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The Economic Impact of Fort Gordon
on
Columbia and Richmond Counties, Georgia

Harpal S. Grewal, Ph.D.
Professor and Chair
Division of Business
Claflin University
Orangeburg, SC

J. Christopher Noah, Ph.D.
Adjunct Professor
Division of Business
Claflin University
Orangeburg, SC


July 2003

 

ACKNOWLEDGEMENTS
While the authors have been writing reports such as this for a few years, this was an initial effort to study the economic impact of Fort Gordon. Consequently, new information paths had to be searched and original data uncovered. All who assisted the authors contributed greatly and diplomatically tolerated our ignorance of the Department of Defense’s procurement and budget processes. The staff at Fort Gordon who were especially helpful includes Ms. Vicky Martin of the Resource Management division, who provided invaluable data and her knowledge of the Fort to ensure our data and assumptions were correct. Ms. Patsy Wallace, Director of Contracting, provided information from her division with which the authors could use as a model for the entire Fort. Special thanks go to Pat Bucholz for her coordination between Fort Gordon organizations.
Final kudos go to Colonel Thom Tuckey (U.S. Army, Ret.), Director of Military Affairs for the Augusta Metro Chamber of Commerce. Colonel Tuckey’s research, Department of Defense contacts, special knowledge of Fort Gordon and the ways of the Army’s contracting and procurement systems were particularly useful.

While all of these sources were invaluable, the information and conclusions in this document are the sole responsibility of the authors.

TABLE OF CONTENTS

ACKNOWLEDGEMENTS
LIST OF FIGURES
LIST OF TABLES
1.0 INTRODUCTION AND OBJECTIVES
1.1 Fort Gordon - Overview
1.2 Scope of Work
1.3 Study Area
1.4 Key Findings
1.5 Data and Methodology
2.0 INCOME IMPACT
2.1 Income Impact of Fort Gordon
2.2 Fort Gordon Procurement and Fringe Benefits Outlays - Highlights
3.0 EMPLOYMENT IMPACT
4.0 OTHER ECONOMIC AND COMMUNITY BENEFITS
5.0 SUMMARY AND CONCLUSIONS
6.0 BIBLIOGRAPHY 

LIST OF FIGURES

FIGURE 1.     GEOGRAPHIC PROXIMITY OF FORT GORDON IN THE CSRA AND BEYOND
FIGURE 2.     FORT GORDON PERSONNEL DISTRIBUTION BY EMPLOYER
FIGURE 3.     EDUCATION LEVEL AT FORT GORDON
FIGURE 4.     FORT GORDON – EMPLOYEES’ PLACE OF RESIDENCE BY COUNTY

LIST OF TABLES
TABLE 1.     ANNUAL EXPENSES FOR FORT GORDON (FISCAL YEARS 1997-2002)
TABLE 2.     INCOME IMPACT FORT GORDON GEORGIA (FISCAL YEARS 1997 – 2002)
TABLE 3.     INCOME IMPACT OF FORT GORDON ON RICHMOND COUNTY, GEORGIA (FISCAL YEARS 1997 – 2002)
TABLE 4.     INCOME IMPACT OF FORT GORDON ON COLUMBIA COUNTY, GEORGIA (FISCAL YEARS 1997 – 2002)
TABLE 5.     FORT GORDON -TOTAL NUMBER OF EMPLOYEES (1997 – 2002)
TABLE 6.     FORT GORDON AVERAGE ANNUAL SALARY (1997 –2002)
TABLE 7.     FORT GORDON EMPLOYEES BY COUNTY OF RESIDENCE (INCLUDES ONLY THOSE EMPLOYEES RESIDING OFF-SITE. APPROXIMATELY 6,500 EMPLOYEES LIVE ON-SITE)
TABLE 8.     EMPLOYMENT IMPACT OF FORT GORDON ON COLUMBIA COUNTY, GEORGIA (FISCAL YEARS 1997 – 2002)
TABLE 9.     EMPLOYMENT IMPACT OF FORT GORDON ON RICHMOND COUNTY, GEORGIA (FISCAL YEARS 1996 – 2002)

1.0 INTRODUCTION AND OBJECTIVES
Until the late 1980’s, many communities enjoyed significant economic benefits from the presence of national defense facilities. These facilities created recession-proof jobs and expanded business opportunities. The end of the Cold War, however, reversed this trend. The closure and downsizing of many defense facilities cost local and state economies millions of jobs and billions of dollars of income. Many local communities are still absorbing the economic losses associated with these cutbacks. Additionally, discussions on the next round of Base Realignment and Closures (BRAC) have already started in Washington. In a recent statement, Secretary of Defense Donald Rumsfeld said that the military does not need one-fourth of its bases. The latest defense budget passed by Congress allows more base closings in 2005. It will be the fourth time that the Congress has authorized base closings since the 1991 Gulf War.

For years, communities in the Central Savannah River Area (CSRA) have enjoyed economic and social benefits derived from the presence of the Fort Gordon military installation. In 2002, Fort Gordon employed more than 17,000 military and civilian workers. Most of these employees live in the CSRA. This facility also purchased products and services worth millions of dollars from local businesses, hence contributing to the region’s economic development. This study provides the results of research conducted on the economic impact of Fort Gordon on two Georgia counties, namely Columbia and Richmond. The specific objectives of the research project were as follows:

• Identify the various components of economic impact of Fort Gordon on the CSRA in general and specifically, on Columbia and Richmond counties.
• Determine the extent to which the Fort contributes to the economic development of the local region.
  

Figure 1. Geographic Proximity of Fort Gordon in the CSRA and beyond
This study applied a model that has been used in similar studies by the authors in 1997 and 2001 on the economic impact of the Department of Energy’s Savannah River Site on South Carolina and Georgia. The study is organized in five sections. Besides providing an overview of the study, Section 1 provides a brief history and description of Fort Gordon. Section 2 addresses the impact of the facility on the income of the communities in the CSRA. Section 3 addresses the cumulative impact of Fort Gordon on employment in the study area. Section 4 discusses other contributions of the facility to the economic development of the area. Section 5 presents summary and conclusions of the study.

1.1 Fort Gordon - Overview
Originally created as “Camp” Gordon during World War II, Fort Gordon has had many missions over the past 60+ years, from infantry and armor to Military Police; and now communications, intelligence, training and medicine. The installation is home to the U.S. Army Signal Regiment and host to a multi-service community of Army, Navy, Air Force, Marine and multinational forces. While much of the Fort’s activities center on support and “force readiness,” a great number of resources are also expended on communications and other training. Besides training the full-time military, the Fort provides year-round instruction to over 54,000 reservists in addition to active officer and non-commissioned officer students. Fort Gordon also hosts elements of other Army units and services such as ordnance, intelligence, communication labs, and band and headquarters units. The installation is home to the U.S. Army Signal Museum and actively supports the formal partnership between the U.S. Army and the National Science Center (NSC) Fort Discovery in Augusta, GA.

A major attribute of Fort Gordon is its extensive military medical capability. The Dwight David Eisenhower Army Medical Center, which employs over 1,800 military and civilian employees, supports local active and retired military personnel and their families and serves as the Southeast Regional Medical Center, overseeing military medical care in seven states and Puerto Rico. The hospital serves as an important U.S. Army education and training center, encompassing most of the Army’s medical residency programs and conducting extensive research in areas such as telemedicine and disaster preparedness. Fort Gordon is also home to the Southeast Regional Dental and Veterinary Commands, which includes the Army’s dental residency programs and the country’s only remaining Army Dental Laboratory. Numerous partnerships and agreements with the Medical College of Georgia and other area medical facilities further enhance the value of the military medical community to the CSRA.

While the U.S. Army comprises 66% of the Fort’s population, many other organizations make up the remainder, including government workers, contractors and other service branches (Figure 2).

1.2 Scope of Work
This report provides the results of research conducted from July 2002 to April 2003 on the economic impact of Fort Gordon. In format it is a follow-up to two similar economic impact research projects completed by the authors in 1997 and 2001. Additionally, this new study is expected to help maximize future economic planning by improving the communities’ understanding of how they are affected by Fort Gordon. Finally, the study provides another perspective from which the facility can judge the impact it has on the region.

Figure 2. Fort Gordon Personnel Distribution by Employer
1.3 Study Area
Two counties are most directly affected by activities at Fort Gordon: Richmond and Columbia counties in Georgia. Since about ninety-five percent of Fort Gordon employees reside in these counties, the economic impact of the facility on only these counties was included in this study.

1.4 Key Findings
While the study’s primary focus was on the direct, indirect and fiscal economic impacts outlined below, the impact of having a large, dynamic military in the region also provides substantial intangible benefits. Together, the tangible and intangible impacts have had a great impact on the people, governments and businesses of the CSRA.

Direct Economic Impact
The budget of Fort Gordon represents a significant economic engine for any area. However, because the CSRA is a small metropolitan area of only 500,000 people, the impact is enormous. Fort Gordon is the largest employer in Columbia and Richmond counties with a combined workforce of over 17,000 civilian and military personnel. The annual expenses from the site totals nearly one billion dollars, much of which stays in the CSRA. However, considerable economic impact beyond the region is also evidenced.

Indirect Economic Impact
Spending at Fort Gordon leads to indirect impacts on jobs and business suppliers. As a result, the Fort affects sales and employment across a wide range of businesses, including personal services, construction, materials, and supplies. When economic multipliers are factored in, the cumulative annual impact was approximately 1.2 billion dollars in fiscal year 2002, which is approximately $2,400 for each man, woman, and child in the CSRA.*

Fiscal Impact
The installation also has considerable monetary influence in the public sector. These fiscal benefits are derived in the form of additional tax revenues, “payment in lieu of taxes,” bank deposits, spouses’ employment, retiree income, second jobs and other expenses.

Intangible Benefits
Beyond the monetary impacts in the form of income, employment and tax revenues, the major intangible benefit to the community from the presence of the Fort is its influence on the region’s quality of life. Such salutary effects include community outreach, employee volunteerism, and education (e.g., public tours, school science and engineering programs, internships and research assistance).
Even with the threat of budgetary cuts, Fort Gordon continues to generate stable economic activity; and support incomes and economic opportunities for the region. With continued federal government missions, it is expected that this situation will be maintained.

1.5 Data and Methodology
The data for this study was collected from various primary and secondary sources. The data on payroll, procurement, and number of employees at Fort Gordon for fiscal years 1997 through 2002 were obtained from its finance and human resources divisions. The secondary data on personal income, average wages, employment and multipliers at the county and state levels were collected from publications from the U.S. Department of Commerce, and Georgia Department of Labor. The information about the county or state-level procurement allocation was not available from Fort Gordon. These proportions were approximated based upon discussions with procurement division personnel.

To call Fort Gordon a “facility” is actually a misnomer, for this large government installation consists of multiple programs supported by numerous large-scale facilities within its boundaries. It has tens of thousands of acres offering multiple land uses in conjunction with its basic missions. For security and safety concerns, the Fort has limited access with a large attendant guard force. With Fort Gordon’s 17,000+ personnel its direct and indirect influence is strongly felt in an area of approximately 500,000. Its annual budget is approximately $900 million; hence its economic impact on the CSRA is significant. Because of the technical nature of the work at Fort Gordon, it is necessary to have highly educated employees (see Figure 3).

Figure 3. Education Level at Fort Gordon
2.0 INCOME IMPACT
Fort Gordon’s annual expenses from 1997 to 2002 are presented in Table 1. The fiscal year for the facility begins on October 1 and ends on September 30. As shown in Table 1, the combined annual expenses of Fort Gordon varied between $708 million and $958 million during fiscal years 1999 and 2002, respectively. The table also shows that the total budget outlays of the facility generally increased over time. The annual increase in total combined outlays from 1997 to 2002 varied between 2.2 percent in fiscal year 1998 and 21.2 percent in fiscal year 2002, except for 1999 when the total spending actually decreased by 4.1 percent as compared to 1998. The changes in the total expenses, however, varied from year to year. The total outlays were almost exactly divided between wages and salaries, and procurement and fringe benefits.

Table 1. Annual Expenses for Fort Gordon (Fiscal Years 1997-2002)   ($ in millions)

Note: Figures in parentheses reflect a percent change from the previous year.

Total expenses for Fort Gordon varied between $708.5 million in fiscal year 1999 and $958.3 million in fiscal year 2002, rising approximately $250 million in two years [While not analyzed, it is assumed this is due to new missions]. The changes in annual expenses were also considerably broad, ranging from –4.1 percent to +21.2 percent. The shifts also varied widely from year to year. The proportions of wages and salaries and procurement and fringe benefits in total expenses at Fort Gordon remained relatively stable, at about 50 percent each.

2.1 Income Impact of Fort Gordon
The income impact of Fort Gordon is presented in Tables 2 to 5. The methodology used is described below. The total income impact of the facility was calculated by considering both the direct and indirect (multiplier) impacts as:

• Direct Income Impact: Constituted payroll impact and procurement impact.
• Payroll impact: Calculated using the percentage of total employees residing in a given area or county and multiplying it by the total wages and salaries and expenses, minus $25 million due to on-site shopping facilities at Fort Gordon - Because these facilities (e.g., Post Exchange) often purchase goods outside the region and the military shoppers are not leaving the facility (thus not adding to the multiplier effects or paying local taxes, etc.).
• Procurement and Fringe Benefits: The geographical distribution of procurement and fringe benefit outlays was not available. Therefore, based upon discussions with procurement managers and past reports, the geographical allocation of procurement expenses and fringe benefits were computed as elaborated below.

2.2 Fort Gordon Procurement and Fringe Benefits Outlays - Highlights

• Twenty-five percent of Fort Gordon’s annual procurement and fringe benefits expenses were incurred in Georgia and South Carolina.
• Seventy percent of procurement and fringe benefits incurred in Georgia and South Carolina were spent in eight CSRA counties.
• Forty percent of the CSRA procurement and fringe benefits expenses were incurred in Richmond County, Georgia.
• Thirty-five percent of the CSRA procurement and fringe benefits expenses were incurred in Columbia County, Georgia.

The indirect income impact at the state as well as county level was calculated by using an across-the-board multiplier of 2.1, the number used in previous reports and used by Georgia and South Carolina economic staff for a facility such as this. The total income impact was calculated by adding direct income impact and indirect income impact.

The overall income impact of Fort Gordon on Georgia is shown in Table 2. During the six-year period from 1996 to 2002, the facility had an annual income impact of $867 million to $1.2 billion. The direct and indirect contributions of Fort Gordon to the annual income of the state also increased consistently over time. It should be noted that a small percentage of Fort Gordon employees reside in North Augusta, (141 employees, or 0.3 percent of the Fort’s employees, as of April 2002) Aiken County, South Carolina. Therefore, a small amount of income impact shown in Table 2 is on border areas of South Carolina.

Table 2. Income Impact of Fort Gordon on Georgia (Fiscal Years 1997 – 2002)  ($ in millions)

Note: $25 million “leakage” was deducted from the payroll expenses of Fort Gordon due to a percentage of goods which are purchased outside the area by on-site shopping facilities.

Tables 3 and 4 present the county-level overall income impact of Fort Gordon on Richmond and Columbia counties.

Table 3 shows the income impact of Fort Gordon on Richmond County. As the table indicates, Fort Gordon has contributed about 10 percent of the county annual income during fiscal years 1997–2002. In dollars, the overall income impact on Richmond County varied from $403 million in 1999 to $519 million in fiscal year 2002. The overall income impact of Fort Gordon on Richmond County has remained relatively stable over the time period studied (1997-2002).

Table 3. Income Impact of Fort Gordon on Richmond County, Georgia (Fiscal Years 1997 – 2002)
($ in millions)
 

In Columbia County, Fort Gordon contributed about 7 percent of the annual personal income (Table 4). The income contributions of the facility also remained stable over time. In dollar amount, the total income impact varied between $133 million 1997 to $170 million in 2002, an increase in 27 percent during 1997-2002.

Table 4. Income Impact of Fort Gordon on Columbia County, Georgia (Fiscal Years 1997 – 2002)
($ in millions)

3.0 EMPLOYMENT IMPACT
The total number of employees at Fort Gordon is presented in Table 5. As this table shows, the total employment at Fort Gordon rose from 15,940 in September 1997 to 18,098 in May 2002. The increase in the Fort’s population depicted in Table 5 may contradict other published reports. However, this increase was attributed to military employees coming in for training, which can be seasonal and will raise the total above the base population for a particular “window of observation.”

Table 5. Fort Gordon -Total Number of Employees (1997 – 2002)

The total employment at Fort Gordon was 18,098, which constituted 13,214 military employees and 4,884 civilian employees including contractors. Table 5 also depicts changes in employment from 1997 to 2002. The number of individuals working at the facility increased by more than 2,000, from 15,940 in September 1997 to 18,098 in May 2002. The expansion in employment however, was contributed by the increase in military employees, whereas the number of civilian employees actually declined by 1,153.
Table 6 presents the annual average salary of Fort Gordon employees for fiscal years 1997 through 2002. The workers earned an average of $26,246 per year in fiscal year 2002. The Fort’s average annual salary increased 15.6 percent between 1997-2002, from $22,704 to $26,246.

Table 6. Fort Gordon Average Annual Salary (1997 –2002)
 

*Notes: (1) Figures in parenthesis show percent change from the previous year. (2)The average number of employees in a fiscal year was calculated using the following method: Example: The average number of employees in fiscal year 1998 equals the number of employees in September 1997 plus the number of employees in September 1998 divided by 2. (3) The data on employees at Fort Gordon in September 1996 was not available. Therefore, the number of employees in September 1997 (15,940) was used as an estimate of the total employees for fiscal year 1996-1997.

Fort Gordon employees by county of residence are presented in Table 7 and Figure 4 - a map showing the county of residence for the Fort’s off-site employees. The data shown in the table and map are for April 2002. As shown in the table and map, the majority of Fort Gordon employees were living in two counties: Columbia and Richmond. Among the 10,134 Fort Gordon employees who lived off-site in April 2002, 7,725 (76.2 percent) resided in Richmond County; and 1,984 (19.6 percent) resided in Columbia County. Fort Gordon provided direct employment to 19.5 percent of working individuals in Columbia County and 7.4 percent in Richmond County.


Table 7. Fort Gordon Employees by County of Residence (Includes only those employees residing off-site. Approximately 6,500 employees live on-site)

Notes: (1) For simplicity, only those counties with 25 or more Fort Gordon employees are included. (2) Figures in parenthesis show percent of county employment in 2001.

Figure 4. Fort Gordon – Employees’ Place Residence by County

Since most Fort Gordon employees live in Georgia, the wages and salary expenses of the facility directly impact the economy of Georgia, and to a much lesser extent South Carolina. However, the procurement and fringe benefits budget is used to purchase goods and services from all over the nation. Most of the income impact of Fort Gordon is concentrated in the CSRA where most of the employees live and a majority of its suppliers are located. Consequently, the facility has a much greater employment and income impact on the CSRA compared to other areas in the state of Georgia.

Fort Gordon provides jobs to thousands of individuals in the CSRA. In addition, it also contributes indirectly to job creation in the local economies through procurement programs as well as through the multiplier effect of direct employment. The employment impact of Fort Gordon is presented in Tables 8 and 9.
The total employment impact of Fort Gordon Columbia and Richmond counties was computed using the following method:

• The number of individuals employed at the site from a given county was calculated by multiplying the total number of employees (Table 5) by the proportion of employees living in that county (Table 7). It was assumed that the percentage of employees of Fort Gordon by county of residence did not change significantly over time during 1997 through 2002.
• Jobs created through procurement spending was computed by using the U.S. Department of Commerce recommended figures of 16.8 jobs per $1 million of output in Georgia.
• Indirect jobs created through the multiplier effect were estimated by using a payroll multiplier of two. The payroll spending of Fort Gordon in a county was calculated by multiplying the total wages and salaries by the percent of employees residing in the county. The number of jobs created through the multiplier were computed by dividing the payroll spending by the average salary per worker in the county.

The employment impact of Fort Gordon on Columbia County is shown in Table 8. The facility contributed between approximately 5,100 and 6,200 jobs for Columbia County residents from 1997 to 2002. The analysis of employment imp