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Economic Development FAQs

Labor market analysis is how we measure and assess economic forces that impact employment, to better construct economic development (ED) goals and strategies. Labor market analysis can address a variety of frequently asked questions regarding economic development, such as:

What are the current employment conditions in my community?

Q: What industries have been growing and what industries have been declining in our local economy?
A: The answer to this question depends on how you define growth. However, industry growth generally refers to increases in employment. You can develop criteria to identify significant growth, such as an increase of 500 or more jobs added in the past year, or your can look at the industry’s rate of growth locally, compared to its growth rate for the state or the nation. You will also need to identify a base year with which to compare current data; depending on your specific interests, you can set your base year anywhere from one to 10 years before your current year. Bear in mind, however, that data before 1997 is categorized by the Standard Industry Classification (SIC) system and data after 1997 uses the North American Industry Classification System (NAICS).

To find data on employment by industry, you can use Quarterly Census of Employment and Wages (QCEW) data, available through WORKnet or the US Bureau of Labor Statistics (BLS) Web site, QCEW page. Another data source is the Current Employment Survey (CES), also available on WORKnet and the BLS Web site, CES page. Data from the US Census’ County Business Patterns (CBP), though older, provides valuable industry data as well.

You can use this data to calculate change or rate of change in employment by industry for your region of interest and a benchmark region, such as the state or the nation. Based on your criteria, this data will allow you to identify growing and declining industries in your area.

Q: What method should I use to compare employment change in industries in my area with changes in the region, state or nation?
A: To compare your local area to your region, the state or the nation, and to provide a more precise look at industry growth and decline, you may want to use QCEW or CBP data (see above) to calculate "location quotients" for your industries of interest. A location quotient is a calculated ratio between an industry in the local economy and the same activity within a larger (benchmark) region. This ratio determines whether or not the local economy has a greater share of that industry than expected. The basic equation for location quotients is:


Location Quotient =

Regional Employment in
Industry I in Year T

 /

National Employment in
Industry I in Year T



Total Regional Employment
Industry I in Year T

Total National Employment
Industry I in Year T


You may want to calculate location quotients for your base year and current year to see how they have changed over time.

Guidelines for Analyzing Location Quotients:


Location
Quotient

Export/Import Status


= 0.75

Import Industry

0.76 = LQ = 1.24  

Self-Sufficient Industry

= 1.25

Export Industry


    Industries with low and declining location quotients—Relative to the regional average, these industries have a low share of employment. These are the weakest sectors of your industrial base.

    Industries with low and increasing location quotients—Though these industries have low concentrations of employment relative to the regional share of employment, they may be important sources of growth, and may become leading sectors in the future.

    Industries with high and declining location quotients—These industries have high employment concentrations that have been declining over past years. You may want to make special efforts to prevent these industries from losing more of the regional employment share.

    Industries with high and increasing location quotients—These industries are the high flyers of the local economy, with high and growing concentrations of employment relative to the regional economy. Economic strategy should focus on maintaining a policy environment that promotes continued high performance in these industries.

For more information on location quotients as measures of industry growth, see University of Minnesota’s Hubert H. Humphrey School of Public Policy Web site Understanding Your Industries. Visit the University of Wisconsin Extension’s Center for Community Economic Development (CCED) Web site at CCED.

Q: How well-off is our local area?
A: "Well-off" is a meaningless term, unless you determine criteria specific to your community against which you can measure the community’s performance. A community’s well-being can be assessed by looking at seemingly endless lists of characteristics. Some key characteristics that you may want to consider in assessing your community’s well-being include:

  • Demographics, including education and health profiles
  • Unemployment rate
  • Average wage rate
  • Total personal income and per capita personal income
  • Median home price

To find this information, we recommend that you first look at the County Summaries available on WORKnet for a quick snapshot of your community. If you need more in-depth reports, you can consult the County Workforce Profiles and Workforce Development Area Profiles produced by the WI Department of Workforce Development. You can also access county profiles on the UW Extension CCED, County Economic Profiles Web page. American FactFinder and BearFacts, sponsored by the US Census Bureau and the Bureau of Economic Analysis, respectively, also provide community profiles.

What is the workforce growth potential in our labor market area?

Q: What is our workers’ demographic profile?
A: Demographic data is available through the WI Department of Administration, Demographic Services Center home page and through the US Census Bureau Web site. The data available on the DOA Web site is Census data, though the DOA also provides population estimates and projections not found on the Census Web site. For quick and easy access to Census data, use the US Census Bureau’s Web site, American FactFinder.

Q: How many available workers are in our labor market area?
A: The best way to gauge worker availability is by looking at Local Area Unemployment Statistics (LAUS) data available on WORKnet or the BLS LAUS home page. This data captures the size of the labor force and the number of employed and unemployed residents who are actively seeking employment. Residents who are unemployed and not looking for employment are not included in these statistics.

Unfortunately, LAUS data does not measure underemployment. Underemployment means that, though employed, an individual is either working fewer hours than she would like, or is employed in a position that does not use her training or education. Underemployed residents can also serve as a significant source of available workers.

Q: What are the occupational wages by labor market area?
A: DWD provides occupational wage data for all MSAs, its 11 non-MSA regions, and for the state as a whole based on wage data from Occupational Employment Statistics (OES). This data is available on WORKnet through its Occupational Employment Statistics (OES) query function, or on the BLS Occupational Employment and Wage Estimates home page. You can also obtain spreadsheets of wage rates by MSA, non-MSA regions, and the state from the WI DWD, Office of Economic Advisors.

Q: What is our workers’ training and educational profile?
A: The easiest way to get a picture of worker training and education is through the county profiles and summaries produced by DWD and the US Census Bureau. See "Q: How well-off is our local area?" for links to these profiles. You can also access Census data through the US Census Bureau Web site, American FactFinder, or the WI DOA, Demographic Services Center home page.

Q: What are the factors leading to local employment and wage growth for economic prosperity?
A: To answer this question, you will need to identify the following:

  1. Industries with a high share of local employment
  2. Industries with high values for total payroll
  3. Industries with high wages per employee

For industries with a high share of local employment, you can view the County Summary pages on WORKnet, which list the top 5 employers in each county. You can also derive this information—as well as payroll and wages data—from QCEW data available on WORKnet or through the Bureau of Labor Statistics.

How do we identify new opportunities for economic development?

Q: Which industries have high growth in employment share or high national employment growth potential?
A: To find data on employment by industry, you can use Quarterly Census of Employment and Wages (QCEW) data, available through WORKnet or the US Bureau of Labor Statistics Web site, QCEW home page. Another data source is the County Business Patterns (CBP), produced by the US Census.

You can use this data to calculate change or rate of change in employment by industry for your region of interest. See Q: What industries have been growing and what industries have been declining in our local economy? for more information on analyzing employment growth by industry.

You can use this data to calculate change or rate of change in employment by industry for the nation. See Q: What industries have been growing and what industries have been declining in our local economy? for more information on analyzing employment growth by industry.

Q: What do I need to know to write an Economic Development Plan?
A: In order to construct a local economic development plan, you must have:

  • The most recent data available
  • Historical data to demonstrate trends in the labor market
  • Comparative data between your region, peer communities, the state, and the nation
  • Aggregate data for the region surrounding your locality of interest, in order to analyze the local economic region/labor shed
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