Finding and Using Labor Market Information for Economic and Workforce Development

The Working for America Institute developed the Action Brief "Finding and Using Labor Market Information for Economic and Workforce Development" as a guide for Workforce Investment Board (WIB) Labor Representatives (download a copy). This brief was designed to acquaint labor representatives with finding and using labor market information to develop workforce and economic development strategies.

This information is critical in defining the challenge that you want your partnership to address, both in terms of the demand side – the needs of the industry and the specific firms that are members or potential members of the partnership – and the supply side – the needs and attributes of the target workforce.

In the case studies featured later in this guide, you will see a section on Understanding the Demand and Meeting It.  In most cases, the partners prepared an analysis of their industry, and used that analysis to focus on the workforce challenges they needed to address. 

Labor markets are regional in nature.  They tend to have specific characteristics that, to some degree, contribute to the significance of the industry in the local economy and the advantage that the industry or the employer maintains relative to competitors.  Identifying those competitive advantages may allow a partnership to foster those features that give it a boost in relation to other parts of the country – or other parts of the globe.

This type of analysis is important in helping your partnership understand the workforce challenges that must be addressed, and it is also an effective way to engage other partners – including potential funders – in your project.  Understanding the economics of your industry is essential to setting your performance goals in the types of measurable terms (increased wages, decreased turnover, etc.) that will be necessary in applying for grants to support your partnership’s project.

In our work since the preparation of this Action Brief, the Institute has also employed additional techniques that we believe can be especially useful to labor-management partnerships:

1. Location Quotients

A location quotient is a measure that enables regional labor economists to readily compare employment levels among different regions of the nation.  Location quotients are ratios that compare the concentration of employment in a defined area to that of a larger area or base.  Location quotients can be used to compare local or regional employment by industry to that of the nation.  A location quotient greater than one indicates a concentration of employment in the local area that is greater than the national average, or base.

Determining a location quotient is a concise way to demonstrate the importance of a particular industry to your community.  Many Workforce Investment Boards use these data to determine which sectors they want to work with – because those sectors or industries are too important to the community to ignore.  The targeted sectors are often identified as the “clusters” or “centers of excellence” the boards want to support through their initiatives.  While WIBs are also interested in attracting new industries and employers, they should also invest in maintaining the higher wage industries that have made their communities strong.  Because unionized manufacturing firms often pay some of the highest wages in the community, projects to maintain the competitiveness of those firms should be of interest to your board.    

Included in the resources section, the Location Quotient Calculator is a new labor market analysis tool the Bureau of Labor Statistics (BLS) recently added to its online services.  The calculator generates location quotients and allows users to compare employment in a city, county, metropolitan statistical area (MSA), or other defined geographic sub-area to that of the state.  The location quotient calculator uses data from the BLS’s Quarterly Census of Employment and Wages (QCEW), a timely data source especially rich in comprehensive industry and area detail.  The BLS location quotient calculator is available online.

2. Community Audits

The most comprehensive approach to Labor Market Information is a community audit.  Community audits are often used by Workforce Investment Boards to prepare their annual strategic plans or to develop “State of the Workforce” reports.  In some cases, these audits will focus on a particular sector rather than the economy as a whole.  While this type of research is not something a labor-management partnership would do alone, the partners should know whether their local workforce board has conducted such an audit, and what it showed about the manufacturing sector in the region.

The term “community audit” can be used to describe a variety of economic surveys.  Some workforce areas use only one aspect of the audit – an employer survey – to shape their strategies.  The Institute has advocated that WIB labor representatives push for a comprehensive audit that looks at the supply (skills and needs of the workforce) as well as the demand (industry needs) issues in the region.  The comprehensive high road community audit offers WIBs the opportunity to identify concrete problems in the economy that are obstacles to retaining or creating good jobs in the economy.  It also allows them to set workforce priorities based on sound data and a full picture of the regional labor market, rather than focusing only on the needs of employers looking to fill entry-level jobs.  For example, a community audit that includes a focus on retention of high-wage jobs in manufacturing will have more impact on good jobs and strong communities than one that simply surveys employers and reports a need to train workers for jobs with big-box retailers as part of an economic development strategy to attract new, but relatively low-wage businesses.

Comprehensive high road community audits also reveal obstacles that prevent workers from accessing good jobs and, as a result, create opportunities for alliances with a broad range of community stakeholders.  Many WIBs contract with an outside group to conduct the technical aspects of a community audit.  The Institute can help connect a board interested in embarking on this kind of audit to worker-friendly, credible research organizations that perform high quality research and understand the issues important to labor unions.  One such list of labor-friendly research organizations is the Economic Analysis and Research Network (EARN) of the Economic Policy Institute (EPI), available at http://www.earncentral.org.

The Institute urges Workforce Investment Boards to conduct comprehensive community audits and encourages union and labor partnerships to become familiar with the audits and other labor market research that has been conducted in their region as part of their engagement with the public system.

 The Department of Labor has valuable information on each of 14 sectors targeted as part of the President’s High Growth Job Training Initiative.  One of those sectors is Advanced Manufacturing.