MORE HIGHLIGHTS: 2009 OC COMMUNITY INDICATORS REPORT

[NOTE: YOU MAY DOWNLOAD A FREE PDF COPY OF THE 2009 OC COMMUNITY INDICATORS REPORT HERE]

Largest Clusters Split Between Growth and Decline

Description of Indicator
This indicator shows employment and salaries in 10 major
Orange County industry clusters. The clusters were chosen
to reflect the diversity of Orange County employment,
major economic drivers within the county, and important
industry sectors for workforce development. Approximately
40% of all Orange County jobs can be found in the 10 clusters
described in this indicator.

Why is it Important?
Employment change within specific clusters illustrates how
Orange County’s economy is evolving. Tracking salary levels
in these clusters shows whether these jobs can provide a
wage high enough for workers to afford to live in Orange
County.

How is Orange County Doing?
Between 2006 and 2007, employment grew in seven of the
10 major industry clusters:
• Two of the largest clusters –Tourism and Health Services
– were part of this growth.
• The other two largest clusters – Business and Professional
Services, and Construction – experienced employment declines.
• Computer Hardware also experienced a decline.
• The largest employment gains occurred in Communications
(19.2%), Energy and Environment (11.5%), and Computer Software (6.4%).
Eight of the 10 major Orange County industry clusters
experienced salary increases between 2006 and 2007:
• The largest salary increases occurred in Communications
(11.8%), and Energy and Environment (8.8%).
• The two industries experiencing salary reductions were
Computer Software (-1.1%) and Biomedical (-3.1%).
• As presented in the Housing Affordability indicator, the
annual income needed to purchase a median-priced home
in Orange County is $78,100, affordable only to the top
three paying clusters.
• Despite salary increases, three of the four largest clusters
do not have an annual income high enough to afford
median rent on a one-bedroom apartment (estimated at
$51,840 in the Rental Affordability indicator).

**
Average Annual Salaries in Orange County Clusters
Orange County, 2007 Job Market

------------------------------------2007------------Change 2006-07
Defense and Aerospace -------------$95,199 -------------------6.7%
Computer Software -----------------$82,630 -----------------(-1.1%)
Biomedical ------------------------$80,198------------------(-3.1%)
Computer Hardware -----------------$70,432 --------------------1.7%
Communications --------------------$69,694 -------------------11.8%
Energy and Environment ------------$59,292 --------------------8.8%
Construction ----------------------$53,581 --------------------7.3%
Business and Professional Services $51,349 --------------------5.2%
Health Services -------------------$47,124 --------------------3.0%
Tourism ---------------------------$20,197 --------------------5.8%

Source: Orange County Business Council analysis of data from the California Employment
Development Department

[from page 21]
**
Economic Contraction Narrows Housing Gap

Description of Indicator
This indicator shows the ratio of new housing permits divided by new jobs created in Orange County compared with peer metropolitan
areas across the state and the country.

Why is it Important?
When an economy is growing, new housing is needed for the additional workers employed. When the housing demand is unmet, it can drive up home prices and apartment rents beyond what is affordable to many workers and residents. An expensive housing market
affects Orange County’s desirability as a business location partly because businesses have greater difficulty attracting and retaining workers — particularly young workers. In addition, residents face longer commute times due to people moving out of the county or to a small concentration of affordable areas within the county. Orange County’s housing deficit is the result of a long-term chasm between the amount of housing built relative to the number of jobs created. Even when the economy contracts, the gap is so wide that demand for new housing does not disappear. To begin to close a gap of this size, housing construction must increase and remain high in times of economic growth as well as contraction.

How is Orange County Doing?
Despite a significant decline in employment, the long-term housing
shortage that has existed in Orange County since the late-1990s
continues due to weak housing development:
• In 2007, employment dropped by 28,200 jobs while 7,372 new
housing permits were granted.
• The resulting ratio of -3.83 leaves Orange County with a
negative number of jobs (job losses) per new housing permit.
• This is in contrast to peer regions around the country (except for
the Inland Empire and Los Angeles) where job growth continued
in correspondence with housing permit growth.
• Still, since 1999, a total of 162,100 new jobs were created (including
losses) compared with 78,800 housing units permitted.
• In other words, for every 1.8 jobs created since 1999, one housing
unit has been permitted. The standard “healthy” ratio of jobs to
permits is 1.5 jobs per housing unit.
• All peer areas compared granted more housing permits than Orange County in 2007.

[from page 22]
**