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May 25, 2021
2021-1061

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

In a newly released report, "Economic contribution of the private equity sector in 2020," prepared on behalf of the American Investment Council (AIC), EY's Quantitative Economics and Statistics Group, estimates the economic footprint of, and taxes paid by, the US private equity sector — US private equity firms and private equity-backed companies — within the US economy in 2020. The AIC is the trade association for the private equity industry.

Key findings include the following:

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 2020, the US private equity sector directly employed 11.7 million workers earning $900 billion in wages and benefits. The average US private equity sector worker earned approximately $73,000 in wages and benefits in 2020. For a full-time worker, this is approximately $38 per hour. The median full-time worker in the US private equity sector earned approximately $50,000 in wages and benefits in 2020.
  • Share of US economic activity. The US private equity sector directly generated $1.4 trillion of gross domestic product (GDP) in the United States in 2020, comprising approximately 6.5% of the US economy's total GDP.
  • Tax contribution. The US private equity sector generates tax revenue through US private equity firms, private equity-backed companies, and its employees. In 2020, the US private equity sector paid $218 billion of federal, state, and local taxes. Approximately two-thirds of these were federal taxes ($142 billion) with the remaining taxes paid to state and local governments ($76 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 7.5 million workers throughout the US economy, earning $500 billion in wages and benefits and generating $900 billion of US GDP in 2020. This economic activity supported $141 billion of taxes - federal ($92 billion) and state and local ($49 billion).
  • Related consumer spending. The consumer spending of workers of the US private equity sector and the sector's suppliers employed an additional 11.9 million workers throughout the US economy, earning $700 billion in wages and benefits and generating $1.2 trillion of US GDP in 2020. Consumer spending related to the US private equity sector supported $171 billion of taxes - federal ($112 billion) and state and local ($60 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 31.1 million workers earning $2.1 trillion in wages and benefits and generating $3.5 trillion in US GDP in 2020. Additionally, the federal, state, and local taxes paid by, and related to, the US private equity sector totaled approximately $530 billion in 2020.

The report, which uses data reported by the federal government and other public sources, follows what are considered to be standard, well-established methodologies and practices of economists, academics and analysts who craft similar studies.

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Contact Information
For additional information concerning this Alert, please contact:
 
Quantitative Economics and Statistics Group
   • Brandon Pizzola (Brandon.Pizzola@ey.com)
   • Robert Carroll (Robert.Carroll@ey.com)
 

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