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October 21, 2019
2019-1864

American Investment Council releases EY QUEST report on the economic footprint of the US private equity industry

In a newly released study, EY's Quantitative Economics and Statistics (QUEST) group partnered with the American Investment Council, the trade association for the private equity industry, to estimate the economic activity of, and related to, the US private equity sector — US private equity firms and private equity-backed companies — within the US economy in 2018. This study also estimates the federal, state and local taxes paid by the US private equity sector.

Key findings include:

Economic activity of the US private equity sector

  • Employment and wage contribution. The US private equity sector provides employment and earnings for millions of workers. Overall, in 2018, the US private equity sector directly employed 8.8 million workers earning $600 billion in wages and benefits. The average US private equity sector worker earned approximately $71,000 in wages and benefits in 2018. For a full-time worker this is approximately $36 per hour.
  • Share of US economic activity. The US private equity sector directly generated $1.1 trillion of value added in the United States in 2018. Value added measures a sector's or industry's contribution to the production of final goods and services produced in the United States or US gross domestic product (GDP). The US private equity sector's value added comprised approximately 5% of US GDP in 2018.
  • Tax contribution. The US private equity sector generates tax revenue through US private equity firms, private equity-backed companies, and its employees. In 2018, the US private equity sector paid $174 billion of federal, state, and local taxes. Approximately two-thirds of these were federal taxes ($113 billion) with the remaining taxes paid to state and local governments ($61 billion).

Economic activity related to the US private equity sector

  • Suppliers to the US private equity sector. Suppliers to the US private equity sector employed an additional 7.2 million workers throughout the US economy earning $500 billion in wages and benefits and generating $900 billion of US value added in 2018. This economic activity supported $144 billion of taxes - federal ($93 billion) and state and local ($50 billion).
  • Related consumer spending. The consumer spending of workers of the US private equity sector and the sector's suppliers employed an additional 10.4 million workers throughout the US economy earning $600 billion in wages and benefits and generating $1.0 trillion of US value added in 2018. Consumer spending related to the US private equity sector supported $157 billion of taxes - federal ($102 billion) and state and local ($55 billion).

Total economic activity of, and related to, the US private equity sector

In total, the US private equity sector, the sector's US suppliers and the related US consumer spending employed an estimated 26.3 million workers earning $1.7 trillion in wages and benefits and generating $2.9 trillion in US value added in 2018. Additionally, the federal, state and local taxes paid by, and related to, the US private equity sector totaled nearly $500 billion in 2018.

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Contact Information
For additional information concerning this Alert, please contact:
 
Quantitative Economics and Statistics Group
Robert Carroll(202) 327-6032
Brandon Pizzola(202) 327-6864
 

 


 

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