Thursday, May 19, 2016

Quantifying your Workforce: ESRI or Census OnTheMap?

In the world of commercial revitalization quantifying your customer population is a fundamental step to communicate the economic viability and potential of your district. However, in downtown communities in particular, residents are not the only source of market demand. The local workforce population also plays a significant role in generating retail demand.  Two of the most well-known sources of employment population data are OnTheMap (from the US Census Bureau) and ESRI, Business Analyst. In this post I would like to share some of my recent experiences using both sources, their data differences, and offer some suggestions for mitigating data inaccuracies.

 Density of workers in my neighborhood, OnTheMap
A couple of months ago I was doing a typical collection of workforce data from OnTheMap and when I shared the findings with the client she was surprised and certain that the data was overestimating the number of local workers. To have a base of comparison, I also collected data for the same trade area from ESRI Business Analyst and got numbers that were over twice as high as the ones obtained from OnTheMap. Since then, the same incident has happened with other projects: ESRI numbers have been significantly higher (sometimes over three times higher) than OnTheMap numbers.

Which one should be trusted? How can we tell which one to choose?

For starters, OnTheMap is an application from the US Census Bureau that provides an online interface for creating, viewing, printing and downloading workforce related maps and reports. The site quantifies how many potential customers/employees work near your commercial district and allows you to select your area of analysis (trade area) based on a specific address (radial), a geographic boundary (census tract, county, city, etc.) or a polygon that you create.

OnTheMap has been developed through a partnership between the U.S. Census Bureau and 50 partner states (plus the District of Columbia) through the Local Employment Dynamics (LED) partnership.  The employment data used in this application are derived from payroll tax (unemployment insurance) payment records maintained by each state. The states assign employer locations (QCEW data), while individual worker home locations are assigned by the U.S. Census Bureau using data from multiple Federal agencies. Age, earnings, and industry profiles are compiled using each state's records along with other supplemental Census Bureau source data. OnTheMap contains annual historical data from 2002 through 2014 for most participating states.

Two greats feature of this application are the Area Profile Analysis and the Inflow/Outflow Analysis. The Area Profile Analysis shows not only the total numbers of workers, their age, ethnicity, industry, and income distributions but also their density: its maps are color coded and show the density of workers, allowing you to see where the higher concentrations of workers within your district are. The Inflow/Outflow Analysis shows the ratio of workers who don’t live in your district but work there versus the number of residents who live in your district and work there or somewhere else.

A limitation of the OnTheMap application is that its data only extend to 2014. Districts experiencing significant revitalization and investment in the past couple of years might find that its data doesn’t reflect recent sizable increase in workforce. One way to mitigate that is to list the number of new commercial developments completed and in the pipeline and their square footage, which can help illustrate the scale of recent changes that may not be captured by data sets from 2014.  

Heat map of food stores  (NAICS code 445), ESRI
The other provider, ESRI Business Analyst, extracts its business data from a comprehensive list of businesses licensed from Infogroup (a commercial data provider). Their business list contains data on more than 13 million US businesses—including the business name, location, franchise code, industry classification code (both SIC and NAICS), number of employees, and sales volume— that is current as of January 2015. The most typical way of getting its workforce data is through downloading its Business Summary Report, which provides the total number of business and employees within your trade area (as well as their break-down by NAICS Codes).

According to ESRI’s Methodology Statement, in maintaining and adding to its business database, Infogroup references several sources including directory listings such as Yellow Pages and business white pages; annual  Reports 10 K and Securities and Exchange Commission (SEC) information; federal, state, and municipal government data; business magazines; newsletters and newspapers; and information from the US Postal Service. To ensure accurate and complete information, they (Infogroup) conduct annual telephone verifications with each business listed in the database.

As ESRI acknowledges, the quality of the local address system varies; address matching is better in urban areas that use street-level address systems than in rural areas. Also, ZIP codes from Infogroup may differ from the residential ZIP codes in the ESRI demographic databases because Infogroup includes business-only ZIP codes that are unique to particular establishments and include no residential area, which might reflect inconsistencies with the data.

In contrast with OnTheMap, ESRI data does not include density and geographic concentration of workers, nor their age, ethnicity or income distribution. The interesting feature ESRI provides is the Business and Facilities Search within its map application. The Business and Facilities Search allows you to see how many businesses there are in a particular location (i.e. your trade area) based on selected NAICS or SIC codes. Furthermore, you can download this list of businesses, which includes their number of employees and retail sales. This application is quite useful to map competitive offerings for particular business types and estimate their number of workers. The application also allows you to see the concentration of particular business types in the form of heat maps. 

Deciding which provider to use will depend on the exact information you’re trying to collect, and the location and characteristics of your district (and trade area).

Keep in mind that access to ESRI Business Analyst data requires a paid subscription. However, if your commercial district is in Massachusetts, Puerto Rico, or the U.S. Virgin Islands (states not covered by the OnTheMap application) your only option at this moment is ESRI.

We like OntheMap because it gives you more detailed info on your workforce: it includes their geographic concentration within your district's trade area as well as their age, ethnicity, industry and income distribution. Even though its data only goes until 2014, it still provides reliable numbers that can be mitigated by collecting additional data 'on the ground' (i.e. contacting major new employers and asking their workforce numbers as well as estimating new employment based on new square footage added through recent developments). It is a great tool to help you understand your local workforce population and estimate demand.

ESRI Business Analyst is useful in other ways. It provides you with the total number of workers and allows you to see the concentration of particular types of businesses within your trade area, instead of the concentration of workers. It is a great tool to identify business nodes within your district and help you decide where particular types of businesses would be the best fit.

It is important to note that ESRI Business Analyst has many more applications and data possibilities than the ones I'm sharing here. These are just the ones we use the most and found most useful to the work we do.

Patricia Voltolini is a Senior Associate at Larisa Ortiz Associates. 

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