The Labor Challenges of Site Selection
Date Posted: March 1, 2022
Posted In: Discussion, Workforce,
From AreaDevelopment: You’re evaluating a new site. It checks all the boxes when it comes to the property, local infrastructure, and business climate. You have one more box to check — labor supply. You’re presented with a hodge-podge of numbers. How can you make sense of it all? And what’s the bottom line?
Understanding Labor Data, Availability
Before considering the outside numbers, you first need to understand your own data. You should know how many workers you’ll need by job title as well as the estimated wages you can budget for each. Labor data are typically available by occupation, so you’ll want to translate your job titles into an occupation taxonomy, such as the Bureau of Labor’s Standard Occupational Classification (SOC) System. O*NET OnLine is a useful, free resource that can help you in the title-to-occupation translation process if you need it.
Detailed labor data are most frequently found as estimates of current employment by occupation. The Bureau of Labor Statistics publishes these estimates by metropolitan area. Alternatively, you can obtain estimates at other levels of detail from a labor data provider. In any case, when you look at these data, you should be aware of a few factors.
First, a metropolitan area is often a fair model for a labor shed, the area from which you are likely to pull the majority of your workers. But this isn’t always the case. Some metro areas are so geographically large, that it is not reasonable to expect a typical worker to commute from one end of the region to the other. Other metros are so small, or located near other population centers, that you may reasonably pull workers from outside your metropolitan area of location.
Performing a Drive-Time Analysis
You may need to look at the labor availability at a more specific geographic level for more realistic estimates of the supply of workers. A drive-time analysis is the best practice here. For example, suppose that workers are typically willing to drive 45 minutes for some of your positions. Define a 45-minute drive time perimeter and analyze the availability of workers within that geography. There may be enough skilled workers for your operation in a metropolitan area overall, but if they live too far away, you won’t be able to attract them to your location.