STI: WorkPlace™ - Methodology

Your Data Building Block for
Business and Employee Estimates

Every market-focused company uses demographic data to target consumers where they live. But only the most strategic companies also target consumers where they work using workplace estimates. Those companies understand that workers are consumers — of restaurants, banks, dry cleaners, drug stores, and more. By knowing a trade area's workplace population and business counts, companies gain vital information for making smarter location-dependent decisions.

Many companies do not use business and workplace projections simply because they cannot find dependable estimates. They know that there is a serious over-counting problem in most business data products. STI: WorkPlace™ solves this long-standing problem by bringing accuracy to estimating workplace populations through the combination an innovative new methodology and unique, dependable business data resources.

In addition to greater accuracy, STI: Workplace is also more robust than other business data products. While most business data only delivers estimates of business and employee counts, STI: WorkPlace delivers four areas of business information for each U.S. trade area:

1. How many businesses operate there

2. How many employees work there

3. The workers' occupations

4. The workers' wages and salaries

What's more, unlike any other business data available today, STI: WorkPlace is updated every three months and delivers business insight starting at the block level — so the information is both timely and relevant.

This rich employer and employee insight gives competitive companies a tremendous strategic advantage when deciding which locations are most likely to attract a large number of working consumers and, ultimately, net the maximum return on investments in trade areas that have significant business populations.

The Problem with Traditional Workplace Estimates

To understand the unique advantages of STI: WorkPlace over other business data products, you first have to understand the typical methodology used to count businesses and workers.

The traditional workplace estimates all share one significant fundamental problem: They are based on business data from database providers whose primary business is selling marketing lists to list brokers — not creating data for statistical applications. For example, one primary way they obtain their business data is by employing numerous telephone solicitors to call companies listed in business telephone directories. They ask the companies a series of basic questions, such as how many people work in their companies.

While at first glance this process appears to be a good way to determine workplace population estimates, a closer examination reveals at least one serious flaw. Namely, the data firms frequently double-count the number of businesses and the number of employees working in each business. This occurs because many companies are listed more than one time in many telephone directories. The data firms do not maintain adequate controls for ensuring that the telephone solicitors count each business only one time.

Knowing this, it's easy to understand why workplace estimates are often incorrect — and typically vastly inflated. In fact, in 2001 one data provider estimated that there were 12.5 businesses in the U.S. However, three respected U.S. agencies reported that there are 7.5 million businesses. This represents an error of five million businesses. Further, this data firm reported that there were more than 10,000 businesses with more than 10,000 employees. A cross-reference with three respected agencies found that there were actually about 7,000 businesses with more than 1,000 employees. This is a significant error, which essentially renders the data useless.

An Innovative Approach to Workplace Estimates

STI: WorkPlace overcomes the traditional weakness in business estimates. The first step in creating better business and employee estimates is that we start with data derived from three highly respected agencies:

• U.S. Census Bureau

• U.S. Bureau of Labor Statistics

• U.S. Postal Service

Next, STI: WorkPlace employs a unique "bottom-up" methodology, which starts at the block level and works up to larger geographies.

There are four basic steps in the STI: WorkPlace methodology:

1. Business counts. Business unit estimates from the three U.S. agencies are analyzed in a sophisticated mathematical process that correlates the three databases. The end result is a single workplace estimate for each market. The estimate is then expanded to the current quarterly timeframe using ZIP + 4® postal data and historical averages. This is done at the market level, not at the national level. Workplace estimates are more relevant for market research purposes when they are analyzed down to the local level. (NOTE: The "bottom-up" methodology used for STI: WorkPlace is similar to the STI: PopStats™' methodology. For a fuller explanation of STI's bottom-up approach using ZIP + 4 data, please refer to the STI: PopStats methodology document.)

2. Employee estimates. The number of employees in each trade area is calculated by assessing the historical averages that are typical within each individual market. So, for example, when estimating the number of employees for a typical law firm in Austin, Texas, the historical averages for law firms in Austin are evaluated.

3. Employee occupations. Historical employee data and business relationships are used at the market level to determine typical job breakdowns per employee per business.

4. Employee salaries and wages. Historical salary and wage data and relationships are used at the market level to determine employees' current salaries and wages.

The Distinction Between Workplace and Daytime Estimates

"Workplace" and "daytime" population estimates are not the same thing, although many people erroneously use them interchangeably. Workplace estimates count the number of employees working in a particular area. Whereas daytime estimates include consumers who live in an area, but do not necessarily work there. The biggest difference in population counts between the workplace and daytime estimates are that daytime estimates include students, stay-at-home mothers and fathers, retirees, and self-employed people.

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