Friday, November 4, 2016

Is your downtown workforce being undercounted by the U.S. Census?

For a downtown with a high workforce population, knowing how many people are working in your district is a critical metric to communicate to retailers and investors. Many people, including us, use Quarterly Workforce Indicators that are collected and updated annually by the U.S. Census Bureau to calculate this figure. The data is updated annually and is incredibly useful. It gives communities insight into how many worker there are and in what industry sectors. It also allows a community to identify workers by gender, age, and income (though the income bands are not quite as detailed as we would like - the highest band is "greater than $3,333/month" which translates to ~$40k annually). This is all great news, right? Not so fast.

We recently worked with a community and found that the workforce figures we pulled from the U.S. Census Bureau differed significantly from internal estimates they kept, which in turn were based on their local knowledge of the area and generally industry accepted assumptions regarding office space utilization. So where were all these missing workers?
Is that local WeWork location throwing
off your official employment statistics?

First, I must say, we really do trust this data source. It is based on Unemployment Insurance wage records that are deducted from every employee paycheck. Unemployment Insurance (UI) is mandatory for nearly every employee from the private sector as well as state and local government. It also includes individuals hired for domestic or personal service in a home. In addition, the data includes information on employees and jobs for most Federal employees, which comes from the Office of Personnel Management (OPM). But there are a few major exceptions, notably five federal agencies have this information suppressed, including the FBI, DEA, Bureua of Alchohol, Tobacco and Fires Arms, the Secret Service and the Treasury. After determining that none of these federal agencies had offices in the district we were back at square one.

Another major exception which held more promise was the fact that self-employed workers do not pay UI. Bingo! We had a lead! A quick google search found a number of collaborative working spaces, including WeWork, Collab and others that collective draw many thousands of additional workers annually. Additionally, when an area has a high number of businesses in the creative fields, the self-employment figures increase. These days, "freelancers" make up a growing percentage of the workforce. According to a recent study by the Freelancers Union, individuals who do any kind of freelance work - and this includes those who also get paychecks from traditional employers - make up 35% of the workforce. So in a district like the one we were looking at, with a high percentage of self-employed workers, it would make sense that the numbers were off. Mystery solved.

If this issue of lower than expected workforce count is happening in your district, there are a few things you can do about it. First, you have to be in a position to communicate quite clearly why you are seeing a discrepancy. Be able to back up the fact that you have lots of self-employed workers in the area, for instance. Show a map of collaborative work spaces and include usage figures from those workspaces. Share pedstrian counts, traffic counts and vacancy rates. Use other information to tell a more robust story about your district than the employment figures may show. Don't think that retailers or investors will believe you just because you say so - be prepared to fully defend your calculations.

As the percentage of self-employed and freelance workers increases, especially in downtown environments where collaborative work spaces are becoming more popular, simply knowing that many of these people are NOT being counted is critical to the success of your retail attraction efforts.

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