The Importance of Primary Employers

Pam Cumpata, President, McHenry County EDC 

A primary employer is defined as the one creating a product or service that is principally sold outside of a region, thereby generating new money and profits into the region. Examples include manufacturing, back-office operations or service centers, corporate headquarters, distribution facilities and research and development. Why are primary jobs important? Because primary jobs create the disposable income that allows development of retail, entertainment and service sectors (secondary jobs).

One way to understand the economic impact of a primary employer is to use the following example. Company A plans to expand and hire 25 additional people receiving compensation on average of $50,000 per year. The impact on their suppliers is 7 employees receiving compensation of $49,000 and the retail employment sector is 9 employees at a compensation of $33,000. Overall this company’s expansion directly and indirectly supports a payroll of $4 million into the local economy, which in turn supports 18 children in the school system and 28 households. Every time a manufacturer/primary employer expands, the entire local economy benefits. Conversely, when a primary employer leaves or contracts, the local community is negatively impacted in more ways than just job loss.

States, municipalities and economic developers need to continue to focus on retaining, expanding and attracting primary employers which provide the disposable income for our communities. It is essential that business, education and government work together to support and value our primary employers since they are the foundation for our economy. Economic Development is a process and the responsibility of everyone.