Industry Analysis

Industry Analysis tool is a dash-board style web interface that shows a given industry’s business, employment and average weekly wage trends, a lion share of employment in relation to the total local employment, and the relative concentration of employment of a particular area in relation to the nation.

A customer selects an area type (county, service delivery region or workforce investment area), specific area, and an industry (private sector) and then view a point in time and a trend using a graphical interface of line, histogram and pie-chart graphs. Customers can observe the followings in one page and get a snap shot of an industry’s contribution to the local economy.

Average Business/Establishment:

A histogram showing average businesses/establishments for a given industry and local area. Customers can observe businesses expansion or contraction for six consecutive years. Move a mouse over on a particular graphic and to get the exact value at a given period.

Average Employment:

A histogram showing average employment for a given industry and local area. Customers can observe employment expansion or contraction for six consecutive years. Move a mouse over on a particular graphic and get the exact value at a given period.

Average Weekly Wages:

A histogram showing an average weekly wage for a given industry and local area. Customers can observe average weekly wage rise or decline for six consecutive years. Also, the graphic compares a local average weekly wage of an industry with the state and the national average, in the same industry. This helps customer to see the competitiveness of local average weekly wage of an industry.

Growth Grates:

Line-graphs showing an average weekly wage, average employment and average business growth rates simultaneously for a given industry and an area. One can easy determine business expansion/contraction and its effect on employment and average weekly wages for a period of six consecutive years.

Industry’s Share of Employment:

A pie-chart is used to show an industry’s percentage share of employment compared to the total employment of a local economy. A customer can move a mouse over the share and find out the exact percentage. This simple graph shows the impact of an industry’s employment on a local economy. Currently, this is available only for the super sectors (2 digit NAICS code) and we have a plan to extend the functionality for selected industries.

Location Quotient (LQ):

We use Location Quotient to measure the relative concentration of an industry’s employment in a given area as a point in time and as a trend in relation to the nation. Location Quotient is typically used to measure how specialized the local economy is. A community highly specialized in a given industry sector is likely exporting goods and services. It is an indication of economic ‘self-sufficiency.’ A community is considered “dependent” when any industry sector that cannot produce enough goods or services to meet local demand is highly represented.

The Location Quotient is calculated by dividing the proportion of the area’s employment activity in an industry by the proportion of the nation’s employment activity, in the same industry.

Interpretation of Location Quotient:

• LQ<1: A location quotient less than one would indicate that there is a smaller proportion of employment in a given industry for a local area than the nation. Economic base theory generally assumes that output from such an industry is not sufficient to meet local demand and the difference is imported.
• LQ=1: A location quotient equal to one means the proportion of employment in a given industry for a local area is equal to the nation. This means local production can just satisfy local consumption.
• LQ>1: A location quotient more than one would indicate that there is a higher proportion of employment in a given industry for a local area than the nation. Output from such industry is generally more than the local demand and the excess would be exported to non-local area. A local area’s export industries are its economic foundation, and all other industries thrive by servicing the export industries and one another. Export industry is called “basic” industry.

Note: Location Quotient is used here for helping customers understand past or current economic situations and examine specialization of economic activity of a local area, but it is not intended for predicting the future.