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
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.”