Transcript After Losing 8.78 Million Jobs
Inland Empire Economic Growth . . .
Take Off?
John Husing, Ph.D. Economics & Politics, Inc.
Chief Economist, IEEP
After Losing 8.78 Million Jobs … U.S. Jobs Are Still Crawling Back
-664,000 Government Jobs +8,221,000 Private Sector (94.1%)
Unemployment Falling, But High
Worst U.S. Metropolitan Area Unemployment Rates
How Regional Economies Work Secondary Tier Economic Development … Increase The Economic Base!
Primary Tier
Three Step Growth Process Based On Interaction Of:
•
Population
•
Preferences
•
Dirt Prices Force Decisions
Southern California Population Growth, 2000-2012
People Prefer To Live Near The Coast
As a homeowner, would you prefer to move closer to work if it involved a townhouse or condo?
(I-15 & Sr-91 Commuters, 2008)
87.5% No Answer stable over 5 years Same question to Renters: 72.3% No
Stage #1: Rapid Population Growth
•
People forced to move inland for affordable homes
•
Population Serving Jobs Only
•
High Desert & I-215 South are current examples
Commuting Bad, But Stable Over Time 1,650,384 Total Jobs 1,156,313 Inside IE 494,071 Commute Outside County 154,845 Between IE Counties 339,226 Outside IE 20.6% Commute Outside the IE 16.3% Orange County Commuters
Construction: Finally Some Hope
Share of Underwater Homes Plunging 4Q 2012 to 3Q 2013 333,720 to 170,768 -48.8%
Home Price Trends 49.5% less for Existing home 32.3% -39.2% 52.8%
Long Term Competitive Price Advantage Still Exists
Permits: Finally Some Optimism
Firms Prefers The Coastal Counties
Stage 2: Strong Industrial Growth
Vacancy Nearing Historic Lows
Undeveloped Land … Industrial Prices Much Lower In Outlying Areas Exhibit 13.-Industrial Space Costs Differences Southern California, Sub-Markets, March 2013 156.6%
Price Per Sq. Ft.
Price with 20% Cubic Factor .
Difference % Difference
$0.56
84.2% $0.63
107.2% $0.78
$0.38
$0.30
Inland Empire Los Angeles Co.
Orange Co.
San Diego (non-R&D) nnn=net of taxes, insurance, common area fees Source: CB Richard Ellis
Workforce Needs Jobs Without Educational Barriers
Workers Will Work For Less Not To Commute Exhibit 82.-Median Wage & Salary Percent Difference Inland Empire vs. Coastal Counties, 2010 459 Common Occupations, Under $70,000
Weight Median Pay Percent IE Pay Is Lower
$33,240 $34,656 $34,089 $35,173 4.26% 5.81% 2.55%
0.0% Inland Empire San Diego Los Angeles Orange Note: Occupations in common weighted by Inland Empire Jobs Source: CA Employment Development Department, Occupational Wage Survey, Economics & Politics, Inc. calculations
Logistics Flow of Goods
Port Container Volumes
Fulfillment Centers
17 Firms Looking For Space 7 Are Fulfillment Centers 1,500,000 1,000,000 1,000,000 800,000 to 1,000,000 700,000 to 1,000,000 500,000 to 800,000 700,000 to 900,000 850,000 700,000 700,000 700,000 to 800,000 600,000 600,000 to 700,000 500,000 450,000 300,000 to 400,000 350,000 Source: Jones LaSalle
Inland Empire Logistics Jobs 32.5% of All Inland Jobs … Jan-Nov. 2012-2013
Manufacturing: Could Be A Major Growth Source
Manufacturing Orders Irregular
U.S. v. California Manufacturing Jobs
Manufacturing Slowing
Regulatory Environment Aimed At “Dirty” Blue Collar Sectors Impacts Construction, Manufacturing, Logistics
Median Pay By Sector Groups
Air Becoming Cleaner Exhibit 6.-PM 2.5 Days over National Standard vs. Total Square Feet of Net Industrial Absorption Since Highest PM2.5 level Monitoring Sites Mira Loma-Van Buren Riverside Magnolia Riverside Rubidoux Fontana-Arrow Highway Ontario-1408 Francis Street San Bernardino 4th Street
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
2012
Change From Highest Change Net Absorptiont Since Highest 46.2
43.4
* 19.0
8.0
13.0
7.0
* * -39.2
-84.8%
86,378,254
88.4
69.7
47.8
* 31.3
* 12.4
6.0
6.3
7.1
*
-81.3
-92.0%
183,911,357
120.2
92.6
78.1
57.3
39.7
15.0
15.1
* * 4.0
5.0
7.0
-113.2
-94.2%
229,967,544
58.2
73.7
54.3
* 22.9
27.2
* 19.3
6.2
6.6
7.1
10.6
-63.1
-85.6%
183,911,357
79.5
67.4
62.2
* 25.3
19.4
9.0
* * 3.2
6.8
0.0
-79.5
-100.0%
229,967,544
80.8
88.9
55.2
* 9.3
9.5
6.2
* * 5.9
*
0.0
-88.9
-100.0%
183,911,357
Poverty Exhibit 2.-Share & Number of Inland Residents Below Poverty Level Census Bureau Year 1990 People In Poverty 306,417 Share of Population in Poverty 11.8% Population 2,588,793 2000 2012 Changes 477,496 809,234 +164.4% 14.7% 19.0% +7.2% 3,255,526 4,293,892 +65.9% African American: Hispanic: White: Asian: 27.2% 23.9% 12.1% 10.4%
Stage 3.-Office Based Firms Follow Their Workers
Skilled Workers Migrate Inland For Better Homes
Office Absorption Finally Starting to Recover High-End Jobs Follow Workers into the Area
Outlying Workers Will Work For Less Not To Commute $86,806 Exhibit 98.-Median Wage & Salary Percent Difference Inland Empire vs. Coastal Counties, 2010 138 Common Occupations, $70,000 & Up
Weight Median Pay
$93,489
Percent IE Pay Is Lower
$94,768 $94,806 7.70% 9.17% 9.22%
0.0% Inland Empire San Diego Los Angeles Orange Note: Occupations in common weighted by Inland Empire Jobs Source: CA Employment Development Department, Occupational Wage Survey, Economics & Politics, Inc. calculations
Office Vacancy Rates Improving But Still Very High 18.1%
High End Occupations & Office Unstable
Inland Empire’s In-migration From Coastal Counties Has Not Yet Recovered
-15,538 Not Bringing Skills, Wealth, Income & Spending
Health Care
Health Care Jobs: Continuous Growth 700 600 800
Health Care Demand Set To Explode People Without Health Insurance (2012): 828,431 (19.0%) People Will Age, Already Those 55 & Over are 926,696 (21.3%) Population Growth Will Resume (2000-2013) 1,075,807 (33.0%) Inland Health Care Workers Handle More People Than CA: (35%)
Federal Job Cuts Debt Ceiling Budget Fights
Assessed Valuation Finally Growing (6.1% for SB County) -1.0%
Government Remains Weak
How Regional Economies Work Secondary Tier Primary Tier
Retail Sales Almost Back
Retail, Consumer Service, Hotel, Amusement Jobs Gaining Speed
Where Will IE Be In Its Job History?
Exhibit 8.-Wage & Salary Job Change Inland Empire, Annual Average, 1984-2014e 2011-2013 55,958 of 148,425 lost or 37.7% 2011-2014 90,958 of 148,425 lost or 61.3%
Sources: CA Employment Development Department, U.S. Bureau of Labor Statistics, Economics & Politics, Inc.
Forecast 2014 Better Than 2013
• • • • • • •
Health Care Will Grow Logistics Will Grow Retail Gaining Office Growth Very Slow Home Building Starts Back Growth Looks Normal Still Well Below Pre-Recession