A civil jurisdiction is classified as a labor surplus area when its average unemployment rate was at least 20 percent above the average unemployment rate for all states, the District of Columbia and Puerto Rico during the previous two calendar years. During periods of high national unemployment, the 1.20 percent ratio is disregarded and an area is classified as a labor surplus area if its unemployment rate during the previous two calendar years was 10 percent or more. This 10 percent ceiling comes into effect whenever the two-year average unemployment rate for all states was 8.3 percent or above. Similarly, a floor of 6.0 percent is used during periods of low national unemployment in order for an area to qualify as a labor surplus area. The 6 percent floor comes into effect whenever the average unemployment rate for all states during the two-year reference period was 5.0 percent or less.

The reference period used in preparing the LSA list was January 2009 through December 2010. The national average unemployment rate (including Puerto Rico) during this period was 9.5 percent. Twenty percent higher than the national unemployment rate is 11.4 percent. Since the ceiling unemployment rate is 10.0 percent, the qualifying rate is 10.0 percent. Therefore, areas included on the FY 2012 labor surplus area list had an average unemployment rate of 10.0 percent or above during the reference period. Areas included on the FY 2012 annual Labor Surplus Area list are all counties, county equivalents, balance of county (where the entire county did not make the LSA list), and cites with a population greater than 25,000 (the population criteria for cities do not apply in a small number of New England states) with an average unemployment rate of 10.0 percent or above during the previous two calendar years.