METROPOLITAN STATISTICAL AREA (MSA)



A Metropolitan Statistical Area (MSA) is a designation the U.S. government uses to refer to a region that, broadly speaking, consists of a city and its suburbs, plus any surrounding communities that are closely linked to the city because of social and/or economical factors. MSAs were known as Standard Metropolitan Statistical Areas (SMSAs) from 1959 to 1983 and, before that, as Standard Metropolitan Areas (SMAs).

Familiarity with MSAs can be most useful to small business owners, for statistical data about the demographic character of these regions can be helpful in devising marketing strategies, delineating sales territories, and determining the appropriate locations of operating facilities. Such information can be invaluable not only for the entrepreneur seeking to launch a new business, but for the established small business owner seeking to expand operations or anticipate marketplace trends.

The government uses the designation MSA for the purpose of applying uniform and consistent standards to the wealth of data collected, analyzed, and published by its myriad departments and agencies. Official definitions for what constitutes an MSA are developed, issued, and periodically revised by the federal Office of Management and Budget (OMB), following public commentary and hearings. These revisions are made in conjunction with the Federal Executive Committee on Metropolitan Areas. In fact, since the MSA and similar designations figure prominently in the compilation of statistics for the national census, the U.S. Department of Commerce's Bureau of the Census also has a voice in determining MSA definitions.

Although the OMB's official standards for defining these regions are highly complex, detailed, and marked by qualifications, MSAs are commonly defined as regions composed of one or more counties containing either:1) a city with a population of at least 50,000 people, or 2) a Census Bureau-defined "urbanized area" with a population that, when combined with that of its component county or counties, totals at least 100,000 people. An important exception to how MSAs are defined exists in the New England states, however. In that region of the country, towns and cities rather than counties are used to designate regions as MSAs, and the total metropolitan population of the previously-mentioned "urbanized area" need only be 75,000 people. The Office of Management and Budget also notes that the MSA may include other "central" counties (any county with at least half of its population within the "urbanized" area) and "outlying" counties that satisfy specific criteria of metropolitan character and integration with the central counties, as indicated by population density, growth, urbanization, and levels of commuting.

A region that meets these requirements for recognition as an MSA and also has a population of one million inhabitants or more may be recognized as a Consolidated Metropolitan Statistical Area (CMSA) under the following conditions:1) separate component areas can be identified within the entire area according to specific statistical criteria, and 2) local public opinion supports the idea of the component areas. If recognized, these component areas are designated as Primary Metropolitan Statistical Areas (PMSAs). As with the CMSAs, PMSAs are composed of one or more counties (except in New England). If no PMSAs are formally recognized, however, the entire area is designated as an MSA.

The largest city in each MSA or CMSA is formally designated a "central city." Additional cities qualify if specified requirements are met in areas such as population and commuting patterns. The title of each MSA consists of the names of up to three of its central cities and the name of each state into which the MSA extends. There is an exception to this, however. Unless local public opinion voices support for including the name in the MSA title, cities with fewer than 250,000 inhabitants and less than one-third of the population of the MSA's largest city will not be included in the title.

In 1999, there were 261 Metropolitan Statistical Areas in the United States and Puerto Rico. There were also 19 Consolidated Metropolitan Statistical Areas comprising 76 Primary Metropolitan Statistical Areas.

Information on the OMB's standards for defining MSAs and other such designations can be obtained from the Statistical Policy Office of the Office of Information and Regulatory Affairs, Office of Management and Budget in Washington, D.C. Information on the Census Bureau's application of these standards is available from the Secretary of the Federal Executive Committee on Metropolitan Areas, Population Division, U.S. Bureau of the Census, also in Washington, D.C.

FURTHER READING:

Cullen, Julie Berry, and Steven D. Levitt. "Crime, Urban Flight, and the Consequences for Cities." Review of Economics and Statistics . May 1999.

Purdum, Tracy, and Edward W. Hill. "Generating Wealth:18 CMSAs Contribute a Huge Chunk of Manufacturing Value in the U.S." Industry Week. April 6, 1998.



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