O.C. Economy at Work
Orange County, the land of beaches, barbecues and bankruptcy, has slowly and quietly built itself into one of the nation’s hottest job markets.
Just ask Glenn Coles.
The 33-year-old Rancho Santa Margarita resident, an information systems specialist, found himself the object of a bidding war among three companies without so much as sending out a resume.
In January, he left his employer of nine years, Westec Security in Newport Beach, for a 30% pay hike and a mandate to form a 15-person information services department at Apria Healthcare Group Inc. in Costa Mesa.
“Quite frankly, because of the demand I’m in, I could have gotten the same pay at Westec,” Coles said. “Up until the day I left they kept countering.”
What Coles and countless others are discovering is that Orange County is now about as close as it gets to a job seekers’ paradise--a veritable island of very low unemployment in a Southern California that is otherwise recovering more slowly and sporadically from the recession.
Even the municipal bankruptcy filing in December 1994, while a public relations fiasco for county officials, barely made the business community pause for breath.
With the jobless rate at a razor-thin 3.1% as of December, Orange County now rivals Silicon Valley’s vaunted jobs machine.
While such low unemployment rarely lasts for long in any area, experts expect Orange County’s economy to continue growing and churning out jobs well into the next century.
By 2020, the Southern California Assn. of Governments predicts, 98% of Orange County’s working residents will be employed in the county, up from 82% in 1995. At the same time, the number of workers commuting to Orange County from elsewhere will have grown by 21%, SCAG projects.
And, as the demand for workers intensifies, salaries--and eventually house prices--should begin creeping up, economists predict.
Orange County has always held an advantage over neighboring counties because of its relatively well-educated, highly skilled work force. But this latest resurgence clearly indicates that the county has completed its transformation from a collection of Los Angeles-dependent bedroom communities into a thriving, independent economic powerhouse.
“This is our time,” said Esmael Adibi, director of Chapman University’s Center for Economic Research. “Among Southern California counties, Orange County can shine.”
All of which poses an interesting dilemma for the county: how to deal with its success.
Certainly, no one expects Orange County to become another Los Angeles, with all its complex, intractable problems. Nonetheless, accompanying Orange County’s continued economic emergence will be a host of issues surrounding transportation, housing, education, crime and pollution--all of which speak to businesses’ ability to remain competitive.
In other words, Orange County might be faced with almost too much of a good thing.
“The quality of life is an issue,” said Adibi. “If it deteriorates, that’s a hindrance to growth. That’s what I’m worried about.”
For now, Orange County’s economic growth seems almost unstoppable.
Companies across a wide swath of industries are on hiring binges, looking for everything from entry-level keypad punchers to high-paid computer specialists.
About 30,000 new jobs are being created each year, mostly in high-tech, biomedical and export services. And for every new engineering or accounting post, there’s generally another waitress or dry cleaning clerk being hired.
Like Silicon Valley, much of the jobs growth in Orange County is rooted in technology. That’s due in large part to the growing stature of UC Irvine. Major research universities tend to spur innovation and the development of high-tech clusters, as they have in some of the nation’s healthiest job markets--including Silicon Valley, the Research Triangle area in North Carolina and Madison, Wis.
Yet some economists believe Orange County may be in even better shape than most of those fast-growth regions where the economy is inextricably linked to one industry.
Silicon Valley’s breathtaking growth is exclusively high-tech related. Las Vegas’ hot jobs market is due to a casino building boom. The employment bursts in many areas of the Sunbelt have been fueled largely by new construction to satisfy growing populations.
By contrast, Orange County’s expansion is younger, steadier and more broad-based. What’s more, it’s increasingly oriented toward exports to fast-growing nations, a trend that makes economists’ eyes gleam.
As a result, county payrolls are projected to increase by about 2.6% annually for the next five years. That’s not gangbusters growth, but it’s strong and sustainable, economists say.
“Maybe in the short run, it has not had the explosive growth of the San Jose area,” said Ted Gibson, chief economist at the state Department of Finance. “But in the long run, that’s probably a better thing. A diverse economy is not as subject to downturns.”
For Cynthia Feeney, the employment surge has created what she calls her “exquisite dilemma”: deciding which of six very attractive, highly lucrative job offers to accept, all of which are within striking distance of her Irvine home. And the 29-year-old is still four months away from getting her master’s of business administration degree at UC Irvine.
A few years ago, the national management consulting firms Feeney is interviewing with would have required her to relocate. Now, she said, “they’re all telling me they have enough work to keep me in Orange County.”
That’s good news for Feeney, but the tight labor market is also starting to produce headaches at local companies hoping to expand.
Landscapers, tool and die companies and construction firms report that empty slots have become harder to fill in the past few months. Retailers say they aren’t getting nearly as many applications. Even nannies are in short supply, largely because there are so many dual-income couples.
At Verity Group in Fullerton, field director Joey Harmon needs a total of 170 workers to conduct telephone surveys for the market research firm. After six months, he found only 80.
Harmon has run ads in every local newspaper, canvassed student hangouts and even posted a billboard-laden sentry on a street corner to try to attract applicants to the $6- to $10-an-hour jobs. The response was so meager that the company is considering leaving the state.
“I can’t be selective” among applicants, Harmon lamented. “You’re getting the bottom of the bottom right now.”
Donna Miller, Orange County human resources manager for Enterprise Rent-A-Car, plans to hire 200 management trainees this year. She recruits heavily on local college campuses, but finds there are far fewer candidates than even six months ago. An ad that would once have generated 600 calls produces only about 80 responses today.
“We’re just kind of pulling our hair out,” Miller said.
Demand is particularly fierce for high-tech specialists, and companies frequently find themselves competing for experienced workers.
“We’re definitely in the field that’s helping drive the unemployment rate down,” said Jeff Stoddard, president of Advanced Integrated Solutions in Los Alamitos.
The company, which designs and manages computer networks for other businesses, has grown from 10 employees a year ago to 40. Stoddard hopes to have 100 workers in a year. But, he worries, anyone with Internet and other cutting-edge experience is “getting a multitude of offers.”
The demand isn’t coming just from high-tech firms.
Companies in a wide range of industries increasingly consider information management a key competitive tool. They are seeking programmers and systems analysts and Internet specialists to help them become more efficient and speed the development of products and services.
At Apria, for instance, Coles was hired because the home health-care services company sees information management as critical to lowering costs, improving service and facilitating better communication among departments and with customers and insurers.
Of course, not everyone has a full dance card at Orange County’s jobs party.
Many companies still turn away inexperienced or unskilled workers. Former aerospace engineers are sometimes shunned by high-tech companies because their knowledge is thought to be incompatible with newer information-based businesses. Some people who stopped looking for jobs during the recession--and aren’t counted in the unemployment figures--still haven’t jumped back in the hunt.
Still smarting from the recession, some firms remain skittish about beefing up their staffs. When they do hire, many increasingly turn to contract workers, one of the fastest-growing segments of the labor market. If the economy unexpectedly dips, these temporary employees would probably be unleashed quickly.
Also, aside from the red-hot information fields, salaries haven’t budged much.
That’s because companies typically do everything else possible to attract workers first--such as offer bonuses tied to performance. If the tight labor market continues, economists expect that salary levels will begin edging up this year--although not enough to stir home prices beyond increases of about 2% to 4% a year.
Most troublesome, said Mike Noonan, vice president of business retention at the Orange County Business Council, is that the jobs lost in the manufacturing sector haven’t returned.
Some of the aerospace concerns that were slashing thousands of jobs a few years ago are inching back into hiring mode. They’re seeking mostly high-tech workers who can help them move into communications, commercial aviation and space-related markets.
Overall, though, manufacturing employment isn’t expected to grow, and that could prove to be Orange County’s Achilles’ heel, Noonan said. He and others fear that services alone are weak sustenance for a growing economy; they need the firm underpinnings of a goods-producing sector and the high-paying jobs it creates.
Not all are convinced that Orange County’s increasing bent toward service-type businesses is a bad thing. Adibi, for one, contends the growth in services simply reflects the county’s maturation.
“Any region at a higher stage of development is going to require more service jobs,” Adibi said. “As income goes up, people require more services.”
He said his research shows that the service jobs being created in this expansion actually pay higher wages on average than manufacturing.
What’s more, Adibi said, Orange County has never been a region dependent on smokestack industries. The manufacturers that do operate here are primarily high-tech businesses that pay good wages and have rapidly expanding foreign sales, he said.
With nearly all signs pointing toward job growth in the years ahead, though, some observers fret that the land of plenty might eventually begin to choke on its own prosperity.
Experts warn that the county’s changing demographics could limit the number of available workers.
Because of the declining birth rates of the post-baby boom generation, by 2000 the number of new retirees in the county will outstrip the number of young people entering the work force by a wide margin, said Bill Gayk, director of the Center for Demographic Research at Cal State Fullerton.
A pickup in immigration to the county--both legal and illegal--is expected after a lull during the recession. But the increase won’t be enough to make a significant dent in the jobs market, Adibi said.
Without enough new blood entering the work force, businesses could become less competitive. Increasingly, they’ll be forced to cast a wider net in their recruitment efforts.
Here’s what could happen as a result:
As more workers commute in from Los Angeles and Riverside counties, where the unemployment rates are more than twice that of Orange County, transportation systems will burst through their already-strained capacity.
Tired of fighting freeway congestion, some of those commuters will decide to move to Orange County. But where will they live? The supply of affordable housing is limited, and many longtime residents are sure to oppose new development.
Clashes over land-use issues and the distribution of resources will become more frequent. Increased diversity and concerns over crime will cleave the populace. A widening gulf between economic haves and have-nots could threaten the area’s vaunted tranquillity.
“The major question that we’re facing . . . is the infrastructure--whether the county can absorb all this growth and whether we have all the right things in place,” said Adibi.
Mark Baldassare, UC Irvine professor of urban planning, worries that steps taken so far to alleviate traffic, while helpful, have done little more than play catch-up. And county funds that were previously earmarked for transportation have since gone to help pay the debt from the 1994 bankruptcy.
“You can have low unemployment for awhile and think, ‘This is great,’ ” he said. “But the question is, at what cost?”
If traffic and housing issues are ignored, he warned, “you’re limiting your prospects for future growth.”
Even more critical to businesses’ future competitiveness, said Dowell Myers, a professor of urban planning at USC, is education. He argues that the business community must step up with ideas--and backing--for curricula that will prepare students from the very youngest age for the workplace of tomorrow.
“When everyone is feeling positive and no longer retrenching, and moving forward, you can lay in place the groundwork for future solutions,” Myers said.
“The goal should be to take care of the children of Orange County. Let’s make sure they don’t get bypassed in this boom.”
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
Job-Seekers Paradise
During the economic downturn of the nearly ‘90s, Orange County’s unemployment rate peaked at 7.9%, but has trended downward ever since. In December it reached 3.1%, the lowest in 6 1/2 years. Orange County unemployment rate, not seasonally adjusted:
1993
July: 7.4%*
1996
Dec.: 3.1%
* Peak rate since July 1992
*
December Unemployment Rates (not seasonally adjusted)
California Counties
Riverside: 7.1%
Los Angeles: 6.7%
San Bernardino: 5.6%
San Diego: 4.0%
Orange County: 3.1%
Santa Clara*: 3.0%
San Mateo*: 2.6%
Statewide: 6.2%
United States: 5.0%
Orlando, Fla.: 3.2%
Phoenix, Ariz.: 3.1%
Denver, Colo.: 3.0%
Boston, Mass.: 3.0%
Madison, Wis.: 1.4%
*Silicon Valley
Source: Southern California Assn. of Governments, State Employment Development Department
Researched by JANICE L. JONES / Los Angeles Times
Commuting Ins and Outs
By 2020, the number of Orange County residents commuting to jobs outside the county will decrease dramatically. At the same time, the number of people commuting into Orange County is expected to increase. How commuting patterns are projected to change:
County Residents Who Work Here
1995: 82%
2020: 98%
****
To Orange County
*--*
County of origin 1995 2020 Los Angeles 148,755 183,000 Riverside 54,630 89,450 San Bernardino 36,170 34,000 San Diego 14,000 19,500 Other counties 8,000 6,000
*--*
****
From Orange County
*--*
Destination county 1995 2020 Los Angeles 200,994 90,000 Riverside 9,000 4,000 San Bernardino 8,000 3,000 San Diego 6,000 4,500 Other counties 6,340 8,065
*--*
Source: Southern California Assn. of Governments
