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University Gives $4 Billion Boost to California Economy


Universities are recognized for the quality of their research and their standard of education, but some are also major engines of economic activity. Mike O'Sullivan reports, a new study says the University of Southern California injects $4 billion a year into the local economy of Los Angeles.

USC is the city's largest private employer, and David Bergman of Economic Research Associates says the university's annual direct spending is nearly $1.9 billion.

"First of all, they spend for goods and services about $300 million a year," he noted. "They spend about $820 million on payroll for non-students, that's about 14,000 employees."

Bergman, an urban economist, says part-time student workers are paid $80 million, and the university spends $200 million a year on new construction. Students spend another $400 million, and visitors to campus sporting and cultural events spend an additional $12 million.

He says 10 jobs are created in the community for each $1 million in university spending. When that indirect impact is added to the equation, the analyst says the university injects $4 billion a year into the local economy.

USC's Associate Vice President Of Planning, Bing Cherrie, says the school has an unusually large number of international students, who bring money into the country.

"USC has the largest foreign-student population of any college or university in the country, and the number is something approaching 12,000," he noted. "So of our total student population of 32,000, that is a pretty darned good percentage."

The students spend money when they come for their education, and the school official says that makes his university an export commodity.

Economist Jack Kyser of the Los Angeles Economic Development Corporation says the financial power of higher education is multiplied in Los Angeles, which is home to several other major universities.

"You have UCLA and Cal Tech, plus a host other colleges and universities, some that supply very, very unique services, such as Art Center College of Design, noted for automotive [design], and Otis College of Art and Design, noted for apparel and toys," he said.

Graduates often become workers in local industries, from Hollywood movies to automotive and clothing design. Kyser says research universities, including USC, also develop industrial products and that can bring more funds back to the school and the community.

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