Editorial · March 10, 2016
Census data business location research: where to look
Census data business location research starts with two Census Bureau sources. The American Community Survey (ACS) describes the people who live in an area. County Business Patterns (CBP) counts establishments, meaning locations with paid employees at any time in the data year. Use the ACS to profile your customers and CBP to size up your competition. Then set two or three places side by side. Counties are a good place to start, because both sources publish county tables.
Which ACS table to open
The Census Bureau lists American FactFinder as its main tool for sharing data, and the ACS tables live there. Data Profiles give a broad view of social, economic, housing and demographic facts, and they suit new users. Subject Tables go deeper on one topic and show percentages. Detailed Tables are the most complete. In 5-year data they reach down to block groups, the smallest areas the ACS publishes, but they do not give percentages. The Bureau's tool guide says Profiles and Subject Tables have no block group data. For a market analyst who wants the most detail for a large retail store site, the guide recommends Detailed Tables.
How to read the ACS numbers
For small places, the ACS means 5-year estimates. Each one pools 60 months of survey answers. The newest set covers 2010 to 2014 and came out on December 3, 2015. Only 5-year estimates cover every area, down to the block group. One-year estimates reach only areas of 65,000 people or more, and the Bureau has stopped making 3-year estimates. The first 5-year set came out in December 2010, when the Census Bureau's director wrote that a new one would follow each year.
Every ACS estimate comes with a margin of error. Add and subtract it to get a range expected to hold the true value with 90 percent confidence. That range runs wider for small areas. The Bureau's 2008 handbook advises care in drawing conclusions from small differences between two estimates, because they may not be statistically different.
In general, use the ACS for percents, means, medians and rates. For population totals, the Bureau recommends the 2010 Census or its Population Estimates Program. The Bureau now says to compare only periods that do not overlap. For example, do not compare 2005 to 2009 with 2006 to 2010. The 2010 to 2014 set is the first 5-year set that can be compared with 2005 to 2009, because the two share no years.
What County Business Patterns counts
CBP is an annual series. By industry, it reports the number of establishments, employment in the pay period that includes March 12, first-quarter payroll and annual payroll. The Bureau says businesses use it to study market potential.
You can pull it for the U.S., states, counties and metro and micro areas, on the CBP page or in American FactFinder. The newest year posted is 2013, released in April 2015. ZIP code tables are available shortly after the main release and give the number of establishments by employment size for each detailed industry. The 2013 data use the 2012 NAICS, so find your NAICS code first.
An establishment is one physical location where business is done. A chain with several stores generally counts once for each store, not once for the company.
CBP leaves some things out. It counts employers only. It excludes self-employed people, private household employees, railroad employees, farm production employees and most government employees. For businesses with no paid employees, the Bureau points to its Nonemployer Statistics. CBP also has no sales figures, so look to other Census Bureau programs for those.
Tables use short codes. D means a figure is withheld to avoid disclosing data for individual companies. S means a figure is withheld because it did not meet publication standards.
Put the two sources on one page
Pick two or three counties. For each, note a few ACS items that fit your customer, such as median household income. Then pull the CBP count of establishments and employees in your NAICS code. Take residents from the 2010 Census or the population estimates, not the ACS. Next, divide residents by those establishments to get residents per establishment. Treat that number as a rough gauge, not a forecast. The CBP count also leaves out firms with no employees.
CBP's own tables have a Compare Areas option that lines up states, counties or metro areas. For the ACS, the handbook follows a business owner weighing a move. The owner downloads a comparison table, ranks the places in a spreadsheet and charts the top places with their margins of error. The handbook notes that, because of sampling variability, some of the estimates in that chart may not be statistically different from one another.
The ACS reaches small areas such as census tracts, and CBP reaches ZIP codes. ZIP codes are set by the Postal Service and may change from time to time, which can blur comparisons across years. Both sources also look back: a shop that opened in 2014 is not in the 2013 CBP counts. Before you sign a lease, visit the site and check its rent, foot traffic and zoning.
A shortcut: Census Business Builder
On September 9, 2015, the Census Bureau released Census Business Builder: Small Business Edition. It is a web tool for people who want to open or expand a business. You choose a type of business and a place, and it builds a report you can download and print. It draws on the ACS, the economic census, County Business Patterns and other economic surveys. It also adds third-party consumer spending data. The Bureau's tool guide picks it for someone deciding where to put a gas station. The guide lists limits too: only counties, places, ZIP codes and tracts, and only some ACS topics. Use it to start, then check the full tables.