The study, The Trillion Dollar Apartment Industry, found that apartments contribute $1.1 trillion to the national economy and support 25.4 million jobs.
“People underestimate the economic impact that flows from apartment buildings,” says Stephen S. Fuller, an academic researcher at George Mason University’s Center for Regional Analysis who conducted the study.
“It’s always that first splash of new construction that gets the attention,” Fuller notes. “No one pays attention to ongoing maintenance or to the people who live in these properties. By not paying attention to them and the long-term effect they have, people underestimate their importance to the overall economy.”
Multifamily construction contributed $42.5 billion to the national economy, and construction spending spurred $12.7 billion in personal earnings, while supporting roughly 324,000 jobs, in 2011. That’s nothing to sneeze at. But resident spending on goods and services produces an economic contribution nearly 21 times greater than construction.
Apartment resident spending drove nearly 80 percent of apartments’ total contribution to the national economy in 2011 and sustained nearly 90 percent of the total jobs supported by apartments. In 2011, the country’s 35 million apartment residents contributed $885.2 billion to the national economy. Renter spending also generated $222.0 billion in additional personal earnings and supported 22.8 million jobs during the year.
“Renters spend more of their income locally than homeowners,” Fuller points out. “These renter households generate a lot of jobs that ordinarily wouldn’t be associated with the apartment industry.”
Based on average spending and after-tax earnings, apartment residents had $628.5 billion in disposable income in 2011. Nearly three-quarters of that amount, or $421.5 billion, was spent on consumer goods and services produced in the United States.
Apartment residents spent a significant portion of those available dollars on housing, food, and transportation—their three largest expenditures—followed by utilities, fuels, and public services; apparel and services; and entertainment. Roughly 70 percent of the dollars residents spent on those items stayed within the local economy.
In addition, the industry spent $67.9 billion on apartment operations in 2011. And that spending directly supported local employment and business activities across four main categories: utilities; repairs and maintenance; management; and building services, including materials and labor costs.
When the indirect effects of that spending are factored in, the operation and maintenance of the nation’s entire stock of apartments had a total economic contribution of $182.6 billion in 2011.
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