lN the Seotlight:
Business Uses of Census Data
l T t h e results are in - well. some of
I
I t h e m . w i l h m o r e t o c o m e o v e r t h e n"^t y"ur. And while the first job of the census was to apportion seats in Congresv and then provide population c o u n t s f o r r e d i s t r i c t i n g , w e r e c o g n i z e that census data are essential to a b u s i n e s s ' s b o t t o m li n e .
If your company buys, or perhaps even does its own, market research, chances are that the basis of that research is census data. Few surveys get even close to the quantity or quality of data produced from the census. The census, which is conducted every 10 years, elicits a veritable boatload of information about how Americans - and Hoosiers - live.
For businesses whose sales depend
on individual consumers, the census is essential. It tells us how many people live in a given area. It describes their l i v i n g a r r a n g e m e n t s . a g e s . i n c o m e . educational attainment, commuting patterns and occupations. It even describes the kinds of homes people have, in terms of age of home, number of rooms. value. whether it has complete kitchen and plumbing
facilities, the availability of telephones and automobiles and the tvpe of home*
heating fuel used.
That information can be taken, in an aggregated form (all individual
responses to the census are confidential, so don't look to the census for a mailing list) and crunched
(continued on Page 2)
Growth Momentum: Indiana's'Big Mon Industries See'lN Business'on page 3 for more details
Thnsportation, Scheduled Personnel Supply
services Computer and Data Processing Services
Misc. Amusement, Recleation Services
Elementary and Secondary
Source: Indiana Business Research Center and Indiana Department of Workforce Developmenl
lN the Spotlight (continued from page I )
to help determine markets or determine skill levels and reasonable commute distance for the labor market. Because the census asks about language spoken at home. it can even be used to
determine if a given area may have a large number of people who speak a particular language.
Cases in Point
. With the majority of mothers in the workplace, day care is a necessity. If s o m e o n e w a n t s to o p e n a d a y c a r e center, the first thing to do is to look at various locations based on the number of children under age 6 living within a 1 - t o S - m i l e ra d i u s .
. A person with skills in renovating older homes would search for those neighborhoods where much of the housing was built prior to 1950 or 1940.
. A company considering relocation would look for areas with a significant supply of skilled labor, combining those data with commuting patterns, occupation and education data.
. A company that provides personal services, such as cleaning or lawn-care or car detailins. would seek out
information on middle- and high- i n c o m e n e i g h b o r h o o d s .
. A law firm, looking at the aging of the population in the state, may decide to expand its practice in law specific to the elderly.
Ghallenges to Using the Data
The data are plentiful, as are the uses.
But finding the specifics can
sometimes pose a challenge. The sheer quantity of information to sort and sift can be overwhelming. This is where market research companies and
consultants come in to provide tailored reports for specific needs, for a fee, of course. CACI Demographics is one such market research company. It uses census data as the foundation of much of its work, but customizes the data for specific purposes. Lifestyle segmenta- tion is one such customization of census data and is combined with vendor estimates of income. (Census data on income will not be available for almost another year.)
A free version by zip code is available on CACI's Web site. When the author typed in the zip code 46205, the lifestyle segmentation description was "Urban Working Families."
Colleagues' zip codes elicited a variety
of other catchy appellations, such as
"Boomers
with Children," "Young Professionals with Children," "Older Couples" and "Urban Professional Couples." A northern Indiana zip came back as "Rustbelt
Neighborhood" (that term hasn't been used much since the 1980s). Both Bloomington, Ind., zip codes elicited "College
Campuses,"
which shows clearly how such broad categorization can mask important details of an area, since there are thousands of highly paid professionals in Bloomington who are potential customers or workers.
Not so catchy, but also not subject to pigeon-holing, are the useful and free profiles of Indiana counties available on the Web site STAZS Indiana, which details population, household types, employment status, income and commuting patterns (with graphs).
In Short
Census data are an essential part of business. Their role in decision making for profit ventures is not highly
visible, masked as it may be by tailored reports and customization.
And while the census data are not collected for business use, businesses have recognized its value.
TNCONTEXT
JuIy 2001M e a s u r i n g G r o w t h M o m e n t u m , P a r t l l l : I n d i a n a ' s 'B i g M o ' I n d u s t r i e s
hat are the high-growth i n d u s t r i e s i n I n d i a n a ? T h i s is a question that we attempted to answer in previous issues o l ' lN C o n r e x r u s i n g a n e r . r e c o n o m i c measure that we called growth momentum.
Growth momentum fbr a particular variable during a specific time period i s c a l c u l a t e d b y m L r l t i p l y i n g n u m e r i c c h a n g e f o r t h a t v a r i a b l e b y t h e p e r c e n t c h a n g e f b r t h e s a m e v a r i a b l e d u r i n g t h e g i v e n p e r i o d . In t h e M a y 2 0 0 I
i s s u e , w e i d e n t i f i e d l0 i n d u s t r i e s w i t h high employment growth momentum between 1995 and 2000. In the June 2001 issue, we applied the momentum approach to identify 10 industries with high total wage growth momentum.
Lef 's
pLrt it all together. Figure I is a Venn diagrarn that lists those industry sectors that appear in either or both high lnonrentum categories. A total ol'
l 5 i n d L r s t r y s e c t o r s ( t r t th e t h r e e - d i g i t S I C l e v e l ) w e r e i c l e n t i f i e d a s r a n k i n g i n t h e t o p l 0 f o l c i t h c r c r n p l o y r n e n t
growth momentum, wage growth momentum or both.
Examples of the types of
establishments found in each of the three categories of growth momentLlm sectors can be found in Table I on page 4. These industries vary widely in terms of their sizes, numeric growtl.r amounts and percentage growth rates, b u ( e a c h o f t h e s e i n d t r s t l i e s g r c w s u b s t a n t i a l l y b e t w e e n 1 9 9 5 a n d 2 0 0 0 i n b o t h e m p l o y m e n t a n d w a g e s .
( c o r t t i n u e d o n p u g e 1 )
E m p l o y m e n t Wages
S o u f c e : I n d i a n a B u s i n e s s R e s e a r c h C e n t e r a n d I n d i a n a D c p a r lntent of Worktbrce Dcvclopnenl
Transportation, Scheduled P e r s o n n e l S u p p l y
Services Computer and Data Processing Services
M i s c . A m u s e m e n t , Recreation Services
Elementary and Secondary
E m p l o y m e n t Wages
JuIy 2001
TNCONTEXT 3
lN Business
(continued Jrom page 3)
Figure 2 shows the relative size of employrnent in the five industry sectors that were identified as hi-eh g r o w t h in b o t h m o m e n t u m c r t e g o r i e s - oul' "Big Mo" industries. F i g u r e 2 a l s o d i s p l a y s t h e g r o w t h in e m p l o y - m e n t b e t w e e n 1 9 9 5 a n d 2 0 0 0 . T h e e l e m e n t a r y a u d s e c o n d a r y s c h o o l s s e c t o r i s b y f a r t h e b i g - e e s t e m p l o y e t ' i n t h e g r o u p ; th e s r n a l l e r p e r s o n n e l s u p p l y s e r v i c e i n d L r s t r y s a w t h e l a r g e s t n u m e r i c g r o w t l . t i n e m p l o y r n c n t .
F i g u r e 3 s h o w s th e g r o w t h r a t e s l i t r b o t h e r r p l o y r n c r r t a n d t o t a l w a g e s f o r c a c h o f t h e b i g m o u r e n t L l m i n c l u s t r i e s . I n b o t h w a g e s a n c l e r n l r l o y t n e n t , t l ' r e l'astest gr-owtlr occurrccl in the i l l r u s e m e n t a n c l a i r t r a n s p o r t a t i o n i n d u s t r i e s . T h e s e i n c l u s t r i e s a l s o
4
Ai r Transportation, Scheduled
Personnel Supply Services
0 ^ o ^ Q ^ o
sv
"o" $o- {ro"
E m p l o y m e n t
c D l c r r r n r l l n r l i a n a I ) c p r r l r D c i l l o l W ( ) f k l i ) r c c I ) c ! c l ( ) | ] l l l c l r l
Examples of Types of Establishments High Employment Growth Momentum
Wheat, rice, corn, soybeans
Stores selling department store commodities in limited amounts Sporting goods and bicycle shops, book, jewelry, hobby and gift stores B u s i n e s s m a n a g e m e n t a n d p u b l i c re l a t i o n s s e r v i c e s , c o n s u l t a n t s G o v e r n m e n t e c o n o m i c d e v e l o p m e n t a g e n c i e s
C a s h G r a i n s
M i s c . G e n e r a l M e r c h a n d i s e S t o r e s M i s c e l l a n e o u s S h o p p i n g G o o d s s t o r e s M a n a g e m e n t a n d P u b l i c R e l a t i o n s A d m i n . o f G e n e r a l E c o n o m i c P r o g r a m s High Wage Growth Momentum
Medicinal chemicals, pharmaceutical preparations
Motor vehicles, car, truck and bus bodies, parts and accessories Investment bankers, security brokers and dealers
B a n k h o l d i n g c o m p a n i e s , o t h e r h o l d i n g c o m p a n i e s Professional sports clubs and promoters, racing Drugs
M o t o r V e h i c l e s a n d E q u i p m e n t Security Brokers and Dealers H o l d i n g O f f i c e s
Commercial Sports
High Growth Momentum in Both Wages and Employment: 'Big Mo' Industries
Air passenger and cargo carriers, courier services E m p l o y m e n t a g e n c i e s , t e m p o r a r y a n d o f f i c e h e l p
Programming, design & development of software, systems development, computer repair Riverboat casinos, amusement parks, public golf courses
Schools, academies, boarding schools Air Transportation, Scheduled
P e r s o n n e l S u p p l y S e r v i c e s
Computer and Data Processing Services lvlisc. Amusement, Recreation Services Elementary and Secondary Schools 4 5 1
736 737 799 821
S o u r c d : S t a n d x r d l n d u r t r i r l C l n s s i i i c a t i o r l ' l r r r u a l . l 9 8 J
TNCONTEXT
J u l y 2 0 0 1Air Transportation, Scheduled
Personnel Supply Services
0 50 100 150 200
Percent
S o u r c e : l n d i a n a B u s i n e s s R e s e a r c h C e n t e r a n d l n d i a n a D e p a r t m e n t o f W o r k f o r c e D e v e l o p m e n t
experienced large numeric gains in employment. Although the computer and data processing services industry had a relatively small employment gain numerically, the industry's employ- ment growth rate exceeded 50Vo, and wage growth topped l25%o.
Gonsidered together, the five
' B i g Mo' industries outpaced the state in terms of
growth rates for employment and
wages.
Considered together, these five "Big Mo" industries outpaced the state in terms of growth rates for employment and wages. Figure 4 shows that wage growth was almost twice the state figure, and the employment growth rate for this group was more than three times the rate for the state. Impressive growth in employment and wages has resulted in larger shares of state totals for this group. These five industries accounted fot 10.37o of the state's employment and 8.97o of the state's wages in first quarter of 2000, up from 8.47o of state employment and l.6Vo of state wages in the first quarter of 1995.
50
40 -o 9 u u
Lo 20
1 0
0
Employment Wages
Source: Indiana Business Research Center and Indiana Department of workfbrce Development
July 2001
INCONTEXT 5
Regional Patterns in Personal lncome Growth
he latest data from the U.S.
Bureau of Economic Analysis show that total personal income in the United States grew by 4.27o in the fourth quarter of 2000. (These data are seasonally adjusted at annual rates, not adjusted for price changes.) This was the slowest quarterly growth rate since the first quarter of 1999.
A l t h o u g h s l o w i n g o f t h e e c o n o m y is evident, there is no indication of a recession in these data since the
growth rate still exceeds the rate of inflation, which was 2.9Vo it the fourth quarter.
Across the nation, the rates of growth ranged from 5.4Vo in the Mideastern states to -2.2Vo in the Plains states. Personal income in the Great Lakes region, which includes Indiana, grew by 4.0Vo (see Figure l).
Indiana recorded a 1.87o advance in the fourth quarter, after jumping 6.7Vo in the third quarter and nearly 8Vo in
Rocky Mountain
S o u r c e : U . S . B u r e a u o f E c o n o m i c A n a l y s i s
INCONTEXT
July 2001last year's second quarter.
The high standing of the Mideast states in the latest data could be misleading. This region encompasses the District of Columbia plus five states, including New York and Pennsylvania. It experienced the
lowest average rate of growth during the past 11 years and also had the highest degree of variabilityx in growth rates (see Figure 2). Since 1990, the best growth records were turned in by the Rocky Mountain and Southwest regions, which also had the
lowest variability in growth rates. The Great Lakes states grew less rapidly than the nation with more variability than the U.S., but Indiana's 5.37o increase bested the region's 11-year average of 5.2Vo.
Indiana's position among its Great Lakes neighbors is worth noting.
While it has been shown frequently that Indiana's share of the nation's personal income has fallen since 1994 (see right scale of Figure 3), the H o o s i e r s t a t e d i d w e l l i n c o m p a r i s o n with some of the Great Lake states (see left scale of Figure 3).
During the early years of the last d e c a d e ( 1 9 9 0 : l t o 1 9 9 4 : l ) , I n d i a n a ' s share of U.S. and Great Lakes personal income grew. There followed a period of decrease in the state's share of both aggregates, with more decline vis-d-vis the region than against the nation. But that pattern was broken in 1996. Since then, Indiana has increased and sustained a higher rate of growth than the region. Thus, while the state's share of the nation declined from 2.017o at the start of 1990 to 1.967o at the close of 2000, its share of the region advanced from 12.I6Vo to 12.30Vo.
This finding suggests that, in direct competition with its neighbors, Indiana has performed well. But its region has lost ground in the nation, falling from 16.5Vo of U.S. personal income to 75.9Vo in2000.
*Variability is measured by the cofficient of variation, which is the mean rate of growth divided by the standard deviation of those growth rates.
=
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0 . 8
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4.0 4.5
S o u r c e : U . S . B u r e a u o f E c o n o m i c A n a l y s i s
5 . 0 5 . 5 6 . 0 6 . 5
Personal Income Growth
, - ' ' - t I I
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. . . i i . . . . ll r : . . . . i . . . " . . . : . . . " . .
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" ' " " ' - " - ' - : - - " " " " " ' U L - a " ' j ' ' - ' : ' - " ' - ' : " " " " - " - - i ' - " " " " " ' :
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July 2001
TNCONTEXT 7
Ghanging Spending Patterns
rom month-to-month and year- t o - y e a r . c o n s u m e r s p e n d i n g i s a great constant in the economy.
But seen over a longer period of time, changing prices and developing opportunities cause dramatic shifts in consumer spending.
In broad terms, there has been little change in the share of consumer spending claimed by durable goods in the period 1947 to 2000 (see Figure 1).
Motor vehicles consistently cycle
between 5o/o and 7o/o ol consumel
s p e n d i n g , w h i l e spending on medical services
has more than tripled to I 5o/o.
Durables have fluctuated in a narrow range between llVo and 16%o of personal consumption expenditures.
By contrast, nondurable goods and services have exchanged positions in their share of consumer spending.
Services were less than one-third of consumer spending in'4'7 and grew to 58Vo by 2000. This increase was possible because the components of nondurable goods fell in relative price, bringing this class of spending down from 567o to 307o of all consumer outlays.
Among durable goods (see Figure 2), motor vehicles and Parts s h o w a s t r o n g c y c l i c a l p a t t e r n s i n c e the late 1950s. But most of that movement lies between 57o andl7o of consumer spending. Furniture and
household equipment gives evidence of a slight downward trend, but also exhibits some cyclicality. Rising in importance over the period were other durable goods, including computers, boats and the assets of affluence.
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a
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o no
70
O U
50 40 30 20 1 0
0
S o u r c e : U . S . B u r e a u o f E c o n o m i c A n a l y s i s
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S o u r c e : U . S . B u r e a u o f E c o n o m i c A n a l y s i s
8 TNCONTEXT
July 2001Nondurable goods (see Figure 3) saw a dramatic decline in the share of consumer spending going to food.
Rising income and falling food prices drove the percent of total spending down from 32Vo to l4Vo of the
consumers' outlays. Similarly, clothing expenditures have declined from nearly l27o to less than 57o of consumer spending, and energy has a declining claim on consumers' outlays.
Services include several sectors that
grew dramatically over the past half- century (see Figure 4). Housing and household operations (including electricity and gas) assumed greater importance from the close of WWII until the early 1960s, but have remained stable since then at 20Vo of total consumer spending. Medical services rose steadily from 4Vo up to 75Vo in the early '90s,
when they leveled off at l5%o. Although
transportation services have changed from trains and buses to airplanes, the portion of consumer spending going to this sector has remained fairly
constant, below 57o.In similar fashion, Americans seem to be spending little more of their budgets on recreation today than they did 50 years ago.
The vast category of other services has nearly doubled as a portion of consumer spending. This group includes the barber, the beautician, the nail decorator, the veterinarian, the mini-storage facility, the CPA who works on taxes, and others who provide services for us, our pets or our possessions. It also includes the writing of computer software. Higher incomes make these services more accessible for more people.
There is a temptation to project these trends into the future. But how far will food fall as a portion of our spending when we choose more and more prepared food? Health care services may not rise as dramatically as in the past if we become more attuned to preventive measures. And if we are healthier, will we spend more on travel or on having our backs rubbed by a professional masseur?
E 3 5
o_ ou
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a i E
8 i o
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S o u r c e : U . S . B u r e a u o f E c o n o m i c A n a l v s i s
o) .= 25 aC
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9 1 6 t U)E 1 0
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S o u r c e : U . S . B u r e a u o f E c o n o m i c A n a l y s i s
July 2001
TNCONTEXT 9
Indiana's Unemployment Rate Lower than Surrounding States
ln every Indiana metro area, in fact.
employment and the unemployment rate both improved in April. Even Kokomo, where manufacturing cutbacks have made headlines, saw its unemployment rate shrink to 4.3Vo in April from 5.9Vo in March.
Indiana's 2.9Vo unemployment rate was the best among its neighboring states in April. Ohio's rate improved to 3.6Vo, while Kentucky held steady at 4.l%o. Unemployment rates rose to 4.4Vo in Michigan and 5.lVo in Illinois.
he unemployment rate in lndiana dipped in April, to a non- seasonally adjtsted 2.9 %o . The average rate in the state for the first three months of 2001 was about 3.570. Nationally, the non-seasonally adjusted unemployment rate was 4.ZVo in April, also a decline from first quarter levels.
This improvement in the unemployment rate occurred even though Indiana's labor force expanded.
The total civilian labor force rose by
nearly 32,000 in April over the first three months' average.
Strong gains in employment in the Indianapolis metropolitan area led the state. Unemployment in Indianapolis fell to 2.lVo in April. The Gary metro arca, made up of Lake and Porter counties. had 3.000 more of its residents employed in April than in March. The April unemployment rate in Gary, Indiana's second largest metro area, dropped to 3.6Vo from 4.2Vo in the prior month.
lU Economic Forecast Sees Flat Year
\I fe should expect little economic V Y srowth in Indiana for the rest of this yeJr, according to the latest economic forecast from Indiana University.
The Center for Econometric Model Research in Bloomington produces econometric forecasts of the Indiana and U.S. economies. Whereas real personal income in Indiana grew 3.2Vo in 2000, the Center's model predicts less than a IVo increase in 2001.
Although Indiana's income did decline slightly in the first quarter of this year (down l.25Vo at an annual rate), some strengthening later in 2001 is expected to produce a small positive growth rate for the year.
The Center's forecast shows unemployment climbing, too (see Figure 1). After sinking to record-low levels during 2000, Indiana's
unemployment rate should follow the U.S. rate up later this year. By the end of 2001, expect unemployment in Indiana to top 4Vo, up from arcund3Vo in the early part of this year. That's still not a high rate of unemployment
10 INCONTEXT
by historical standards. Indiana's rate was above 4Vo as rccently as 1995 and
1996, in the heart of the last decade's economic boom. On average, then, businesses in Indiana should see about the same level of sales as last year.
Lower sales at manufacturing firms are likely to be offset by higher revenues in the health and business services sectors and in financial sectors.
The U.S. economy will not go into recession this year, according to the
Center's forecast. Gross domestic product should rise about l.8Vo in real terms. While small by comparison to the 5Eo jump in 2000, this positive growth rate for 2001 means that lower interest rates, a strengthening stock market and renewed consumer confidence should begin to move the national economy forward at a brisker pace later this year. Already we are seeing encouraging national sales figures for vehicles and housing.
s
o (6 CE
co
E- E c)
l o
5 4
J
2
1 9 9 6 : 1 1 9 9 7 : 1
Source: Center for Econometric Model Research, Kelley School of Business, Indiana University, May 2001
July 2001
State Unemployment Rate = 2.9"/o
! Above State Rate (40 counties)
ffiffi Approx. Equalto State Rate (+/- 0.3) (23 counties) l-l Below State Rate (29 counties)
*Not seasonally adjusted Source: Indiana Depafiment of Workforce Development
Highest Unemployment Rates, A p r i l 2 0 0 1 :
CoururrEs
. Otange: 7.2Vo . Greene: 5.4Vo
MErno AnEns
. Kokomo: 4.3Vo . Terre Haute: 4.l%o
Lowest Unemployment Rates, April 2001:
Coururres
. Hamilton: l.2Vo . Boone: l.4Vo . Hendricks: 1.47o . Johnson: 1.47o
Merno ARens
. Bloomington: l.5Vo . Indianapolis:2.|Vo C h a n g e i n t h e N u m b e r o f P e o p l e E m p l o y e d , A p r i l 2 0 0 1 G o m p a r e d t o A p r i l 2 0 0 0 : LnRcesr Coururv lrucnrRses
. Marion County: 13,360 . Hamilton County: 3,000 LRRcesr Coururv Drclrrues . Howard County: -1,690 . Wavne C o u n t v : - 1 . 0 1 0
July 2001
INCONTEXT 11
lN Depthl
For all the latest state and county figures and complete time series data sets related to the Indiana economy' visit the following lnternet sites:
o www. i brc,indiana.edu/incontext
. www.stats.indiana.edu
*:;J::a:ilff;T:'"-
Indiana Business Research Center Kelley School of Business Indiana University
IUPUI Campus
801 West Michigan Street, BS 4090 Indianapolis, IN 46202-5 1 5 1
Nonprofit Organization U . S . P o s t a g e
PAID Permit No. 4245 Indianapolis, Indiana
