In April 2020, the U.S. Bureau of Labor Statistics (BLS) released the annual employment data for 2019. EB5 Affiliate Network (EB5AN) has updated its national EB-5 TEA map to ensure that EB-5 investors and developers have access to the most up-to-date information related to targeted employment area (TEA) designation.
Understanding the Effects of the April 2020 Annual BLS Data Update on EB-5 TEA Designations
Finding the relevant data to calculate unemployment rates for TEA designation, and performing these calculations, can be complex, yet accurately identifying TEAs is a crucial step in the EB-5 investment process. For a better understanding of the BLS annual data update and what it means for TEA designation, watch the video below of the Annual 2020 TEA Map Update and Training webinar presented by Sam Silverman and Mike Schoenfeld, managing partners of EB5AN. Topics discussed include confirming TEA designation, the data sets used to calculate unemployment rates, combining census tracts on the EB5AN TEA map, and more.
How Does the EB5AN National TEA Map Work?
The EB5AN national TEA map is a free tool that allows users to instantly see whether their projects are located within TEAs and thus qualify for the lower EB-5 investment amount of $900,000. In addition to being able to choose rural areas that qualify as TEAs, users can view high unemployment TEAs, with unemployment levels based on both the census-share method and American Community Survey (ACS) five-year data method. Users can also combine census tracts to determine whether a combined area qualifies as a TEA.
Calculating Unemployment Rates for High Unemployment TEAs
To identify high unemployment TEAs, United States Citizenship and Immigration Services (USCIS) accepts two calculation methods: the census-share method and the ACS five-year data method. Moreover, for an area to qualify as a high unemployment TEA, the unemployment rate must be at least 150% of the national unemployment rate.
The ACS five-year data set, which includes unemployment data by census tract, is released each December for the preceding five years. In other words, the ACS data set released in December 2019 contains data covering 2014 to 2018. In December 2020, the five-year data spanning 2015 to 2019 will be released. Thus, this layer of the EB5AN TEA map remains up to date. According to this data set, the relevant base national unemployment rate is 5.86%, so to qualify as a TEA, an area must have an unemployment rate of at least 8.79%.
The census-share method combines ACS five-year data with BLS one-year data to enable users to calculate the employment and unemployment rates at the census-tract level. BLS data typically focuses on larger areas, so ACS data is used to disaggregate the BLS data. Annual BLS data is published in mid-April each year, with the data covering the previous year. In other words, the April 2020 data relates to employment data for 2019. According to the latest data set, the national U.S. unemployment rate is 3.66% for 2019, so to qualify as a TEA, an area must have an unemployment rate of at least 5.49%.
Following the publication of the latest annual BLS data in April 2020, EB5AN has updated the census-share layer of its national TEA map. Therefore, EB-5 investors and developers can keep making informed decisions about project locations and TEA designation.
The Impact of the COVID-19 Pandemic on Unemployment Rates
While the COVID-19 pandemic has had a significant impact on unemployment in the United States and the rest of the world, the full effect on the U.S. unemployment rate will not become clear until April 2021 at the earliest. This delay is due to the publication dates of the BLS and ACS data.
Annual BLS data is published in April each year, so the data released in April 2021 will reflect the current impact of the pandemic on employment. For calculations made using ACS five-year data, updated data that reflects the current employment situation will not be available until December 2021. However, monthly and annual BLS data could be useful in anticipating future TEA status.