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Central PA Regional Employment Facts

Central PA Regional Employment Facts
July 2015
Category: Business

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?
 
central pennsylvania employment statistics
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).
 
a look at the region's strongest industries
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

 
The chart above displays the location quotient per industry for all of Central Pennsylvania combined. The bars in blue represent those industry sectors with and LQ equal to or less than 1 (nonbasic industries). The bars in green represent those industries with an LQ greater than 1 (basic industries).

top industries by central pennsylvania counties
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 
The table below compares each industry category (as they are defined by the Standard Industry Classification-SIC Code) to each Central Pennsylvania county to determine which county ranks the highest for the total number of businesses, the total number of employees, the largest percentage of the county's total employment within the specified industry, and the highest location quotient.
 
 Industry   Largest # of Businesses  Largest # of Employees Highest % of Total Employment 
Highest LQ  
 Agriculture & Mining
 Lancaster
641 
 Lancaster
5,087
 Perry
3.3%
 Perry
1.956
Construction 
Lancaster
2,183 
Lancaster
17,558 
 Adams
8.5%
Adams
1.835 
Manufacturing 
Lancaster
927 
Lancaster
37,786 
York
14.1% 
York
1.718 
Transportation* 
Lancaster
686 
Cumberland
10,456 
Cumberland
7.5% 
Cumberland
2.383 
Utility 
Lancaster
72 
Berks
1,955 
Berks and York
0.9% 
Berks
1.291 
Communications 
Lancaster
123 
Dauphin
1,749 
 Dauphin
0.7% 
Dauphin
0.707 
Wholesale Trade 
Lancaster
1,011 
York
16,059 
Franklin
8.5% 
 Franklin
1.842 
Retail Trade* 
 Lancaster
4,745 
Lancaster
60,271 
Cumberland
23.8% 
Cumberland
1.130 
Finance, Insurance, and Real Estate* 
 Lancaster
2,081 
 Dauphin
13,667 
Cumberland
6.3% 
Cumberland
0.925 
 Services*
 Lancaster
7,812 
Dauphin
117,329 
Dauphin
48.0% 
Dauphin
1.173 
Government 
Dauphin
754 
Dauphin
40,106 
Dauphin
16.4% 
Dauphin
2.522 
 *Industry Definitions
1. Transportation - Includes taxi, bus, and other transit systems, mailing services, distribution, warehousing, and logistics
2. Retail Trade - includes home improvement, general merchandise stores, food stores, auto dealers, gas stations, auto aftermarket, apparel and accessory stores, furniture and home furnishings, eating and drinking places, and misc. retail
3. Finance, Insurance, and Real Estate - includes banks, savings and lending institutions, securities brokers, insurance carriers and agents, and real estate, holding, and other investment offices
4. Services - includes hotels and lodging, auto repair services, motion pictures and amusements, health services, legal services, educational institutions and libraries, and other services 

 
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