How it works
New annual pay = jobs × average pay
New local spending in your category = new pay × share spent × your category's share of household spending × share that stays local × share that is new to the area
The low and high cases move only the two least certain numbers, the local share and the new-to-area share, by 20 points each way. If your plan only works at the high case, the plan is leaning on hope.
Category shares are rounded from the Bureau of Labor Statistics Consumer Expenditure Survey for 2024: average household spending was $78,535, of which food away from home was $3,945 (5.0%), food at home $6,224 (7.9%), gasoline $2,411 (3.1%), health care $6,197 (7.9%), apparel and services $2,001 (2.5%), entertainment $3,609 (4.6%), personal care $978 (1.2%) and education $1,569 (2.0%).
A worked example
A restaurant owner hears that a Supercenter will open with 300 jobs at $35,000. New pay is $10,500,000. At 90% spent, 5.0% on food away from home, 60% staying local and half of it new, the base case is $141,750 a year. The low case (40% local, 30% new) is $56,700 and the high case (80% local, 70% new) is $264,600.
If the restaurant needs $750,000 a year in sales, that payroll covers about 19% of it in the base case, 8% in the low case and 35% in the high case. The rest has to come from shoppers, residents and the restaurant’s own regulars. These figures are hypothetical.
Prefer to work it out yourself? Step-by-step guide: do this calculation by hand or in a spreadsheet.
Common mistakes
- Treating the base case as a prediction. It is one set of assumptions, and the low case is just as possible.
- Counting spending that only moves from one local business to another. That is not growth.
- Forgetting the other side. If the new store sells what you sell, you may lose sales to it. This tool measures only what the payroll could add.
- Planning around the high case. Check that you can survive on the low one.
- Using an announcement as a fact. Confirm the project in city planning and permit records first.
What this doesn’t tell you
This counts one thing: the spending a new employer's payroll could add to your category. It leaves out shoppers drawn to the site, the employer's own purchases from suppliers, new residents, competition from the new store and how long any of it takes. Studies of Walmart openings disagree about the effect on nearby retail jobs, and none we found counts the restaurants and repair shops that opened nearby, so the tool does not say that businesses will follow. The employer notes use BEA's 2002 benchmark tables, which are historical, not a current forecast, and the 2002 tables do not separate general merchandise stores, so supplier purchases for a Supercenter are left out. The estimate is the same at every address; it does not use your county's data.
Related calculators
Go deeper: 15 Numbers Every Small Business Owner Should Know, from The Groundwork Review.
Anticipated Questions
Is this a forecast?
No. It multiplies your assumptions together and shows a range. Change any assumption and the answer changes. It cannot tell you what will happen on your street.
Where do the category shares come from?
From the Bureau of Labor Statistics Consumer Expenditure Survey for 2024, which reports what an average U.S. household spends by category. We rounded each share to one decimal and divided by average total spending of $78,535. Your town may spend differently.
Will new businesses open near a new Walmart?
We could not find a study that measures it directly. The research we found measures jobs at existing businesses and finds mixed results. Treat "businesses follow" as a hypothesis, not a fact.
Why does the tool not include shoppers and supplier purchases?
Shopper traffic and supplier purchases are real but much harder to estimate honestly. Payroll is the piece you can start from with public numbers. Add traffic separately, and only if you can count it.
What do the distribution center and hospital notes mean?
They come from BEA's 2002 benchmark input-output tables: for a warehouse, about 53 cents of each dollar of output goes to pay and about 40 cents to purchased inputs, mostly real estate and electricity; for a hospital, about 52 cents to pay and 44 cents to purchased inputs. These are national averages from 2002, not forecasts for a given site.
Does Groundwork have any tie to the companies or researchers named?
No. Brand and employer names appear only because the research does.
Sources
- Bureau of Labor Statistics: Consumer Expenditures 2024 (USDL-25-1586)
- Bureau of Economic Analysis: Benchmark Input-Output Data (2002 benchmark)
- Neumark, Zhang and Ciccarella: The Effects of Wal-Mart on Local Labor Markets (NBER 11782)
- Haltiwanger, Jarmin and Krizan: Mom-and-Pop Meet Big-Box: Complements or Substitutes? (NBER 15348)
Last reviewed October 19, 2026. How our calculators work. General information for planning, not legal, tax or financial advice. Found an error? Email info@groundworkbusinessadvisory.com.
