57 



The second problem is that retained corporate earnings are included as local income. 

 While this would be very important if we were considaing the retained earnings of McDonnell 

 Douglas in the economy of SL Louis, the role is less clear in Humboldt county. The problem 

 is that the corporate headquarters of Pacific Lumber have been in Houston, Texas since 1986. 

 As the OctobCT 13,1993 testimony of John Campbell, President of Pacific Lumber showed, 

 millions of dollars of retained earnings must go directly to caporate headquartCTS as a normal 

 part of business. 



Neglecting the sampling problems in his survey because not all of the firms provided 

 fiill data, ^e only way that Mr. Grobey could have gotten a 70% figure is by counting only 

 wage income as economic stimulus. TTie 70% number would have be«i accurate for the years 

 before 1977. After that date other types of wages grew much faster than timber wages. It does 

 not appear possible to get an estimate of 70% using either the accounting framework of the 

 IMPLAN model or the full accounting framework used in the RIMS n model of the Bureau of 

 Economic Analysis or my economic base fOTmulation. 



I hope this information helps clarify the issues raised during the hearings of October 

 13,1993 on the Headwaters Forest Act 



SincCTely, 



Dr. William Stewart 

 Senior Research Associate 



William Stewart, Importance of Timber Income Response, 10/15/93 



