Recently, there have been positive news headlines about the growth in employment. New businesses are opening and industries are again hiring. The Central Pennsylvania market has shown strength as unemployment in each of the nine counties remains well below the national level. But, which industries support our local region? Which industries have the greatest impact on economic activity?

 

There are just under 92,000 businesses in the nine Central Pennsylvania Counties (Adams, Berks, Cumberland, Dauphin, Franklin, Lancaster, Lebanon, and York Counties). These businesses employ 1.25 million people and generate approximately $300 million in sales. On average for the region, there are 13.6 employees directly supported by 1 business (the national average is 1:11.9). The employment-to-population ratio (total population divided by total employment) for Central Pennsylvania overall is 1:1.89 (the national EPR is 1:2.01).

 

The particular analysis used in this article to determine the region's strongest industries is called an economic base analysis. This type of analysis breaks up employment activity into two sectors: basic and non-basic. Basic industries are those exporting goods or services from the region and bring outside money in. Non-basic industries are typically service industries that circulate money that already exists in an area and support basic industries. This type of analysis is performed by calculating a Location Quotient (LQ). The LQ takes the percentage of a region's employment in an industry and compares it to the national standard within the same industry. Essentially, the LQ creates an index for comparing regions that is not based on just the total number of businesses and the total number of employees. The location quotient is measured as follows: industries with an LQ equal to 1 produce just enough output to satisfy local consumption; industries with an LQ greater than 1 produce excess for export (basic industry); industries with an LQ less than 1 do not produce enough for local consumption and therefore goods and services must be imported into the region. 

 

While this analysis is helpful for identifying strong industries within a region, as well as industries that are emerging or faltering, it is not a perfect calculation because it assumes that employment is perfectly aligned with the consumption of goods and services and that each region's consumption of goods and services, as well as its exports and imports of goods and services are exactly the same. For the purposes of this article, we are using this calculation for comparison to determine areas of strengths and weaknesses in the Central Pennsylvania region and each of the counties.

 

That being said, if we look at the Central Pennsylvania region from an economic base mindset, we learn that overall the region's strongest industries (those with an LQ greater than 1) are as follows:

• Manufacturing - 1.312
• Wholesale Trade - 1.110
• Construction - 1.082
• Government - 1.082
• Transportation - 1.064

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Looking at each of the nine Central Pennsylvania counties through the same type of analysis, we learn that the strongest industries within each (based solely on the location quotient) are as follows:

 

• Adams County - Construction Industry - 1.835
• Berks County - Manufacturing - 1.361
• Cumberland County - Transportation - 2.383
• Dauphin County - Government - 2.522
• Franklin County - Wholesale Trade - 1.842
• Lancaster County - Manufacturing - 1.638
• Lebanon County - Manufacturing - 1.599
• Perry County - Government - 2.260
• York County - Wholesale Trade - 1.737 

industry facts and county comparisons 

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