What is a 'Metropolitan Statistical Area (MSA)'

A metropolitan statistical area (MSA), formerly known as a standard metropolitan statistical area (SMSA), is the formal definition of a metropolitan area as established by the U.S. Office of Management and Budget. Metropolitan statistical areas serve to group counties and cities into specific geographic areas for population censuses and compilations of related statistical data.  Modern MSAs are configured to represent contiguous geographic areas with a relatively high density of human population.

BREAKING DOWN 'Metropolitan Statistical Area (MSA)'

Metropolitan statistical areas usually consist of a core city with a large population and its surrounding region, which may include several adjacent counties. The area defined by the MSA is typically marked by significant social and economic interaction. People living in outlying rural areas, for example, may commute considerable distances to work, shop, or attend social activities in the urban center.

There are almost 400 metropolitan statistical areas in the United States. In contrast to micropolitan statistical areas, which center on towns and smaller communities with populations below 10,000, metropolitan statistical areas must include a city with a population of at least 50,000. Some MSAs, such as Dallas-Fort Worth-Arlington, contain multiple cities with populations exceeding 50,000. The most populous MSA in the country, New York-Newark-Jersey City, spans portions of three adjacent states, New York, New Jersey and Pennsylvania.

Uses of Data About MSAs

The Bureau of Labor Statistics uses MSA data to analyze labor market conditions within a geographical area. Within a metropolitan statistical area, workers can presumably change jobs without having to move to a new location, creating a relatively stable labor force.

Statistical data about MSAs also helps government officials and businesses review information about per capita income, spending patterns, and unemployment rates. The resulting data can be used to formulate policies designed to stimulate economic growth in the region.

For example, the Atlanta-Sandy Springs-Roswell metropolitan statistical area exerts a major influence on the economic health of the region. It is the most populous area of Georgia. Companies seeking to relocate or establish new companies in the Atlanta-Sandy Springs-Roswell region can use statistical data about the area to project the viability of their intended business.

Real estate investors also use MSA data to study housing trends and population movement. In addition, applicants for certain social services may need to prove income levels below a fixed percentage of the median gross income in their metropolitan statistical area to qualify for help, including low-income housing and other forms of support.

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