BEA economic areas: a progress report on redefinition.

Johnson, Kenneth P. ; Spatz, Lyle

The bureau of Economic Analysis (BEA) facilitates regional economic analysis by providing geographically detailed economic data not only for States and other political or administrative units but also for economic units known as BEA economic areas, which cover the entire Nation. BEA assembles economic-area data on earnings by industry, employment by industry, total personal income, population, and per capita personal income. These data facilitate analysis of local-area economic activity, local interindustry economic relationships, and interarea population movements. In addition, they serve as the basis for local-area economic projections.(1) Historical and projected economic-area data are used by government agencies for planning public-sector projects and programs, by businesses for determining plant locations and sales territories, and by university and other research groups for doing regional economic studies.

The 183 current economic areas were first defined in 1977; they were revised slightly in 1983 but have not been revised since. To maintain their analytical usefulness, BEA has undertaken a redefinition of the economic areas that is scheduled to be completed in late 1994.(2) This article reports on progress toward that redefinition and on future plans.

Each economic area consists of an economic node - a metropolitan area or a similar area that serves as a center of economic activity - and the surrounding counties that are economically related to the node.(3) Commuting patterns are the main factor used in determining the economic relationships among counties, so each economic area includes, as far as possible, the place of work and the place of residence of its labor force. The decision to redefine the economic areas reflects (1) substantial changes in the commuting patterns of economic areas, based on data from the 1990 Census of Population, and (2) changes in definitions of metropolitan areas.

Changes in commuting patterns

The economic-area definition procedure requires that, as far as possible, the labor force of an economic area should work and reside in that economic area. Thus, each economic area should exhibit one or both of the following commuting patterns: (1) The number of out-commuters (residents who commute to work out of the economic area) and the number of in-commuters (nonresidents who commute to work in the economic area) are minimal; (2) the net number of commuters (the difference between the numbers of in- and out-commuters) is minimal.(4)

The current definitions reflect the use of journey-to-work data from the 1970 Census of Population. According to the 1970 data, more than 80 percent of all economic areas had in-commuting and out-commuting rates of 3 percent or less, and more than 85 percent had net commuting rates of 1 percent or less (table 1 and chart 1).(5)

[TABULAR DATA OMITTED]

In the early 1980's, the definitions were evaluated on the basis of journey-to-work data from the 1980 census; commuting across area boundaries continued to be minimal. According to the 1980 data, nearly 80 percent of all areas had in-commuting and out-commuting rates of 3 percent or less, and more than 80 percent had net commuting rates of 1 percent or less.

An evaluation of definitions on the basis of journey-to-work data from the 1990 census indicates that commuting across economic-area boundaries is no longer minimal. According to the 1990 data, only about 40 percent of an areas had in-commuting and out-commuting rates of 3 percent or less; about 60 percent had net commuting rates of 1 percent or less. Consequently, the boundaries of a substantial number of areas must be revised if each economic area is to include both the place of work and the place of residence of its labor force.

Changes in metropolitan-area definitions

The economic-area definition procedure requires that when a metropolitan area is assigned to an economic area, all the counties in the metropolitan area are assigned to the same economic area. All except one of the current assignments were made in 1977. In 1983, following the 1980 census, the Office of Management and Budget (OMB) revised the metropolitan-area definitions; the revised definitions resulted in only one instance in which a metropolitan area crossed economic-area boundaries.(6)

In December 1992 and June 1993, OMB revised the metropolitan-area definitions to reflect the results of the 1990 census. As a result of the revisions, seven metropolitan areas now cross economic-area boundaries; that is, each of the seven metropolitan areas contains a county from an economic area adjacent to the one to which the metropolitan area is currently assigned (table 2). Therefore, the boundaries of 14 economic areas must be revised if no metropolitan area is to cross an economic-area boundary.

[TABULAR DATA OMITTED]

Future plans

In mid-1994, BEA plans to publish in the Federal Register a notice that will summarize comments on the data and procedures used to define the current economic areas, as described in the Federal Register notice of March 1993; in addition, the new notice will also propose a set of boundary changes. In late 1994, BEA plans to publish a notice that will summarize comments on the proposed changes and that will present final boundary changes; BEA also plans to discuss the final boundary changes in an article in the Survey of Current Business. In 1995, as part of its next set of regional projections, BEA plans to prepare projections for the redefined economic areas.

(1.) See Regional Economic Analysis Division, "BEA Economic Area Projections of Income, Employment, and Population to the Year 2000," Survey of Current Business 70 (November 1990): 39-43. (2.) See "Intent to Revise the Boundaries of the BEA Economic Areas," Federal Register 58 (March 9, 1993): 13,049-50. (3.) Metropolitan areas consist of metropolitan statistical areas, primary metropolitan statistical areas, and New England county metropolitan areas. (4.) In this article, the number of out-commuters (or in-commuters) is "minimal" if the number is 3 percent or less of all employed economic-area residents, regardless of their place of work; the net number of commuters is "minimal" if it is i percent or less of all employed residents. (5.) For an economic area, the rate of in-commuting (or out-commuting) is the number of in-commuters (or out-commuters) as a percentage of the number of employed economic-area residents, regardless of their place of work. The net commuting rate is the difference between the in-commuting rate and the out-commuting rate. Summary statistics for net rates are based on absolute net rates (net rates regardless of sign). (6.) OMB reassigned Monroe County, MI, from the Toledo, oh metropolitan tan area (in the Toledo, OH, economic area 70) to the Detroit, MI, metropolitan area (in the Detroit, MI, economic area 71); the boundary between economic areas 70 and 71 was changed in 1983 to reflect this reassignment.