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Defining Labor Market Areas (LMAs)

Defining Labor Market Areas (LMAs). Ken LeVasseur Bureau of Labor Statistics APDU Annual Conference Washington, DC September 24, 2008. Overview. Relationship between geography and methodology We follow OMB, delineate for residual (SLMA) History—1970s, 80s, 90s, 00s

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Defining Labor Market Areas (LMAs)

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  1. Defining Labor Market Areas (LMAs) Ken LeVasseur Bureau of Labor Statistics APDU Annual Conference Washington, DC September 24, 2008

  2. Overview • Relationship between geography and methodology • We follow OMB, delineate for residual (SLMA) • History—1970s, 80s, 90s, 00s • Legal requirement: JTPA 1982 • New England is difficult • Examples from 2000s • HUD programmatic use

  3. Estimation Methodology • The LAUS program estimates employment and unemployment by place-of-residence for about 7,300 subnational areas on a monthly basis • About 2,358 of them are LMAs, generally estimated using a building-block approach • 400 metro areas/divisions; 591 micro; 1,367 small • Employment inputs are readily available from the CES and QCEW programs at BLS • Both have monthly establishment data for total nonfarm w&s • Jobs, by place-of-work

  4. Estimation Methodology • Converting employment from an establishment basis to a household basis (persons by place-of-residence) can be accomplished by a ratio approach • Previously, a simple ratio: Census/CES • Adjusts for commutation, multiple-jobholding, and unpaid absences • Now, multiple ratios, tying up to 5 areas together • In either case, having a “well-defined” LMA is essential • Largely self-contained: Place-of-residence employment is tied primarily to place-of-work employment

  5. General Approach • Take as given the OMB-designated federal statistical areas • “Large” labor market areas • Metropolitan areas (divisions where applicable) and micropolitan areas • Review and delineate areas in the residual U.S. territory • “Small” labor market areas

  6. OMB-Designated Areas

  7. History • 1972: BLS was given (technical) responsibility for the Local Area Unemployment Statistics program • Data were receiving increased use, including for federal allocations • Funding transferred about a decade later

  8. History—Legal Requirement • 1982: Job Training Partnership Act enacted • Sec. 4. “For the purpose of this Act … the term "labor market area" means an economically integrated geographic area within which individuals can reside and find employment within a reasonable distance or can readily change employment without changing their place of residence. Such area shall be identified in accordance with criteria used by the Bureau of Labor Statistics of the Department of Labor in defining such areas or similar criteria established by a Governor.”

  9. History • 1970s: • BLS national office examined commuting flows (from Journey to Work) and sent out lists of proposed small LMA designations for regional office and State agency review • Contiguity was required • Other details are sketchy

  10. History • 1980s: • BLS national office examined commuting flows (from Journey to Work) and sent out lists of proposed small LMA designations for regional office and State agency review • Some regional offices/States accepted them • Some States liked the prior delineations • Thus, some “grandfathering” or “local opinion”

  11. History • 1990s: • Population and density disregarded • 15% commuting threshold (to nearest 0.1) in either direction • Allowed additional iteration(s) • For pre-existing multi-county areas, kept intact if commuting threshold was not significantly under 15% at 90% confidence level • Contiguity required • In New England, residual areas (based on MCDs) were attached more freely, with State input

  12. History • 2000s: • Did not use urban clusters of 2,500-9,999 or any other data on population or density • 25% commuting threshold in either direction • Allowed only 1 additional iteration • Contiguity required • New England (NECTA) residual was very messy • Small LMAs, if internal cohesion and independent • Adjacent areas, if internal cohesion and ties to OMB area • Isolated MCDs, if little cohesion • For titling, we used county names

  13. History • 2000s results: • 22 Multi-county SLMAs outside New England • 1,295 Single-county SLMAs outside New England • 44 Multi-MCD SLMAs in New England • 2 Single-MCD SLMAs in New England • 4 Multi-MCD adjacent areas in New England • 18 Single-entity Isolated MCDs in New England • Labor Market Area Directory at www.bls.gov/lau/lmadir.pdf • Updated annually, based on OMB changes and title changes

  14. Examples for the 2000s

  15. Examples for the 2000s

  16. Programmatic Use • We received a large number of requests regarding “what labor market area am I in?” • Investigation led us to HUD Community Development Block Grant Anti-Job Pirating Provision • “CDBG funds may not be used to directly assist a business, including a business expansion, in the relocation of a plant, facility, or operation from one LMA to another LMA if the relocation is likely to result in a significant loss of jobs in the LMA from which the relocation occurs.”

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