North Carolina’s Interconnected Labor Markets
Regional labor markets
Job seekers, employers, educators, program administrators and policy makers all need quality data and information to help make economic and labor market decisions. Much of the data collected and reported is based on political boundaries that may seem disconnected from the functioning of our economic markets. For example, using data from a single county may not accurately indicate where a company gets its workforce; as LEAD has published in previous articles, only a small proportion of NC workers live and work in the same county. Another geographic example is the data reported for Metropolitan Statistical Areas (MSA), which represents a federal attempt to create multi-county regions. However, the definition of MSA may not always align with existing labor sheds, and not all counties are included in MSA – leaving many counties in the state independent from their neighbors. To address this, LEAD has initiated research to better identify the links between counties that define our state’s labor markets.
LEAD studied many existing models of regional economic geography before settling on the USDA Travel Zone methodology. This methodology values two-way commuting relationships. In other words, when some models value the main center of a labor market (for example, a large central city) and seek commuting relationships with it, the Commuting Zone approach values commuters in both. sense. In our update to this methodology, we used the Census Longitudinal Employer-Household Dynamics Origin-Destination Employment Statistics (LODES) dataset as a measure of commuting.
Counties are joined on the basis of the highest percentage of cross moves to form initial clusters. From there, cross-commuting percentages are calculated between these initial clusters and other counties. More joins occur between clusters and counties based on these percentages, and the process repeats between clusters and other clusters, or clusters and counties. The process ends when a designated stopping point – in the case of North Carolina, 25 commuting zones – is created. The stopping point is defined by statistical tests, common sense (i.e. distance too great for a regular trip) and external validity via a comparison with USDA travel zones.
Map / Analysis
Below is a map of interconnected labor markets made using the latest LODES data (2018):
The percentages (and colors) represent the share of workers in each market who live and work in those areas (hereinafter described as “hub share”). Many of these areas span multiple counties and / or MSA, which justifies the need for alternative economic geographies mentioned in the introduction to this article. As evidenced by their darker coloring, the Research Triangle (Raleigh-Durham-Chapel Hill), Charlotte-Mecklenburg and Asheville areas have high hub shares. These hub shares provide evidence of existing policies that treat these counties as economic regions. Finally, the map shows the interconnected interstate markets in the Southwest (with northern Georgia), northern Piedmont (with Danville, VA), and the northeast (with Virginia Beach, VA). These regions imply a potential for interstate collaboration in the area of economic development.
Applications / Future research
This analysis can inform the conversation about the economic geography of North Carolina and, hopefully, promote greater regional collaboration. For example, it may be advantageous for counties to collaborate rather than compete on business recruitment projects if they share a labor market. These counties benefit from the jobs created by the addition of a new employer in the area.