When working with Zip Code level data, there are several factors to consider. This article, while not exhaustive, lists the main items to keep in mind when using Zip Code data for your geographical study Region.
AGGREGATION & LEAKAGES:
Zip code files, like other IMPLAN files, can be combined to create a Region or used independently. Please keep in mind that while an individual zip code file will create Multipliers and have impacts, these impacts will be minimal. This is because zip codes may have little or no population and/or little to no employment. Also, many individual zip codes are not large enough to allow for local sourcing of materials needed for the indirect effect or to provide adequate services to create significant induced effect leading to much of the potential impact being lost in leakages.
Zip code regions may represent very small economic Regions and consequently, be extremely open to leakages. These leakages, even to nearby regions (in some instances this could literally be across the street) are lost from the Region resulting in very small Indirect and Induced Effects. Please take into consideration where indirect purchases will be located and where employees may be spending their labor income when customizing zip code regions for analysis.
Multi-Regional Input-Output (MRIO) analysis allows for purchases to be made between Regions (the zip code(s) and the linked regions) by tracking trade between these regions, potentially capturing many of the lost impacts.
MISSING ZIP CODES:
Not all zip codes listed by the U.S. Postal Service may be represented in the zip code package you receive. The USPS can open/close post offices or reorganize routes on an on-going basis, thereby changing zip-code demographics. Because of this, the County Business Patterns and Census demographic zip code representation may not be current.
Depending on the year, roughly 4% of zip-codes have neither County Business Patterns (CBP) employment nor Census (demographic) data. If your region includes any of these zip codes, they will not be available in the package you purchase, as there is inadequate information to create Multipliers for these regions. Depending on the year, there will be roughly 8,000 zip-code files for which there is only CBP data with no demographic data. Most of these are P.O. boxes and “unique” point codes. They serve business but do not represent residential population. With no household representation, all employment would be considered in-commuting and have no local induced effect.
Conversely, there are also some zip-code files with only demographic data and no CBP data. While CBP data does not exist for these zip-codes, they may still contain employment in some sectors since CBP data do not cover all IMPLAN sectors. Population is used as a distributor for most of these non-covered sectors. Farm counts by zip-code from the 2017 Census of Agriculture are used to distribute agricultural industry data in these cases.
There will be cases where you may find an Industry exists in an actual zip code region but does not show up in the zip code data (or even the county data). This occurs because of unreported sectors in the CBP and inconsistencies in data between CBP and BLS covered wages and employment. When this issue occurs, you will need to customize your Region to add the Industry to the Study Area. CBP data are primarily obtained from administrative records supplied by the IRS, Social Security, and other sources. CBP is tabulated on an establishment basis, and each business location is tabulated only once according to the primary business activity. The industry classifications of establishments in the CBP are self-reported in the vast majority of cases. BLS CEW data are obtained from quarterly tax reports submitted to State Employment Security Agencies.