Multifamily Demographics: The ABCs of FTEs

Multifamily Demographics: The ABCs of FTEs

An FTE is a "full-time employee" or full-time "equivalent" employee.  When reviewing job creation we want to know the total number of FTE's that an employer is bringing into a community.

Where things often get fuzzy is in the definition of FTE. An a-typical example is when an employer and community announces: 300 new jobs!  Well...this could represent 300 part-time jobs that equates to only 75 full-time equivalent jobs. Now, 75 new jobs in a small town is a great thing- but the representation is 300 new jobs.

What if home builders and others begin the process of creating new housing stock based on the 300 jobs number? It would not take long to create an over-supply in a small community once the reality of the actual job number set in- only 75 full-time equivalent jobs being created.

Secondly, what about the timing of the job creation? A set number of jobs all starting on a particular date can have a dramatic impact on an area.  Using our same example, 300 new jobs that open up on January 1 is a completely different economic boom than creation of 100 jobs a year in each of the next three years (still 300 jobs but with significantly different economic impact).   

This is a simple example to make you think about how people represent numbers. Like with any other information its best to dig a little deeper to gain understanding and drill down to the real facts.  This is particularly important when making financial decisions based on public information.

Take that 300 jobs number from above and add a zero. If a community announces 3,000 jobs there is likely to be a whirl wind of economic activity that starts to activate.  Yet, the where, when and timing of this event is no less important than in the smaller example.  And the financial stakes are even higher.

Mr. Wilhoit is the author of two books: How To Read A Rent Roll: A Guide to Understanding Rental Income and Multifamily Insight Vol 1 - How to Acquire Wealth Through Buying the Right Multifamily Assets in the Right Markets.

For information on property management audio courses, books and our live weekly leadership academy, visit PowerHour Books and Courses.

About This Blog: Multifamily Insight is dedicated to assisting current and future multifamily property owners, operators and investors in executing specific tasks that allow multifamily assets to operate at their highest level of efficiency. We discuss real world issues in multifamily property management and acquisitions. This blog is intended to be informational only and does not provide legal, financial or accounting advice. Seek professional counsel.

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