In August 2015, the CV™Suite began showcasing Industry Earnings data rather than Industry Sales. Although Industry Sales data is still available on the site, Industry Earnings data will provide CV™Suite users with a more comprehensive measure of economic impact in their community.
First, it is important to make clear that Industry Sales and Industry Earnings measure two different types of impacts on the creative economy:
Sales (also referred to as revenue) is calculated by multiplying the price at which goods or services are sold by the number of units or amount sold. Industry sales is comprised of the amount of money that companies in a given industry actually receive during a specific period, minus discounts and deductions for returned merchandise. It is the “top line” or “gross income” figure for an industry from which costs are subtracted to determine “net income”.
Industry earnings is defined as the labor compensation paid to all the workers in a given industry. Amounts are reported as average earnings per job for the most recent year of data only; if the most recent year of data is not the current year, then earnings are “brought forward” into the current year using the most recent job/earnings ratio combined with EMSI’s current-year jobs estimate. In some public data sources, such as BEA’s SPI/LPI and BLS’s QCEW, industry earnings are simply called “wages.”
What You Need to Know
You might ask, “What is the difference between earnings and sales?” Both indicators are measurements of an industry’s economic activity, but they impact the economy in different ways. Economic Modeling Specialists International (EMSI) explains, “Sales may be bringing money into the economy, but until that money starts rippling through the economy, it has no impact. The allocation of sales dollars to employees in the form of [earnings] is the beginning of the ripple effect.” It can also be implied that the earnings brought home by a worker have a stronger probability of being spent within the region, thus have a greater local impact than industry sales.