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Florida State University 
Department of Urban and Regional Planning
Planning Methods III: Forecasting 





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King-US
Example
 

LOCATION QUOTIENT EXAMPLE: KING COUNTY AND THE STATE OF WASHINGTON

Example

Using the following statistics we can calculate a location quotient for King County for Manufacturing of Transportation Equipment (SIC Code 37) by comparing it to the State of Washington's figures. We can then estimate the number of Basic sector jobs if the LQ is greater than 1.0.
Table 1: Total and Industry Employment, King County and Washington State, 1994
 
Employment in Industry I
Total Employment
King County
53,000
729,341
WA State
84,955
1,773,259

Table 2: Calculation of Location Quotient for Transportation Equipment
LQ Part I=
Region Industry
=
53,000
= 0.072668
Region Total
729,341
LQ Part II=
State Industry
=
84,955
= 0.047909
State Total
1,773,259
LQ Part III=
Region Ratio
=
0.072668
= 1.516800
State Ratio
0.047909
So the Location Quotient for Industry Code 37 (Transportation Equipment) has been calculated to be greater than 1.0. There is evidence that some of this employment is Basic sector because this industry appears to be exporting much of its goods to non-local markets (a Boeing-related effect no doubt!). How many of these 53,000 jobs are Basic in nature? To determine this we need to apply our Basic Sector Employment formula.
Basic Employment
Part I=
Region Industry Employment
=
53,000
= 0.62386
State Industry Employment
84,955
Basic Employment
Part II=
Region Total Emp
=
729,341
= 0.41130
State Total Emp
1,773,259
Basic Employment
Part III=
State
Employment
Industry I
=
84,955
Using the above portions of the formula we can now calculate the number of Basic sector jobs from this specific industry:
Basic Sector Jobs = (0.62386 - 0.41130) X 84,955 = 18,058
If, instead of using the State as our comparison area we used the United States as our reference region, how do you think our results would differ? Would the location quotient go up or down? Why? Would the number of Basic sector jobs go up or down? Why? For an answer to these questions go to the King County-US LQ Page.

Example Results

  • Industry Code 37 (Transportation Equipment Manufacturing) has a Location Quotient of 1.5168 which is greater than 1.0.
  • Therefore, this industry exports many of its goods to non-local markets.
  • Of the 53,000 Transportation Equipment Manufacturing jobs, 18,058 are Basic Sector jobs.

Discussion Questions

  • Do these findings seem reasonable?
  • What of the conclusion that "only" 18,058 of the 53,000 Transportation Equipment Manufacturing jobs are Basic sector? Doesn't Boeing seem to export almost all of its goods and services to non-local areas? Does this still make sense?
  • What limitations does this suggest for the Location Quotient Technique?
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