New Measures of How Widespread Employment Changes Are across States and Metro Areas

BLS recently began publishing a new set of measures on employment changes in states and metropolitan areas. For decades we have published monthly estimates of employment, hours, and earnings for each state and metro area. Our new measure summarizes how widespread employment increases or decreases are across all states or metro areas. We call this measure a diffusion index.

What’s a diffusion index? Let me explain how we create the measure.

Let’s say we’re creating a diffusion index for the 50 states and the District of Columbia. We start by assigning each state and D.C. a value depending on whether its employment decreased, stayed the same, or increased over the period we’re looking at.

• The assigned value is 0 if employment decreased.
• The assigned value is 50 if employment stayed the same.
• The assigned value is 100 if employment increased.

The diffusion index is the average of those 51 values. To create a diffusion index for metro areas, we assign values of 0, 50, or 100 for each of 388 metro areas and then average those values. We calculate diffusion indexes for employment changes over 1 month, 3 months, 6 months, and 12 months.

Now that we understand the simple arithmetic for calculating diffusion indexes, what do they mean? An index greater than 50 means more states or metro areas had increasing employment over the period. An index below 50 means more states or metro areas had decreasing employment. At the extremes, an index of 0 means employment fell in all states or metro areas; an index of 100 means employment rose in all of them. A diffusion index of 50 doesn’t necessarily mean 50 percent of the states or areas had increasing employment and the other 50 percent had decreasing employment. It just means the same number of states or areas had increases and decreases, with any of the other states or areas having no change.

The chart below shows 3-month diffusion indexes for all states and metro areas. You can see how all states and nearly all metro areas had job losses during the worst of the 2007–09 recession. We see it again more recently with the downturn associated with the COVID-19 pandemic.

Editor’s note: Data for this chart are available in the table below.

Diffusion indexes aren’t a new analytical tool. We publish other diffusion indexes using national employment data that summarize how employment change is dispersed across industries. The Federal Reserve Bank of Philadelphia publishes diffusion indexes using a variety of data. The new BLS diffusion indexes summarize how employment is changing across geographic areas to give us another perspective of the labor market.

Keep a look out for the new data. We update the indexes each month in our public database.