The Economic Impact of South Carolina's Military Bases by Donald L. Schunk

Donald L. Schunk

South Carolina's many military bases account for a significant amount of economic activity locally and statewide.
Here are the numbers.

Dr. Donald L. Schunk is Research Economist for the Division of Research and Assistant Professor of Economics in the Moore School of Business at the University of South Carolina. This article is based on research conducted by the Division of Research in early 2004 for the (South Carolina) Governor’s Military Base Task Force.

The many military installations dispersed across South Carolina account for a substantial segment of the overall South Carolina economy. Bases around the state fuel economic activity by purchasing goods and services from the local community and providing income to military and civilian personnel. In addition to these direct impacts, additional benefits accrue to the state economy because of the military-related visitors and military retirees that they attract.

The ultimate impacts on the state and local economies, however, don’t stop with these direct expenditures. Once an initial injection of funds occurs in the local economy, additional rounds of economic activity are supported by economic multiplier effects. By including these multiplier impacts, the true significance of military base operations to the state and local economies becomes clear.

Further, the role of a military base in the local economy is somewhat unique in that the funding for the operations comes from the federal government. While some of this federal funding is the return of South Carolina tax dollars, much of the money used to support the military represents a true net addition to the South Carolina economy. In this way, the impacts of the military add to the economy as opposed to simply redistributing existing funds.

Economic Impacts

A total of $7.3 billion in sales accrues annually to South Carolina businesses because of the military’s overall presence in the state . . . , [and] a total of 142,000 jobs are directly or indirectly supported by the presence of the military.

The tables presented here show various forms of economic impacts that arise from the following sources:

The operations of Fort Jackson, Shaw Air Force Base, and McEntire Air National Guard Station in the Midlands region
The operations of the Charleston Air Force Base and Naval Weapons Station in Charleston
The operations of the Marine Corps Air Station, Marine Corps Recruit Depot, and Naval Hospital in the Beaufort area
Military-related visitors, specifically to Fort Jackson, the Marine Corps Recruit Depot, and the Charleston area
Military retirees

The major results reported within these tables include:
A total of $7.3 billion in sales accrues annually to South Carolina businesses because of the military’s overall presence in the state. Of this total, $5.9 billion is due to military base operations, $1.3 billion is due to the in-state spending of military retirees, and just under $100 million is due to military-related visitors.
Across South Carolina, a total of nearly 142,000 jobs are directly or indirectly supported by the presence of the military. This job total represents nearly 8 percent of total employment in South Carolina. Of this job total, about 54,000 are jobs located directly at military bases; the remainder are spread across virtually every sector of the state’s economy.
The military’s presence supports about $5.1 billion annually in personal income for South Carolinians. Again, this income flows throughout the economy, not just to those directly employed at the military installations.
The total impact of the military on businesses in the Midlands amounts to $2.3 billion each year. This economic activity helps support 55,500 jobs and $1.9 billion in personal income in the Midlands area.
The military’s impact in the Charleston area amounts to $3.5 billion worth of sales at local businesses, a total of 64,300 jobs, and $2.2 billion in personal income.
The military’s presence in Beaufort supports a total of $717.5 million in sales at local businesses. This spending supports a total of 17,500 jobs and $614.6 million in personal income each year.

The tables are:

Summary of Military Impacts in South Carolina
Summary of Military Impacts in the Midlands
Annual Sales at Local Businesses due to Overall Military Presence, Midlands Area Includes Effects of Fort Jackson, McEntire and Shaw Operations, Fort Jackson Visitors, and Area Retirees
Summary of Military Impacts in Charleston
Annual Sales at Local Businesses due to Overall Military Presence, Charleston Area Includes Effects of AFB and NWS Operations, Military Visitors, and Area Retirees
Summary of Military Impacts in the Lowcountry
Annual Sales at Local Businesses due to Overall Military Presence, Beaufort Area Includes Effects of MCAS, MCRD and NH Operations, MCRD Visitors, and Area Retirees

Industry Distribution Detailed

The role of a military base in the local economy is somewhat unique in that the funding for the operations comes from the federal government.

These results clearly show the substantial impact of the military on South Carolina’s economy. While recognizing that the magnitude of these impacts is vital to understanding the importance of the military, the ultimate goal of the figures presented here is to provide an estimate of the industry distribution of this business activity. For each area and each direct source of impacts, there is a table that provides a list of the 40 industries most affected in terms of annual sales. These industry estimates are the heart of this report, and serve to show the breadth of the military’s impact on the state and local economies in South Carolina.

Overall, the military’s presence in South Carolina provides a substantial contribution to the state’s economy and especially to the local communities that are home to these bases. The magnitude of the estimated economic impacts suggests that any base closures in South Carolina could have the potential to significantly hurt a local area’s economic fortunes. Yet, these numbers should not be taken as reason to fear the potential negative impact of a base closure. Rather, they should serve as a reminder of how important the military’s presence is, and that these local communities need to take proactive steps to 1) try to protect these military bases, and 2) put in place contingency plans aimed at transforming the local economy in the event of a base closure.

A base closing does not have to be a death sentence for a local economy. The closing of the Charleston Naval Base in the mid-1990s prompted action from many groups and led to the creation of the Charleston Naval Complex Redevelopment Authority that has worked to create thousands of new jobs in the area. It’s hoped that recognition of both the magnitude and the breadth of the military’s economic impact will work to convince those from all sectors of the economy to work not only to prevent base closure, but also to plan ahead for the possibility of a closure. o

Summary of Military Impacts in South Carolina

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Base operations Fort Jackson, McEntire, Shaw, MCAS, MCRD, Beaufort NH, CAFB, CNWS
	Direct Impacts	Multiplier Impacts	Total Impacts
Business Sales	$2,813,464,910	$3,127,132,666	$5,940,597,576
Employment	54,110	70,808	124,918
Labor Income	$1,741,500,000	$2,057,700,091	$3,799,200,091

Visitors Military Visitors to Beaufort, Charleston, Midlands
	Total Impacts
Business Sales	$67,652,269
Employment	1,234
Labor Income	$25,785,274

Retiree spending
	Total Impacts		Retiree Income
Business Sales	$1,323,705,774
Employment	15,782
Labor Income	$440,094,889		$860,800,000

Overall military impact on South Carolina (Includes base operations, military visitors, statewide military retirees)
	Total Impacts
Business Sales	$7,331,955,619
Employment	141,934
Labor Income	$5,125,880,254

All dollar figures are in 2003 dollars. For base operations impacts, the direct impacts include: base expenditures in the local economy, the spending of personnel payroll in the local economy, and military and civilian employment directly at the base. The retiree spending impacts are based on the local expenditures of retirees living anywhere in South Carolina. The overall impacts on South Carolina are greater than the sum of the individual regional impacts. Primarily this is because the statewide impacts capture interregional spillovers that represent a leakage from the local economy.

Summary of Military Impacts in the Midlands

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Base operations Fort Jackson
	Direct Impacts	Multiplier Impacts	Total Impacts
Business Sales	$580,391,534	$587,383,165	$1,167,774,699
Employment	19,000	14,251	33,251
Labor Income	$510,500,000	$400,870,737	$911,370,737

McEntire
	Direct Impacts	Multiplier Impacts	Total Impacts
Business Sales	$69,294,644	$70,644,503	$139,939,147
Employment	1,799	1,707	3,506
Labor Income	$54,000,000	$48,200,000	$102,200,000

Visitors Fort Jackson
	Total Impacts
Business Sales	$28,259,048
Employment	530
Labor Income	$10,493,205

Retiree spending
	Total Impacts		Retiree Income
Business Sales	$418,766,581
Employment	5,123
Labor Income	$139,716,942		$282,100,000

Overall military impact on the Midlands (Includes base operations at Fort Jackson, McEntire, Shaw, Fort Jackson visitors, and area military retirees)
	Total Impacts
Business Sales	$2,268,073,222
Employment	55,522
Labor Income	$1,851,432,091

All dollar figures are in 2003 dollars. For base operations impacts, the direct impacts include: base expenditures in the local economy, the spending of personnel payroll in the local economy, and military and civilian employment directly at the base. Fort Jackson visitor impacts are based on an estimate of $13.8 million in visitor spending annually. The $28.3 million impact of visitor spending includes the $13.8 million in direct spending and the multiplier effects of this direct expenditure. The retiree spending impacts are based on the local expenditures of retirees living in the 290, 291, and 292 3-digit zip code areas.

Annual Sales at Local Businesses due to Overall Military Presence, Midlands Area Includes Effects of Fort Jackson, McEntire and Shaw Operations, Fort Jackson Visitors, and Area Retirees

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	Industry	Annual Sales
1.	Real Estate	$111,637,423
2.	Maintenance and Repair—Other Facilities	$110,747,330
3.	Other Business Services	$101,522,188
4.	Doctors and Dentists	$ 98,856,446
5.	Wholesale Trade	$ 90,096,664
6.	Eating and Drinking	$ 89,411,255
7.	Banking	$ 86,740,779
8.	Insurance Carriers	$ 61,786,749
9.	Maintenance and Repair- Residential	$ 57,144,110
10.	Communications- Except Radio and TV	$ 52,351,165
11.	Automotive Dealers and Service Stations	$ 51,282,522
12.	Miscellaneous Retail	$ 43,978,050
13.	State/Local Gov’t Non-education	$ 37,880,858
14.	State and Local Electric Utilities	$ 37,512,179
15.	Electric Services	$ 36,955,390
16.	Food Stores	$ 36,551,234
17.	Hospitals	$ 34,806,384
18.	Motor Freight Transport and Warehousing	$ 34,792,689
19.	Services to Buildings	$ 33,350,254
20.	Computer and Data Processing Services	$ 32,142,557
21.	Motor Vehicles	$ 31,945,230
22.	General Merchandise Stores	$ 28,656,106
23.	Hotels and Lodging Places	$ 25,900,384
24.	Legal Services	$ 25,820,475
25.	Other State and Local Gov’t Enterprises	$ 25,486,332
26.	Engineering- Architectural Services	$ 24,963,787
27.	Credit Agencies	$ 21,960,286
28.	Apparel Made from Purchased Materials	$ 19,770,995
29.	Inorganic Chemicals Nec.	$ 19,487,601
30.	Management and Consulting Services	$ 19,450,149
31.	Automobile Repair and Services	$ 19,396,973
32.	Personnel Supply Services	$ 18,363,811
33.	Other Medical and Health Services	$ 18,331,909
34.	Insurance Agents and Brokers	$ 17,696,264
35.	Accounting- Auditing and Bookkeeping	$ 17,252,641
36.	Furniture and Home Furnishings Stores	$ 15,810,913
37.	Amusement and Recreation Services- N.E.C.	$ 15,589,384
38.	Motor Vehicle Parts and Accessories	$ 14,887,667
39.	Apparel and Accessory Stores	$ 14,103,415
40.	Building Materials and Gardening	$ 13,503,087

The sales figures represent total sales, including the direct and multiplier-generated sales. These industries are the 40 most affected out of a total of more than 250 affected industries.

Summary of Military Impacts in Charleston

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Base operations Charleston Air Force Base
	Direct Impacts	Multiplier Impacts	Total Impacts
Business Sales	$409,140,351	$118,049,690	$786,615,448
Employment	6,942	10,181	17,123
Labor Income	$194,700,000	$283,467,562	$478,167,562

Charleston Air Force Base
	Direct Impacts	Multiplier Impacts	Total Impacts
Business Sales	$1,195,878,474	$1,129,577,232	$2,325,455,706
Employment	11,673	30,546	42,219
Labor Income	$476,000,000	$849,468,994	$1,325,468,994

Visitors Military Visitors to Charleston
	Total Impacts
Business Sales	$28,429,947
Employment	505
Labor Income	$10,954,152

Retiree spending
	Total Impacts		Retiree Income
Business Sales	$345,929,655
Employment	4,431
Labor Income	$119,621,397		$249,200,000

Overall military impact on the Midlands (Includes base operations at Fort Jackson, McEntire, Shaw, Fort Jackson visitors, and area military retirees)
	Total Impacts
Business Sales	$3,486,430,756
Employment	64,278
Labor Income	$2,183,412,105

All dollar figures are in 2003 dollars. For base operations impacts, the direct impacts include: base expenditures in the local economy, the spending of personnel payroll in the local economy, and military and civilian employment directly at the base. Charleston visitor impacts are based on an estimate of $15.3 million in visitor spending annually. The $28.4 million impact of visitor spending includes the $15.3 million in direct spending and the multiplier effects of this direct expenditure. The retiree spending impacts are based on the local expenditures of retirees living in the 294 3-digit zip code area.

Annual Sales at Local Businesses due to Overall Military Presence, Charleston Area Includes Effects of AFB and NWS Operations, Military Visitors, and Area Retirees

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	Industry	Annual Sales
1.	Maintenance and Repair—Other Facilities	$382,428,673
2.	Other Business Services	$346,009,797
3.	Real Estate	$173,229,692
4.	Maintenance and Repair- Residential	$170,511,777
5.	Services to Buildings	$114,910,118
6.	Doctors and Dentists	$113,218,517
7.	Wholesale Trade	$112,263,511
8.	Engineering- Architectural Services	$107,073,611
9.	Eating and Drinking	$105,828,379
10.	State and Local Electric Utilities	$101,402,936
11.	Banking	$ 83,903,699
12.	Automotive Dealers and Service Stations	$ 65,593,453
13.	Hospitals	$ 63,816,117
14.	Miscellaneous Retail	$ 56,642,930
15.	Management and Consulting Services	$ 56,416,041
16.	Motor Freight Transport and Warehousing	$ 52,541,643
17.	Hotels and Lodging Places	$ 51,268,913
18.	Communications- Except Radio and TV	$ 50,022,125
19.	Food Stores	$ 44,410,881
20.	Insurance Carriers	$ 42,662,467
21.	Computer and Data Processing Services	$ 41,907,315
22.	Cyclic Crudes- Interm. & Indus. Organic Chem.	$ 39,385,100
23.	Legal Services	$ 37,226,487
24.	Other State and Local Gov’t Enterprises	$ 37,008,228
25.	Personnel Supply Services	$ 34,912,665
26.	Accounting- Auditing and Bookkeeping	$ 33,453,670
27.	Motor Vehicle Parts and Accessories	$ 33,020,518
28.	General Merchandise Stores	$ 31,774,150
29.	Electric Services	$ 27,425,333
30.	Automobile Repair and Services	$ 25,937,703
31.	Other Medical and Health Services	$ 23,285,690
32.	State/Local Gov’t Non-education	$ 23,144,838
33.	U.S. Postal Service	$ 20,947,252
34.	Furniture and Home Furnishings Stores	$ 19,200,921
35.	Apparel and Accessory Stores	$ 19,141,835
36.	Building Materials and Gardening	$ 17,696,728
37.	Sanitary Services and Steam Supply	$ 16,848,509
38.	Amusement and Recreation Services- N.E.C.	$ 15,884,352
39.	Credit Agencies	$ 15,242,649
40.	Security and Commodity Brokers	$ 14,624,400

The sales figures represent total sales, including the direct and multiplier-generated sales. These industries are the 40 most affected out of a total of more than 250 affected industries.

Summary of Military Impacts in the Lowcountry

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Base operations Marine Corps Air Station
	Direct Impacts	Multiplier Impacts	Total Impacts
Business Sales	$172,591,529	$118,040,690	$290,641,219
Employment	5,125	3,470	8,595
Labor Income	$142,500,000	$98,915,978	$241,415,978

Marine Corps Recruit Depot
	Direct Impacts	Multiplier Impacts	Total Impacts
Business Sales	$150,117,662	$100,405,621	$250,523,283
Employment	2,705	2,992	5,697
Labor Income	$134,900,000	$84,669,348	$219,569,348

Naval Hospital
	Direct Impacts	Multiplier Impacts	Total Impacts
Business Sales	$53,992,691	$36,062,894	$90,055,585
Employment	1,120	1,025	2,145
Labor Income	$33,500,000	$30,802,580	$64,302,580

Visitors Marine Corps Recruit Depot
	Total Impacts
Business Sales	$10,963,274
Employment	199
Labor Income	$4,337,917

Retiree spending
	Total Impacts		Retiree Income
Business Sales	$75,335,692
Employment	903
Labor Income	$24,945,877		$60,000,000

Overall military impact on the Lowcountry (Includes base operations at MCAs, MCRD, MCRD visitors, visitors, and area military retirees)
	Total Impacts
Business Sales	$717,519,053
Employment	17,539
Labor Income	$614,571,700

All dollar figures are in 2003 dollars. For base operations impacts, the direct impacts include: base expenditures in the local economy, the spending of personnel payroll in the local economy, and military and civilian employment directly at the base. MCRD visitor impacts are based on an estimate of $6.5 million in visitor spending annually. The $10.96 million impact of visitor spending includes the $6.5 million in direct spending and the multiplier effects of this direct expenditure. The retiree spending impacts are based on the local expenditures of retirees living in the 299 3-digit zip code area.

Annual Sales at Local Businesses due to Overall Military Presence, Beaufort Area Includes Effects of MCAS, MCRD and NH Operations, MCRD Visitors, and Area Retirees

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	Industry	Annual Sales
1.	Real Estate	$48,500,414
2.	Other Business Services	$40,871,040
3.	Maintenance and Repair—Other Facilities	$40,660,375
4.	Eating and Drinking	$32,172,801
5.	Doctors and Dentists	$28,252,581
6.	Wholesale Trade	$22,708,249
7.	Maintenance and Repair- Residential	$21,661,402
8.	Banking	$19,816,645
9.	Communications - Except Radio and TV	$19,208,343
10.	Miscellaneous Retail	$16,605,450
11.	Automotive Dealers and Service Stations	$15,605,586
12.	State and Local Electric Utilities	$14,506,476
13.	Management and Consulting Services	$14,365,217
14.	Services to Buildings	$13,369,724
15.	Insurance Carriers	$12,543,899
16.	Hotels and Lodging Places	$12,502,045
17.	Hospitals	$12,465,642
18.	Food Stores	$12,320,568
19.	Cyclic Crudes- Interm. & Indus. Organic Chem.	$11,461,192
20.	Electric Services	$11,289,958
21.	State/Local Govít Non-education	$10,471,479
22.	Other State and Local Govít Enterprises	$ 9,926,121
23.	Motor Freight Transport and Warehousing	$ 9,125,284
24.	General Merchandise Stores	$ 8,645,025
25.	Legal Services	$ 8,239,250
26.	Engineering- Architectural Services	$ 7,255,072
27.	Credit Agencies	$ 6,361,721
28.	Automobile Repair and Services	$ 6,289,779
29.	Amusement and Recreation Services	$ 5,993,378
30.	Other Medical and Health Services	$ 5,571,019
31.	Apparel and Accessory Stores	$ 5,484,010
32.	State/Local Gov’t Non-education	$ 5,458,509
33.	Transportation Equipment- N.E.C.	$ 5,147,216
34.	Furniture and Home Furnishings Stores	$ 5,078,843
35.	Apparel Made from Purchased Materials	$ 4,917,458
36.	Security and Commodity Brokers	$ 4,743,782
37.	Building Materials and Gardening	$ 4,561,756
38.	Commercial Printing	$ 4,435,742
39.	Miscellaneous Plastics Products	$ 4,128,940
40.	Insurance Agents and Brokers	$ 4,022,197

The sales figures represent total sales, including the direct and multiplier-generated sales. These industries are the 40 most affected out of a total of more than 250 affected industries.