Interesting Changes in Industry Concentration in San Antonio

One common indicator used to get a sense of the structure of a local economy is the location quotient. Specifically, it measures the concentration of an industry in a local economy, such as a metropolitan area economy or a state economy, relative to the concentration of the same industry in some base area, typically the national economy. The most often used data to calculate the location quotient is employment, but income or wages is also used. The location quotient for industry i in region r is calculated using the following formula:

LQir = (Employmentir/Total Employmentir)/(EmploymentUS/Total EmploymentUS)

I did these calculations for the San Antonio metropolitan area economy using this formula. I calculated the location quotients for the NAICS 2-digit level industries. The names of these industries and the location quotients as of January 1990 and April 2017 are shown in the following table. April 2017 was used because it was the most current data available at the time I made the calculations.

Four industries in San Antonio have seen increases in their concentration levels since January 1990 (highlighted in yellow). The construction, mining, and logging industry saw the largest increase in relative concentration followed by financial activities, professional and business services, and manufacturing.

The largest declines in the location quotients were in the government sector followed by other services. The hospitality and education and health industries also saw smaller declines in their relative concentrations, and while the trade, transportation, and utilities and the information industries both saw declines so small one should probably just treat these as being inconsequential.

It is also interesting to note that a location quotient greater than 1.00 indicates that the concentration of the industry in the region is greater than the concentration at the level of the national economy.

As of April 2017, the industries with such location quotients were construction, mining, and logging; information; financial activities; education and health; hospitality; and government. The highest location quotient as of April 2017 was the financial activities industry; it had the second highest location quotient in January 1990. The industry with the highest location quotient in January 1990 was government.


These changes highlight two interesting characteristics of the San Antonio economy.

First, it is an economy with a broad base of industries with relatively high concentration levels. Second, the relative base of employment has shifted away from government. This is not to say that government activities and funding are not still a vital component of the San Antonio economy because they are. The military has a big impact on the local economy, and it is worth noting that the military does not have to report employment levels, so I do not believe they are captured in these calculations.

Additionally, government funding of healthcare is very important to the San Antonio economy due to the size of the healthcare industry in the region. That said, the government sector still has a location quotient of 1.08. This fact combined with the diversity of the industry base in San Antonio is why the economy also tends to be somewhat stable relative to regional economies with more focused industry bases.



Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s