near current offshore 

 production areas. According to industry sources, Mid Ulantic OCS 

 operations can be supplied from Gulf Coast enterprises, so that the 

 expansion of the study area capability with respect to the above 

 mentioned direct and indirect suppliers should not be necessary. We 

 have assumed that such expansion will not take place. 



Those products useful to, but not exclusively utilized by OCS 

 facilities can be purchased from firms in the study area and from 

 companies in the large manufacturing sectors of the New York City 

 and Philadelphia areas. These latter areas can readily compete for 

 purchase orders with study area establishments. 



Since industries in the study area will probably provide only 

 a small portion of the above supplies required for OCS operations, 

 we have assumed that two indirect jobs will be created for every 

 ten jobs at OCS facilities. 



In OCS facility studies, induced employment is typically estimated by 

 applying a multiplier to the total of direct and indirect employment. An 

 illustrative discussion of use of a multiplier is included in Example 4, 

 from the 1975 study mentioned above. (Note that ratios and multipliers 

 are not equivalent forms of notation.) 



A hypothetical example illustrating indirect and induced employment 

 calculations may be helpful. This example is based on three assumptions: 

 (1) a hypothetical industry directly creates 500 jobs; (2) for e^jery five 

 direct jobs, one indirect job will be created; the indirect employment 

 ratio is thus 5:1; (3) for every ten direct and indirect jobs, eight jobs 

 are induced; the induced employment multiplier is thus 0.8. The resulting 

 calculation is as follows: 



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