Frank Manzo IV is the Policy Director of the Illinois Economic Policy Institute (ILEPI). Visit ILEPI at www.illinoisepi.org or follow ILEPI on Twitter @illinoisEPI. This is the first post of the “Frankonomics” series.
Want to work in Chicago?
Your best bet may be to develop expertise in office administration, rail transportation, steel manufacturing, advertising and public relations, or a professional service.
That’s according to my analysis of the “location quotient” of employment in Cook County, Illinois relative to the United States. Data are from the 2013 County Business Patterns and are limited to those sectors with 1,000 employees or more in Cook County (sorry, agricultural and mining industries).
A “location quotient” is a very simple way to determine how concentrated an industry is in a certain region. Here is how it is calculated: Take the share of Cook County workers employed in a particular industry and divide it by the share of all U.S. workers employed in that industry. If the location quotient is greater than 1.0, then Cook County “specializes” in those jobs.
Below are the Top 30 areas of market specialization in Cook County, along with their average total compensation in Cook County.
The “office administrative services” has the highest “location quotient” of employment in Cook County, with a rating of 3.96. This means that Chicago and its surrounding communities have 4 times as many jobs in office administrative services than the national average. The jobs pay over $55,000 in total annual compensation in Cook County.
In addition, Cook County has about 3 times as many jobs in rail transportation and steel manufacturing as the rest of the country.
Compared to the larger U.S. labor market, Cook County has more than twice as many workers employed in 10 other sectors. These include advertising and public relations; business, professional, labor, and political organizations; electric lighting equipment manufacturing; securities and commodities trading; and performing arts companies.
Notably, Cook County is also a national hub for educational support services, colleges and universities, and jobs requiring high-skilled workers that those institutions produce – such as management and scientific consulting services, legal services, and specialized design services.
On the other hand, sectors with the smallest market footprint in Cook County include utility systems construction, gasoline stations, amusement parks and arcades, basic chemical manufacturing, and structure and building exterior contractors.
Many of the sectors with the lowest “location quotient” intuitively make sense. Workers in Chicago are far more likely to take public transportation than the average American (demonstrated by the 1.50 school and bus transportation value above), and the total price of gasoline is relatively high in the area, which lowers demand. So fewer people work for gasoline stations. Similarly, most construction companies (including utility systems, building and exterior, and road and bridge contractors) and warehousing facilities are located in rural and suburban areas outside of Cook County where traffic is lighter so they can efficiently reach projects or markets. Illinois also has some of the most productive construction workers in the country, so it takes fewer employees to get construction jobs done here than in other parts of the country.
However, the under-representation of jobs in some sectors is alarming. Cook County only has about two-thirds as many jobs in scientific research and development services as the rest of the country, a surprising finding given the high density of colleges and universities in the area. Relative to the national average, Chicago and surrounding cities have 40% fewer employees at psychiatric and substance abuse hospitals– which hopefully reflects good public health rather than the possibility of fewer residents being treated.
Feeling entrepreneurial? The other potential takeaway from low location quotients in Cook County is that there is a market opportunity in some areas. Want to open an amusement park or arcade? You may be one of the only ones in the market. Have a great-tasting microbrew or homemade carbonated drink? There are not a lot of beverage manufacturers (relative to the rest of the country) in Cook County.