Labor Market Areas: Connecting Place of Work to Place of Residence with Administrative Data
by: Krista Gerth, Senior Statistician, Tony Glover, Senior Research Analyst, Carol Toups, Economist
"Through the use of administrative data, we found that during 2000, more than 75 percent of all workers in Jackson were employed in the Services, Retail Trade, and Construction industries. The number of individuals commuting to work in Jackson in 2000 was 27.6 percent higher than it was in 1992."
Jackson, Wyoming, is nestled in Jackson Hole with Grand Teton and Yellowstone National Parks to the north, the Bridger-Teton National Forest to the east, and the Star Valley to the south. Tourists flock to Jackson year-round to take advantage of the area’s numerous cultural and recreational activities, including skiing, snowmobiling, hiking, fishing, camping, mountain climbing, and whitewater rafting. The resort-like atmosphere requires a large labor supply, but like many resort communities, the high cost and short supply of housing forces many workers to take residence in neighboring towns. By using administrative data, we are able to determine the number of workers within an area, the labor market areas in which the workers live, the industries that employ them, and their average wages, subject to certain limitations. Through the use of administrative data, we found that during 2000, more than 75 percent of all workers in Jackson were employed in the Services, Retail Trade, and Construction industries. The number of individuals commuting to work in Jackson in 2000 was 27.6 percent higher than it was in 1992.
With 8,647 residents, Jackson is the largest town in Teton County. From the 1990 Census, we know surrounding counties are a source of labor for Teton County. Over the last decade the County has consistently had one of the lowest unemployment rates in the state; its annual average unemployment rate in 2000 was 1.7 percent, compared to a statewide rate of 3.9 percent. Lincoln County, which is directly south of Teton County, has consistently had one of the highest unemployment rates in the state; its annual average unemployment rate in 2000 was 5.3 percent. For fiscal year 2000,1 the U.S. Department of Labor classified Lincoln County as a labor surplus area, which means that its average unemployment rate was at least 20 percent higher than the average unemployment rate for all states during the previous two calendar years.2
Research & Planning (R&P) investigated worker commuting patterns between Lincoln and Teton counties, Wyoming, from 1992 through 2000 under contract with a private firm. The practical application and theoretical importance of labor market areas prompted R&P to expand the analysis to include commuters from all surrounding counties (Sublette, Park, Fremont, and Lincoln) to the town of Jackson. The primary focus was on Wyoming towns within 100 miles of Jackson. We used 1992 as our reference year because it is the first year for which employee data are available in the Unemployment Insurance Wage Records database.3
The Workforce Investment Act of 1998 defines a Labor Market Area (LMA) as “an economically integrated geographic area within which individuals can reside and find employment within a reasonable distance or can readily change employment without changing their place of residence.”4 Each county is considered its own LMA or part of a larger, regional LMA depending on the proportion of individuals commuting to jobs outside of any given county relative to the number of individuals working in their county of residence. In the analysis and for this discussion, the focus is on Jackson alone, not the balance of its LMA (Teton County).
The Meridian Group has proposed the development of a planned community north of Alpine, Wyoming, which will consist of residential units, a post office, elementary school, grocery store, restaurants, and other retail and service outlets.5 In addition to providing a housing alternative for employees who work in Teton County (where the average price of homes sold in 2000 was $422,8976), the project aims to reduce commuter traffic on the corridor between Alpine and Jackson by providing commuter bus service (see Map 1). This is a joint venture between The Meridian Group and Southern Teton Area Rapid Transit (START). Meridian contracted with R&P to determine the average number of commuters between Lincoln and Teton counties, their average quarterly wages, and the industries in which they work. The companies will use the data to determine the size and scope of the potential community and transit service. Information about the project is available at http://www.northalpine.com.
Administrative Data Technique
For this analysis, Research & Planning used information from two Unemployment Insurance (UI) tax sources (Wage Records and the ES-2027) and the Wyoming Driver’s License (DL) database. The DL database was used to determine each worker’s place of residence, and the Social Security Numbers (SSNs) in the DL database were linked to their corresponding records in the Wage Records database. Each individual’s wage record contains the UI account number of the employer(s) for which the individual worked in any given quarter. The UI account numbers were then cross-referenced with the employer data in the ES-202 to determine the individual’s place of work each quarter.
Some administrative records are limited by the currency of the data they contain. The assumption behind the use of the DL database, in this case, is that even though people change residences between driver’s license renewals, they are replaced by people with similar demographic characteristics and work behaviors. For statistical purposes, the assumption appears reasonable in this setting, but it remains to be seen whether this assumption is reasonable during times of rapid economic change. Additional control over the issue of currency can be obtained by using more recent administrative data from UI claims, Employment Service, Vocational Rehabilitation, or Community College records.
The number of commuters between towns was calculated by comparing the town listed on each individual’s driver’s license with the town in which the individual’s employer was located according to the ES-202.8 If an employer had several worksites throughout the state, it was assumed that the individual worked at the location closest to his/her residence. Similarly, if a worker held more than one job in a quarter, his/her location of employment was assigned as the town of the job nearest his/her home. Individuals were assumed to reside in the towns found on their driver’s licenses, although some people may have moved without updating their addresses (despite a law that requires Wyoming residents to notify the Department of Transportation within 10 days of an address change).9 These assumptions were necessary to provide a starting point for further analysis.10
Our analysis focuses on commuters living between 20 and 100 miles from Jackson. Unless otherwise noted, future references to Jackson also include the towns of Wilson, Teton Village, Kelly, Hoback Junction, and Moose, which are within 20 miles of Jackson. Individuals who worked in Jackson were classified as Local Residents, Commuters, Unlikely Commuters, or Residence Unknown. Those who lived in Jackson were labeled Local Residents, while those living between 20 and 100 miles from Jackson were labeled Commuters. Individuals living more than 100 miles away (as determined by their addresses in the DL database) were labeled and treated in the analysis as Unlikely Commuters. Although the addresses on their driver’s licenses indicated that they lived over 100 miles from their places of work, we suspect that most of the Unlikely Commuters either temporarily relocated to the Jackson area to work in a seasonal industry or they permanently relocated near Jackson but did not update their addresses with the Department of Transportation. In either case, it is unlikely that workers in this group regularly traveled more than 100 miles to and from work. Finally, individuals who appeared in Wage Records as working in Jackson but were not found in the DL database were labeled Residence Unknown, because R&P has no way to determine their residences at this time.
For our analysis, we included data for 1992, 1996, and 2000. We selected 1996 for two reasons. First, the number of workers in Jackson remained relatively steady from 1992 to 1996, which allowed us to observe changes in geographic sources of labor. The number of workers in Jackson increased by 1,643 (16.3%) over the four-year period, compared to an increase of 2,867 (24.5%) between 1996 and 2000 (see Table 1). The second reason we selected 1996 involves a time lag between the year and quarter an individual began working in Wyoming and the quarter for which we were able to determine that person’s residence in the DL database. To assign cities of residence to individuals who started working in Wyoming before they obtained Wyoming driver’s licenses, we worked backwards from the time they first appeared in the DL database to the time they first appeared in Wage Records. In such cases, the residence cities on their driver’s licenses were assigned as their residences at the earlier date, provided that their residences were near the towns where they worked according to Wage Records. Because driver’s licenses issued by many states expire every four years, individuals who moved to Wyoming in 1996 should have obtained Wyoming licenses by at least 2000 if they continued to work in, and considered themselves residents of, Wyoming.11 Workers who moved to Wyoming after 1996 might not have appeared in the DL database by the end of 2000, which may account for some of the growth in the Residence Unknown category in recent years.
There are several possible explanations for the presence of workers in the Residence Unknown category. In addition to new Wyoming residents who have not yet obtained Wyoming driver’s licenses, others (such as workers under the age of 16) may not have had driver’s licenses at all. Some workers labeled Residence Unknown may have been seasonal employees whose primary residences were in different states. Teton County has large fluctuations in employment levels throughout the year. For instance, ES-202 employment for Teton County in July 2000 was 20,538; four months later, in November, employment was 14,062. The large drop in employment is indicative of the number of seasonal workers, many of whom are not Wyoming residents and have low attachment to the labor force.
Analysis revealed that some individuals labeled Residence Unknown worked in Jackson at least four consecutive quarters, and therefore were probably not seasonal employees. We have reason to believe that many such workers were living in Idaho border towns and working in Jackson. The 1990 Census revealed that 325 residents of Teton County, Idaho (ID) commuted to Teton County, Wyoming; 143 of them worked in the town of Jackson.12 The population of Teton County (ID) grew 53.9 percent from 1992 (estimated population 3,899)13 to 2000 (population 5,999),14 so it is likely that the number of individuals commuting to Wyoming increased as well. Map 2 shows the county population growth rates from 1992 to 2000 for other nearby counties in Wyoming and Idaho.
The employment and commuting numbers shown are annual averages. Although data are available for each quarter, we chose to work with annual averages due to the seasonality in the number of workers and Commuters. Historically, employment and Commuter numbers in Teton County are highest during the third quarter each year because the summer months are peak tourist season.
Table 1 shows the annual average number of persons working in Jackson from 1992 to 2000 by commuter type and for the ten communities with the most Commuters. Over this time period, the town of Afton consistently had more individuals commute to Jackson than any other Wyoming town within 100 miles. Alpine was the next largest exporter of employees, followed by Thayne. Afton, Alpine, and Thayne are all located in Lincoln County, which had 447 workers commute to Jackson in 2000. Sublette and Teton counties follow, with 101 and 71 Commuters, respectively. Dubois, with 63 Commuters in 2000, was the only town involved from Fremont County. This study did not locate any Commuters from Park County, most likely due to the mountainous terrain in that area of the state. Map 1 is a topographic map of the Jackson commuting areas with the darker shades of blue representing mountainous terrain. It also shows the major roads, the ten Wyoming communities with the most workers commuting to Jackson, the towns in Idaho that are likely to have residents who commute to Jackson, the driving distance to Jackson, and the number of Commuters from each town.
From 1992 to 2000, the annual average number of Commuters increased 27.6 percent (from 551 to 703) (see Table 1). In contrast, the number of Local Resident employees declined 9.3 percent from 1992 to 2000, even though the population of the town of Jackson15 increased 59.0 percent over the same period of time. In 2000, 49.6 percent of all workers in Jackson fell into the Residence Unknown category, compared to only 25.6 percent in 1992. The annual average number of Residence Unknown workers increased 179.2 percent from 1992 to 2000.
Industries and Wages
As shown in Figures 1, 2, and 3, the largest average annual employment of Commuters in this time period was found in the Construction, Services, and Retail Trade industries. In 2000, 32.7 percent of the Commuters were employed in Construction, 20.5 percent were employed in Services (which includes hotels & other lodging places and amusement & recreation services), and 16.6 percent worked in Retail Trade. Only 31.1 percent of Commuters worked in the remaining six industries. In 2000, 39.3 percent of the Residence Unknown workers were employed in Services, 23.0 percent in Retail Trade (led by eating & drinking places), and 19.2 percent in Construction. Local Residents had a similar distribution: 32.6 percent worked in Services, 21.4 percent were in Retail Trade, and 16.2 percent were employed in the Construction industry. Figures 4, 5, and 6 show that Local Residents consistently had higher average annual wages in nearly every industry than workers in the Commuter, Residence Unknown, and Unlikely Commuter categories.
Recreation is a predominant aspect of the Jackson area’s economy, so we examined worker numbers and wages in Retail Trade and Services in greater detail. Employment in three recreation sub-industries accounted for 29.0 percent of total employment (in all industries) in 2000. As shown in Figure 7, eating & drinking places, the recreation sub-industry in Retail Trade, employed 7.2 percent of all Local Resident and 11.6 percent of all Non-Resident employees (includes Commuters, Unlikely Commuters, and Residence Unknown) in 2000. Amusement & recreation services and hotels & other lodging places are the recreation sub-industries in Services. In 2000, these two sub-industries employed 13.8 percent of all Local Resident and 22.7 percent of all Non-Resident employees, which is lower than the percentage employed in the two sub-industries in both 1992 and 1996. Of the 4,260 individuals working in the recreation sub-industries in 2000, 71.1 percent were Non-Residents; of the 14,703 individuals working in all industries in Jackson in 2000, 60.1 percent were Non-Residents.
Figure 8 shows that, with the exception of amusement & recreation workers in 1992, Local Residents had higher annual average wages than Non-Residents. Average wages for Local Residents in the recreation sub-industries increased 59.2 percent (from $14,330 to $22,821) between 1992 and 2000, while average wages for their Non-Resident counterparts increased 41.2 percent (from $9,466 to $13,370). In contrast, over the same period the average wages of Local Residents and Non-Residents in all industries increased 57.7 percent and 76.0 percent, respectively.
Census Versus UI Wage Records
The decennial Census long form gathered information about individuals’ work locations, which allowed the Census Bureau to estimate commuting patterns at the county level. Commuter data from the 2000 census have not yet been released, but commuting findings from the 1990 Census appeared in the January 1993 issue of Wyoming Labor Force Trends.16 The 1990 Census supported our initial observation that many workers classified as Residence Unknown were residents of Idaho. At the time of the 1990 Census, 325 residents of Teton County (ID), or 9.5 percent of that County’s population, worked in Teton County (WY). To put this in perspective, Lincoln County, the primary Wyoming county with Commuters to the Jackson area, had only 191 residents who worked in Teton County (WY) in 1990. At this time, Census information is the only way we can identify workers who reside outside of Wyoming, but the Census provides less timely information about commuting patterns than the methods used in this study. Census information is only collected every ten years, and represents only one point in time, while the Unemployment Insurance Wage Records database is updated quarterly. Our research using administrative data allowed us to estimate commuting levels between individual cities and provided a time series over which to analyze trends.
Although this article focused on the commuting patterns of individuals who work in Jackson, future research will identify commuting patterns throughout the state. Just as we suspect Teton County has a high number of workers from Idaho, preliminary research indicates that Campbell and Laramie counties have large numbers of Residence Unknown workers who probably commute from Montana and Colorado, respectively. We expect to find fewer individuals classified as Residence Unknown in towns in central Wyoming, such as Casper, Riverton, Worland, and Lander.
The findings of commuting pattern research have several practical purposes. The results of our initial research will be used in the planning stages of a project that will provide housing and travel alternatives for commuters and reduce traffic along a scenic highway. Businesses can use the information to determine locations that will allow them to optimize patronage by commuters. Others may use the results to identify locations where additional services are needed. The State of Wyoming may use the findings to optimize consumers’ access to government service centers.
The central observation of this analysis is that an individual’s place of work is not necessarily determined by place of residence. In a highly mobile society, and particularly in Wyoming where individuals are accustomed to traveling long distances for shopping, entertainment, to reach an airport, and even to work, there is a need to have the ability to identify locations of work and residence beyond that reported by the Census every ten years. At the current time, the only means of developing this information at a reasonable cost is through the use of administrative data.
1 October 1, 1999 through September 30, 2000.
2 Area Trends In Employment and Unemployment, U.S. Department of Labor, May 2000. Other Labor Surplus Areas in Wyoming were Big Horn County, Fremont County, and Natrona County excluding the city of Casper. Some changes in the determination of Labor Surplus Areas are made during periods of low unemployment.
3 For more information about Wage Records, see Appendix C of Wyoming Wage Records 1992-1998: A Baseline Study, Wyoming Department of Employment, November 1999. Also available online at <http://lmi.state.wy.us/Wage_Records/title.htm>.
4 Workforce Investment Act of 1998, Section 101(18). Available online at <http://www.usdoj.gov/crt/508/508law.html>.
5 “North Alpine Planned Community,” March 11, 2001, http://www.northalpine.com/docpress2.html (September 4, 2001).
6 Suzanne Olmstead, Teton County Assessor, phone interview for information by Krista Gerth, August 16, 2001. Average price of homes sold is based on average sales price of existing single family homes on 10 acres or less during 2000.
7 The ES-202 (Covered Employment and Wages) contains data from Employers’ Quarterly Contributions Reports, Industry Verification Statements, and Multiple Worksite Reports. It includes detailed information about Unemployment Insurance (UI) covered employing units, employment, and wages by region, county, and industry. Wage Records information is compiled quarterly. For each employee working for a UI-covered employer, Wage Records contains the employee’s Social Security Number, total gross wages for each quarter, and the employer’s UI number.
8 Our initial study for The Meridian Group focused on the zip code on individual driver’s licenses instead of the city. In our subsequent research, we chose to group individuals by city to account for adjacent towns which share a zip code.
9Department of Transportation, “WYDOT Driver Services / Change of Name/Address,” July 20, 2001, <http://wydotweb.state.wy.us/web/driver_services/name_change.html > (September 4, 2001).
10 In subsequent research we adjusted for some employees who may not have changed their driver’s license address immediately after moving. A link to details about this methodology may be found at <http://lmi.state.wy.us/staff/w_g.htm>.
11 According to W.S. 31-7-107, Wyoming residents who hold a driver’s license from another state are required to obtain a Wyoming driver’s license within one year of moving to Wyoming. Nonetheless, we have allowed a four-year window because some individuals may not be aware of the law.
12 U.S. Census, 1990 and Idaho Department of Commerce, “County Profiles,” (n.d.), <http://www.idoc.state.id.us/idcomm/cntypro.html> (September 4, 2001).
13 U.S. Census Bureau, “Population Estimates for States, Counties, Places, and Minor Civil Divisions,” October 20, 2000, <http://www.census.gov/population/estimates/metro-city/scful/SC99F_ID.txt> (July 24, 2001).
14 U.S. Census Bureau, Census 2000, (n.d.), <http://factfinder.census.gov/bf/_lang=en_vt
_name=DEC_2000_SF1_U_DP1_geo_id=05000US16081.html> (September 4, 2001).
15 This population growth includes only the town of Jackson. The towns of Moose, Wilson, Kelly, Teton Village, and Hoback Junction were not included because the 1990 Census did not specifically produce a population count for the towns. Therefore, 1992 population estimates for the towns were not available.
16 Gosar, Wayne M. “Labor Markets Know No Political Boundary,” Wyoming Labor Force Trends, January 1993.
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