Abstract

The economic contributions of the green industry in the United States were estimated for 2018 using information on industry employment and wages, and economic multipliers from a U.S. IMPLAN economic model. Direct industry output for all sectors was estimated at $159.57 billion (B), and total output contributions, including indirect and induced regional economic multiplier effects of export sales, were $348.08 B. The total value added contribution to the Gross Domestic Product (GDP) was $190.98 B, including labor income contributions of $121.55 B, other property income contributions of $16.01 B and business taxes paid to local, state and federal governments of $25.84 B. The industry had direct employment of 1,599,662 fulltime and part-time individuals, and total employment contributions of 2,315,357 jobs in the broader economy. The largest individual industry sectors in terms of employment and GDP contributions were landscaping and horticultural services (1,460,669 jobs, $221.89 B), greenhouse, nursery and floriculture production (217,574 jobs, $28.69 B), and lawn and garden equipment and supplies stores (292,614 jobs, $43.80 B). The top ten states in terms of employment contributions were California (264,913 jobs), Florida (203,482), Texas (161,151), Ohio (90,406), Pennsylvania (90,075), New York (90,266), Illinois (87,595), North Carolina (78,766), Michigan (77,719), and Georgia (66,527). Since 2013, green industry contributions in 2018 increased by 16.2% for employment and 17.3% for GDP in inflation-adjusted terms. Growth in the industry was highest for wholesale and retail trade, while production and manufacturing declined. Although the green industry has grown slowly in recent years, it remains an important contributor to national, state and local economies.

Index words: Sales, industry output, employment, value added, Gross Domestic Product, production, manufacturing, landscaping services, wholesale, retail, lawn and garden product line.

Significance to the Horticulture Industry

The green industry remains an important contributor to the U.S. economy and to individual states and regions. The green industry is extremely broad based, with the landscape services and wholesale-retail trade sectors existing in virtually all communities in the nation. In contrast, the production and manufacturing sectors are concentrated in some states and contribute disproportionately because of out-of-state shipments that bring new money into the local economies. The findings in this report are critical to our understanding of the structure-conduct-performance issues affecting the green industry, as well as the economy at large. Participants in the green industry now have access to data to assist them in making strategic decisions regarding future investments in their respective businesses. In addition, policy makers have better information to inform their decisions regarding efficient allocation of resources (e.g., water and labor) among competing industries and interests.

Introduction

The U.S. environmental horticulture industry, or green industry, is comprised of wholesale nursery, greenhouse, and turfgrass sod producers, landscape design, construction and maintenance firms, and wholesale and retail distribution firms such as garden centers, home stores, mass merchandisers with lawn/garden departments, brokers and re-wholesale distribution centers, and allied trades suppliers of inputs to the industry. The green industry has historically been a fast growing segment of the U.S. economy. However, the industry has reached the mature stage of its life cycle and is now growing slowly or even declining in some segments (Hall 2010). According to data from the Quarterly Census of Employment and Wages (U.S. Department of Labor 2018), employment in the principal sectors of the U.S. green industry reached a peak of 1.285 million jobs in 2007, then dropped sharply during the global recession of 2008-09. As of 2013, industry employment had somewhat recovered, but had not yet returned to pre-recession levels, but by 2018, employment had recovered fully and surpassed the 2007 employment levels. Over the 2007-18 period, total employment in the industry has increased by 2.75%, although this varied widely among specific industry sectors, with strong positive growth for landscaping services (+15.6%), but decreased for florists (-35.3%), landscape architectural services (-26.2%), lawn and garden equipment manufacturing (-8.8%), and nursery and floriculture production (-18.9%) (Fig. 1).

Employment for most sectors increased during 2001-07, then declined during the recession of 2007-09, and recovered during 2011-18, but 5 sectors remain below their 2007 peak level. The only industry sector showing steadily downward trending employment was florists, consistent with the decreasing number of brick-and-mortar establishments. The number of business establishments in the green industry also declined during the recession, and has not recovered, in part due to consolidation and increasing concentration in the industry (Hall 2010). The housing sector collapse during the recession revealed that the rate of industry growth was unsustainable.

Recognizing the limitations of existing data sources and the critical need for economic impact information, numerous state nursery and landscape industry organizations have sponsored economic impact studies for their respective states. For example, studies were conducted in Florida (Hodges et al. 2011b, Hodges et al. 2017), Louisiana (Hinson et al. 2003) and Colorado (Thilmany et al. 2003). Stakeholders have found these studies to be useful in communicating the importance of the green industry to policy makers to gain assistance and resources, and in combating proposed legislation that would negatively impact the industry. However, direct comparison of these results across states is complicated because of differences in research methods utilized in these studies. For example, some states used mail, telephone or personal interview surveys to collect primary data, while others relied on secondary data sources. Another important difference is the number and type of sectors that were included in each respective study, with some states including end users such as households, golf courses and sports complexes, while others did not. Also, the regional economic models used to determine economic multipliers differed between studies. These factors point to the need to conduct a comprehensive national study that uses a common methodology to collect industry data and calculate associated economic contributions.

The first attempt to develop an internally consistent estimate of state and national economic contributions of the green industry was reported by Hall et al. (2006), with total national economic contributions of the industry in 2002 given as 1.96 million fulltime and part-time jobs, $147.8 billion (B) in industry output, and $95.1 B in value added or GDP, expressed in 2004 dollars. A study conducted for 2007-08 reported total national contributions of the industry estimated at 1.95 million jobs, $175.26 B in industry output, and $107.16 billion in GDP (Hodges et al. 2011a). In a further study for 2013, the economic contributions of the industry were given as 1.60 million jobs, $196.07 B in industry output, and $120.71 B in GDP (Hodges et al., 2015). The largest individual industry sectors in 2013 in terms of employment and GDP contributions were landscaping services (1,105,526 jobs, $54.70 B), nursery and greenhouse production (240,809 jobs, $20.36 B), and lawn and garden equipment and supplies stores (217,798 jobs, $12.87 B). The top ten individual states in terms of employment contributions were California (245,267 jobs), Florida (197,073), Texas (149,364), Ohio (77,664), Pennsylvania (77,569), Illinois (76,254), New York (73,676), North Carolina (72,014), Georgia (64,066), and Michigan (63,189). The green industry represented 0.72% of U.S. GDP and 1.11% of the total workforce in 2013.

The objective of this study was to update the previous estimates of the economic contributions of the green industry at the national and state levels by utilizing 2018 data. The findings from this study enables reliable comparisons among U.S. states and regions that will inform public policy and support efforts by industry stakeholders to communicate the importance of the green industry.

Materials and Methods

Economic sectors associated with the green industry were identified based on definitions in the North American Industry Classification System (NAICS, U.S. Department of Commerce 2018b). The production and manufacturing industry group includes the sectors for nursery, greenhouse and floriculture production (NAICS 11142) and lawn and garden equipment manufacturing (333112). The landscape design, construction and maintenance services industry group includes the sectors landscaping services (56173) and landscape architectural services (54132). The wholesale and retail distribution industry group includes farm and garden equipment merchant wholesalers (423820), nursery and florist merchant wholesalers (42493), lawn and garden equipment and supplies stores (4442), and florists (4531). These green industry sectors collectively had a total of 163,912 business establishments, with 1,324,409 direct employees, and $49.91 B in wages paid in 2018 (Table 1). In addition, retail sectors that have significant sales of horticultural merchandise were included in the study.

Some retail sectors were not included in the analysis because the lawn and garden product sales were relatively minor and represented less than 1% of total sales: health and personal care stores, motor vehicle and parts dealers, sporting goods stores, furniture stores, electronics and appliance stores, and clothing stores. Specific lawn and garden product lines reported included outdoor nursery stock, indoor potted plants and floral items, cut flowers, fertilizer-lime-chemicals and other soil treatments, lawn and garden equipment and tools, materials used in landscaping or lawn service, and artificial/silk flowers plants-trees.

The regional economic contributions of green industry sectors were evaluated using the information on employment and wages in Table 1 together with economic multipliers from a U.S. model for 2017 created with the IMPLAN Input-Output/Social Accounting Matrix software (IMPLAN Group LLC 2018). These models represent the structure of a regional economy in terms of transactions between industries, employees, households, and government institutions (Miller and Blair 2009). Information in the model are derived from a variety of sources, including the Quarterly Census of Employment and Wages, state and national GDP and personal income statistics, the Economic Census and Census of Agriculture, which are considered very reliable sources, with a well-established methodology, adjustment for non-responding firms, and published statistical confidence parameters. The IMPLAN modeling system contains economic data for 536 industry sectors, including commodity production, employment, household income, commodity trade, capital investment, taxes, transfer payments (e.g. welfare, retirement pensions), and gross margins for wholesale and retail trade sectors which represent the share of sales that constitute final demand after netting out cost of goods sold. IMPLAN multipliers capture the product or service sales (direct effects), supply chain purchases by industry firms from other economic sectors (indirect effects) and employee household consumer spending, and local, state and federal government spending (induced effects), with separate multipliers for industry output (sales revenues or receipts), employment, value added, and labor income (earnings). Differences in multiplier values reflect the structure of industry sectors, the degree of economic integration, and the mix of supplier industries available to meet local demands. The IMPLAN model was adjusted for multi-industry economic contribution analysis according to the method described by Cheney (2016). Note that this approach differs from previous published studies of the U.S. green industry, so the results are not strictly comparable, however, the updated model and approach were used to reanalyze results for a previous study for 2013 (Hodges et al, 2015) in order to make valid comparisons over time. The economic analysis results for the U.S. were allocated to individual states based on the share of direct employment within each industry sector. The state-level results were aggregated within eight agroclimatic regions of the U.S., as shown in Fig. 2, that are similar to farm production regions defined by the U.S. Department of Agriculture (2000). The results of economic contribution analysis represent the ongoing activity in the industry rather than a net change in economic activity (Watson et al. 2007).

Results and Discussion

The estimated total economic contributions of the U.S. green industry in 2018 are summarized by industry groups and sectors in Table 2 and Figures 3 and 4. Direct industry output or sales revenues for all sectors was $159.57 billion (B). The total output contribution, including indirect and induced regional economic multiplier effects of exports, was $348.08 B. Direct employment by green industry firms was 1,286,135 fulltime and part-time jobs, and the total employment contribution (including multiplier effects) in the broader economy was 2,315,357 jobs. The total value added, or GDP contribution was 190.98 B. The labor income contribution, representing employee compensation, benefits, and business owner income, was $121.55 B, the property income contribution, representing rents, royalties, corporate dividends, capital gains, and interest, was $16.01 B, and the contribution of $25.84 B in business taxes on sales, property, payroll, excise, motor vehicle, fuels, etc. that were paid to local, state and federal governments.

By far the largest individual green industry sector was landscape services, with contributions of $221.89 B in output, $119.08 B in GDP value added, and 1,460,669 jobs (Table 2 and Figs. 35). The next largest industry sector was greenhouse, nursery and floriculture production, with $28.69 B in output, $15.94 B in GDP and 217,574 jobs. The largest retail sector was lawn and garden equipment and supplies stores, with contributions of $43.80 B in output, $23.76 B in GDP value added, and 292,614 jobs. Retail florists had contributions of $8.49 B in output, $5.13 B in GDP value added, and 88,125 jobs. Lawn and garden equipment and nursery and florist merchant wholesalers had contributions of $23.06 B in output, $19.53 B in GDP value added, and 188,267 jobs. Lastly, lawn and garden equipment manufacturing contributed $22.15 B in output, $7.53 B in GDP, and 68,108 jobs.

Economic contributions of the green industry in U.S. states and regions are summarized in Tables 3 and 4 and Figures 3 and 4. The largest regions in terms of employment contributions were the Midwest (465,263 jobs) and Northeast (430,760), followed by the Pacific (382,355), Southeast (351,541), Southcentral (235,136), Appalachian (222,764), Mountain (170,620), and Great Plains (56,916). Industry output contributions were over $73.8 B, $64.5 B, and 55.6 B in the Midwest, Northeast, and Pacific regions, respectively. The Southeast region had $52.3 B in output, while the Southcentral and Appalachian regions had over $34.6 B and $33.4 B in output, respectively. The Mountain region had $25.4 B in output and the Great Plains region had the lowest green industry contribution of $8.5 B in output.

Among individual states, the top 10 states in terms of total employment and output contributions were California (264,913 jobs, $38.6 B), Florida (203,482 jobs, $29.8 B), Texas (161,151 jobs, $23.6 B), Ohio (90,406 jobs, $14.5 B), New York (90,266 jobs, $13.6 B), Pennsylvania (90,075 jobs, $13.1B), Illinois (87,595 jobs, $13.9 B), North Carolina (78,766 jobs, $11.9 B), Michigan (77,719 jobs, $12.0 B), and Georgia (66,527 jobs, $9.9 B) (Table 3). Other states with employment contributions exceeding 40,000 jobs and output contributions over $6.2 B were New Jersey, Virginia, Washington, Massachusetts, Wisconsin, Maryland, Colorado, Arizona, Indiana, Tennessee, Minnesota, Oregon and Missouri. The top three states for value added, or GDP contributions were California ($21.6 B), Florida ($16.5 B), and Texas ($13.2 B).

Since the previous study for 2013 (Hodges et al. 2015), the total economic contributions of the overall U.S. green industry in 2018 increased by 16.2% for employment, 17.3% for output, and 19.8% for GDP, with values adjusted for inflation using the GDP Implicit Price Deflator (U.S. Commerce Department 2018a). Figure 5 presents economic contribution estimates that were also compiled for 2013 for comparison using similar, though not identical, sources and methods as for 2018.

During the 1980s and 1990s, the green industry was one of the fastest-growing sectors of the U.S. economy, due to robust demand for ornamental plants and related products and services from commercial and residential development and rising affluence. However, current trends and driving forces indicate that consumer demand is maturing, and industry growth is slowing (Hall 2010). Obviously, the severe economic recession of 2008-09 placed a considerable financial strain on green industry businesses, as well as most other sectors of the global economy due to reduced home values and home ownership rates, and declining disposable household income in inflation-adjusted terms.

In spite of slowed growth or decreased activity in some sectors in recent years, the green industry remains an important contributor to the U.S. economy and to individual states and regions. The green industry is extremely broad based, with the landscape services and wholesale-retail trade sectors existing in virtually all communities in the nation. In contrast, the production and manufacturing sectors are concentrated in some states and contribute disproportionately because of out-of-state shipments that bring new money into the local economies.

These findings are critical to our understanding of the structure-conduct-performance issues affecting the green industry, as well as the economy at large. Participants in the green industry now have access to data to assist them in making strategic decisions regarding future investments in their respective businesses. In addition, policy makers have better information to inform their decisions regarding efficient allocation of resources (e.g., water and labor) among competing industries and interests.

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Author notes

1

This project was supported by a grant from The Horticulture Research Institute, 1200 G Street NW, Suite 800, Washington DC 20005 (project #5927314), and cost sharing provided by the University of Florida and Texas A&M University. The National Green Industry Survey is conducted by the Green Industry Research Consortium of horticulturists and agricultural economists at U.S. land grant universities, organized as the S-1065 Multi-state project under the USDA-National Institute for Food and Agriculture (NIFA).

2

Professor and Ellison Chair in International Floriculture, Texas A&M University, Department of Horticultural Sciences, College Station, TX. Corresponding author contact: c-hall@tamu.edu. Extension Scientist Emeritus, awhodges@ufl.edu, University of Florida, Food and Resource Economics Department, Gainesville, FL. Associate Professor, hayk@ufl.edu, University of Florida, Food and Resource Economics Department and Mid-Florida Research and Education Center, Apopka, Florida. Professor, mapalma@tamu.edu, Texas A&M University, Department of Agricultural Economics, College Station, TX.