New Report Shows Private Equity’s Positive Impact on U.S. Economy

November 1, 2019 by Dan McCue

WASHINGTON – Private equity sector is playing a positive role in the U.S. economy, supporting more than 26 million jobs while accounting for about 5% of the nation’s gross domestic product, according to a new report.

The analysis comes from Ernst & Young, which worked in partnership on the report with the American Investment Council. Together they estimate those 26 million workers earned a total $1.7 trillion in wages and benefits and generated $2.9 trillion in value last year.

Additionally, the report says the federal, state, and local taxes paid by, and related to, the U.S. private equity sector totaled nearly $500 billion in 2018.

In conjunction with the report’s release, AIC is also launching a new website and a substantial national digital advertising campaign to educate Americans about the role private equity plays in creating jobs, driving economic growth and supporting local communities. 

“This new report shines an important and timely light on the positive and growing impact private equity has on the strength and success of our nation’s economy,” said Drew Maloney, president and CEO of the American Investment Council.

“From helping rebuild America’s manufacturing base to supporting millions of good-paying jobs in industries from tech to hotels to transportation and trade, private equity is a driving force for economic growth and opportunity for our country’s economy and workers,” Maloney said.

The report reveals that private equity now has a total economic impact in the U.S. of nearly $1.1 trillion.  The study also shows that private equity plays a vital role in the tax base of our states and local communities, supporting critical investments in schools, transportation, infrastructure and other key priorities.

In 2018, alone, the U.S. private equity sector paid $174 billion in 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).

“Every single member of Congress has private equity-backed jobs and investment in their local communities. Whether it’s picking up coffee from Dunkin Donuts, buying milk from Dollar General, staying in a hotel like a Hilton or taking a Lyft across their town, the positive force of private equity is being felt in communities and jobs throughout the country every day,” Maloney said.

A separate American Investment Council report, released in July, detailed the positive role private equity now plays in providing a stronger and more secure retirement for millions of Americans, including teachers and first responders. 

The report analyzed investment returns by 165 U.S. public pension funds and highlighted how private equity continues to deliver the highest returns of any asset class.

The study showed private equity continues to lead all asset classes in long-term investment performance, with private equity’s median 10-year annualized return of 10.2% surpassing public equity’s 8.5% and real estate’s 4.8%.

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