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Labor Surplus Areas
A "Labor Surplus Area" (LSA) must have an average unemployment rate at least 20 percent above the average rate for all States (plus the District of Columbia and Puerto Rico) during the previous two calendar years. However, the 20 percent ratio is disregarded:
- when this 2-year average for all the states is 8.3 percent or above; then an average unemployment rate of 10 percent or more during the same 2 year period will qualify an area, and
- when the all-States' average is 5.0 percent or less, an area will qualify with a 6.0 percent average.
The U.S. Department of Labor issues the labor surplus area listing on a fiscal year basis. The listing becomes effective each October 1 and remains in effect through the following September 30, but may be updated at any time during the fiscal year based on exceptional circumstance petitions.
The purpose of Labor Surplus Areas is to direct Federal procurement contract money to areas where people are in the most severe economic need. Contracts are awarded to employers who agree to carry out over 50 percent of the value of the contract in the LSA.
LSAs are classified on the basis of civil jurisdictions (cities with a population of at least 25,000 and all counties) rather than on MSAs or LMAs so that Federal contracts can be directed to specific localities with high unemployment.
The first attempt to channel Federal procurement contracts into high unemployment areas dates back to February 1952, when Defense Manpower Policy No. 4 was issued as a result of concern over low utilization of plants and equipment during the Korean conflict.
Additional support was given to the LSA program on August 4, 1977, when Public Law 85-89 provided statutory authority for the program and on August 16, 1978, with the signing of Executive Order 12073.
Finally on July 2, 1980, Public Law 96-302 authorized the LSA program on a permanent basis.
See Executive Order 12073--Federal procurement in labor surplus areas for more information and the U.S. Employment and Training Administration Labor Surplus Area page.
Your Labor Market Economist can also be of assistance.
Additional information may be obtained from:
U.S. Department of Labor
Employment and Training Administration
Office of Workforce Investment
200 Constitution Avenue, NW, Room C-4514
Washington, D.C. 20210
Attention: Samuel Wright
Phone: (202) 693-2870