Over the Year change is a fairly simple metric used to compare employment levels from year to year. Comparisons are made between the same month of different business years. During the calculation of OTY change we answer 1) what was the state of employment this year and last year 2) how large of a change is the difference between the two.
An example that illustrates the use of OTY change without employment metrics is the comparison of fun-size Snicker bags purchased during the month of October for Halloween from 2019 to 2020. Because of COVID-19 there was less trick-or-treating which resulted in fewer candy sales. Let’s hypothetically assume the following:
Snicker Sales October 2019 = 250,000,000
Snicker Sales October 2020 = 145,000,000
Change in Snicker Sales for October = (145,000,000 – 250,000,000) / 250,000,000) = – 42.0%
From this calculation we see that total sales were higher in 2019 than in 2020. The 42.0% change shows that sales decreased by close to half of what we had just the year prior.
A real life example that we could use is the unemployment rates in the Omaha-Council Bluffs metro area comparing March 2020 to March 2021.
Unemployment % March 2020 = 3.7
Unemployment % March 2021 = 3.2
OTY Change in March Unemployment = ( 3.2 – 3.7 ) / 3.7 = -13.5%
In this example we see that unemployment decreased from 2020 to 2021, indicating that a larger percentage of the workforce has been able to find work in Omaha during the same period. In this case it is easy to say that this change was probably caused by the arrival of Covid 19, causing employees in bars and restaurants to be laid off across the nation. Now in 2021 there has been a recovery in the industry as most bars and restaurants are able to operate with some regulations.
So how do we make use of OTY change? We can use this measurement across different metrics to look at the health of an economic ecosystem as a whole and its sub ecosystems. Referencing back to our example, if we see a decrease in OTY Change in March employment for consecutive years, we can assume that the economy is doing well and there are jobs that people want to take in Omaha. We can also apply this metric to other measures of economic health, such as average wages for specific industries, number of grants given to startups, and many more. Identifying trends in the different sections of a region’s economy can pinpoint strengths and weaknesses that need to be developed.
If you have any questions about OTY change or you would like to see an article on your ecosystem, then send us an email at info@mug.news.