Tuesday, September 8, 2009

Comparing Ontario-area Industry concentrations with those of the Nation

When analyzing a region’s economy, community members often want to know how their area compares with others. A commonly used economic analysis tool is the location quotient, which assesses industry concentration.

Generally, if a location quotient is 1.0, the area is presumed to have the same proportion of employment in a given industry as that of the nation. Location quotients above 1.0 mean the local area has a greater employment concentration; less than 1.0 indicates a smaller concentraion. A location quotient over 1.25 suggests the local region’s production in the industry has exceeded local demands, and the industry can export its additional goods and services. An industry having a location quotient of less than 0.75 is presumed to not be producing enough goods and services to meet local demands.

The following paragraphs discuss location quotients in the Ontario Micropolitan Statistical Area, which consists of Malheur County in Oregon plus Payette County in Idaho:

With respect to Malheur County, not only does its trade, transportation, and utilities industry account for 23.6 percent of the county’s total employment, it also posts a 1.2 location quotient (LQ). This is attributed, in part, to the dominance of retail trade activities. Oregon does not have a sales tax, and this is considered to be a crucial factor in the development of this business sector. In Payette County, this sector accounts for 16.1 percent of the total employment and has an LQ of 0.8. This suggests that Malheur County has greater self-sufficiency in the trade, transportation, and utilities industry than does Payette County; additionally, it suggests that residents in Payette County may need to leave that county to meet their needs (e.g., travel the short distance to Malheur County, especially with respect to retail trade-related goods and services).

Additionally, the area boasts a high LQ in the natural resources and mining industry (6.4). The region's strengths also include manufacturing (1.3) and state and local government (1.9 and 1.4, respectively).

The above is an edited excerpt of a full article written by Workforce Analyst Annette Shelton-Tiderman in Eastern Oregon's most recent Local Labor Trends publication.

Check out this tool to calculate LQs for your local area!

No comments: