Expanding firms often say skilled labor is one of the most important factors determining where they locate their next operations. Although most...
Expanding firms often say skilled labor is one of the most important factors determining where they locate their next operations. Although most firms know they need accurate labor data, they often don’t consider the importance of using an accurate labor shed that defines where they will be drawing workers.
Both metropolitan statistical areas (MSA) and a specified mile radius around a location can be inaccurate, leading to costly worker shortages or excluding a location that may be ideal. A drive-time analysis, such as that available in Chmura Economics’ JobsEQ® tool, is needed to prevent such problems.
Two examples illustrate the need to use drive times to measure a labor shed.
A firm located in the center of Isle of Wight County, Virginia would overstate the talent it could draw if they used the Virginia Beach-Norfolk-Newport News MSA or a 50-mile radius to define its labor pool. Almost 2,100 machinists work in the MSA and nearly 2,300 work within a 50-mile radius of the firm location. However, the presence of the Chesapeake Bay and its tunnels, and James River limit the number of workers available within a 45-minute commute—only 620 machinists work within that drive time. Similar shortages are found with most occupations. About 900 structural metal fabricators and fitters work in the MSA and nearly 960 are within a 50-mile radius but less than 300 work within a 45-minute drive time.
The opposite problem occurs for a firm located in the center of the Akron MSA in Northeast Ohio. Almost 2,000 machinists work in the Akron MSA. Because this MSA is close to the Cleveland MSA, a 60-minute drive time for a firm located in the center of the MSA identifies a much larger pool of nearly 11,000 machinists. The larger labor pool is true for all occupations. About 1,400 application software developers work in the Akron MSA but nearly 7,000 work within a 60-minute drive time. Nearly 4,000 bookkeeping and audit clerks work in the Akron MSA and over 21,000 work within a 60-minute drive time.
The bottom line is that drive-time analysis is crucial for expanding firms to ensure that their labor force needs will be met.
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