Cal Neighbors

A newsletter for neighbors of the University of California, Berkeley

Winter 2002
A special report on the role of the campus in the regional economy
UC Berkeley's impact goes beyond dollars and cents, report shows
Public use of campus library

UC Berkeley's impact goes beyond dollars and cents, report shows
A new study examining the contribution of the University of California, Berkeley to the Bay Area economy shows not only how important the campus is to the region's vitality, but also how closely the life of the campus is tied to the life of the city of Berkeley.

Start with this key statistic: 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.

Now consider these findings (based on 1998-99 data):

  • 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.
  • UC Berkeley 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.

"Those of us who live here know how deeply the campus is woven into the fabric of city life. You can't go to dinner, hire a plumber, buy groceries or get your taxes done without running into someone connected in one way or another to the campus," said Chancellor Robert M. Berdahl.

"This economic impact study reminds us that whether it is dollars spent, jobs created or programs to help school children, the campus is a significant contributor to this city's economic well-being and rich quality of life," he said.

The report titled "Building the Bay Area's Future" was prepared for UC Berkeley by the San Francisco-based Sedway Group. Using data from 1998-99, the most recent year for which information was available, the report examines the economic impact of the campus's educational and research enterprise on the Bay Area, the East Bay and the city of Berkeley.

Goods and services
"Based on its spending alone, UC Berkeley is a major force in the Bay Area economy," said the Sedway report.

The campus is a dependable generator of new money for the Bay Area. In 1998-99, the report found, the campus drew 75 percent of its $1.2 billion in revenue from outside the Bay Area, but it spent 70 percent, or $842 million, in the Bay Area on goods and services. The result is that UC Berkeley makes a net contribution to the Bay Area economy of more than a half a billion dollars a year.

Using the IMPLAN model developed by the U.S. Department of Agriculture, the Sedway Group calculated that direct university spending of $842 million in the Bay Area in 1998-99 generated an additional $568 million in indirect and induced spending.

Deborah Badhia, director of the nonprofit Downtown Berkeley Association, says there's no doubt of the campus's positive impact on the city.

"UC Berkeley has an international reputation, so immediately we get on the map. And, 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," she said. "Sporting events at UC draw thousands of fans, and we have wonderful restaurants that can cater to them."

The campus's impact on the city of Berkeley is well understood, said Bill Lambert, Berkeley's director of economic development.

"The university does three primary things: One, it provides a steady stream of 'imported dollars' to the local economy via students and via faculty. Two, this insulates Berkeley's economy from wide fluctuation. And, three, the university provides a continual supply of brain power and business innovation, which allows the city to be a key location for business start-ups."

Innovation and brain power
The report confirms that the campus is a major generator of the ideas and the talent that keep the region at the center of innovation. As a global center for research into the problems of the real world, the campus has a direct impact on the economy of the city, the Bay Area and the world through the transfer of technology.

"Thanks to the university, Berkeley is a great city for start-ups," said Bahdia. "For instance, Computers & Structures, Inc., which is located downtown, started out over 25 years ago as a research project at UC and is now recognized worldwide as a leader in the development of software for earthquake and structural engineering."

UC Berkeley's role as a major research university, along with Stanford University, UC San Francisco and Lawrence Berkeley National Laboratory, gives the Bay Area tremendous competitive advantage, the report stated. Whether in the city or the wider Bay Area, UC Berkeley alumni are instrumental both in starting new ventures and in providing leadership in all areas of commerce and government.

"The highly skilled personnel that the campus's colleges and schools supply are perhaps UC Berkeley's most significant contribution to the Bay Area economy," said the report.

Lambert agrees. "I hate to sound stuffy about it, but the university provides an environment for interactive thinking - in environmental technology, computer software and energy conservation," he said.

Employment stability
As the city's major employer, the campus provides stable, high-quality jobs, directly touching the lives of nearly 20 percent of Berkeley's population and indirectly benefiting thousands more in the city and throughout the Bay Area. UC Berkeley was the East Bay's third largest employer and the fifth largest in the Bay Area in 1998-99, the study found.

In all, the campus employed 13,520 workers in 1998-99. It paid out nearly $603 million in salary and wages, 98 percent of which went directly to Bay Area residents. Of that total, 38 percent went to Berkeley residents who work for the university. The report estimated that UC Berkeley spending in 1998-99 translated into $374 million in personal income in the city of Berkeley alone, and more than $1 billion in personal income for Bay Area residents.

Direct spending and employment by UC Berkeley is substantial in itself, but when Sedway Group economists calculated the indirect and induced effects, the university's contribution to the city and the region went further. Using the IMPLAN multiplier, it estimated UC spending also generated 17,500 indirect jobs.

When these jobs are added to those directly generated by the campus, the report said, the campus helped to create 39,000 jobs in the Bay Area. In the city of Berkeley, it generated 15,876 jobs, including student employment.

Quality of life
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.

It is hard to imagine a school-age child in Berkeley who has not benefited from the campus's outreach programs. Many get their first introduction to the arts through programs offered by the university's Berkeley Art Museum or Cal Performances, Northern California's largest presenter of the performing arts. The university has provided more than $2.8 million annually in educational outreach and sends more than 2,000 volunteers annually to assist students in K-12 schools in the city of Berkeley and in schools in Alameda and Contra Costa counties.

Though local business people and others say they recognize and value the economic and social contributions of the campus, they also seek improvement in town-gown relations.

Bahdia has concerns about university expansion that takes land off the tax rolls. Rachel Rupert, CEO of the Berkeley Chamber of Commerce, said she wants to see communication between the university and the city improved. "A cooperative effort between town and gown is lacking. There is no one making sure we are all working on the same page."

Still, said Rupert, "UC impacts not just the business community but the community at large.... The university is a real asset."

More information, including a copy of the full report, is available at http://www.berkeley.edu/econimpact/

Janet Huseby contributed to this report.