Location Quotients
A location quotient measures how the level of employment concentration in a geographic area compares with that of another, larger geographic area. For example, location quotients can be used to compare state employment by industry to that of the nation. Additionally, employment in an industry at the county level could be compared to employment at the state level. Location quotients provide a general idea of which industries a particular area specializes in and, therefore, which industries may provide most of the impact upon the local economy. The following example compares Montana’s mining employment to national employment:
In 2006:
Mining employment in Montana was 4,152
Total employment in Montana was 346,275
Montana’s workers employed in mining: 1.119% (4,152 / 346,275)
Nationally:
Mining employment in the United States was 219,243
Total Employment in the United States was 112,718,858
United States workers employed in mining: 0.195% (219,423 / 112,718,858)
The location quotient for mining in Montana is equal to the ratio of Montana’s mining employment percentage over the national employment percentage, or:
1.199 / 0.195 = 6.15
A location quotient of six indicates that employment in Montana’s mining sector was about six times larger than expected, based on the size of Montana’s workforce. Alternatively, other sectors might be smaller than expected. An example for Montana is the air transportation sector; it has a quotient of 0.5. This quotient reveals a sector that employs half the expected number of workers.
The Bureau of Labor Statistics provides a location quotient calculator on their web site, with employment information at the state, county, and metropolitan levels. The North American Industry Classification System (NAICS) is used to classify employment in each industry. Location quotients and a tutorial are available on the location quotient calculator web site, located at:
http://data.bls.gov/LOCATION_QUOTIENT/servlet/lqc.ControllerServlet
