Verdugo and Glendale Economies and Workforce Verdugo Workforce Investment Board

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Verdugo and Glendale Economies and
WorkforceVerdugo Workforce Investment Board
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Verdugo Economy

• Steady unemployment rate
• Sept. 07 4.2
• Feb. 07 3.8
• Sept. 06 4.2
• Sept. 05 4.3
• Sept. 2000, 2001 and 2002 5.3

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Glendale Economy

• Unemployment rate also stable
• Rates
• Sept. 2007 4.5
• Sept. 2006 4.0
• Sept. 2005 4.2

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Verdugo Industry Composition

• Glendale-Burbank has a huge entertainment
  industry
• Health care is second largest industry
• Retail is third and rising
• Manufacturing still is large, despite large
  losses in recent years

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Glendale Industry Composition

• Health care is the dominant industry
• Retail is catching up fast
• Manufacturing is still prominent as the third
  largest industry
• Finance and Insurance have suffered heavy losses
  but still is prominent
• Entertainment is still small in Glendale

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Key Short-term Industry Issues

• Entertainment
• Health care
• Retail/restaurant
• Manufacturing
• Finance/insurance
• Education

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Entertainment

• Looming industry-wide strike
• 200,000 workers potentially out of work
• Concentration in Verdugo region
• Ancillary impact on local businesses

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Entertainment

• Even with no strike, a big stockpiled backlog of
  films portends significant period of inactivity
  for workers.
• Projected losses
• 3-month strike 54,600 jobs lost and 2.9 billion
  in L.A.
• 1-month strike 21,700 jobs lost and 1.2 billion
  in L.A.

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Entertainment

• 700 entertainment-related companies within
  Verdugo
• Multiplier effect ranges from 3-1 to 5-1
• Non-entertainment companies impacted by a period
  of reduced spending restaurants, caterers,
  florists, lumber, etc.

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Health Care

• Second largest Verdugo industry and largest
  industry in Glendale
• Glendales unique hospital situation
• 6 consecutive years of employment growth
• The baby boomer impact

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Nursing Shortage

• WIB identified 400-500 unfilled nursing openings
  in 4 regional hospitals
• WIB also identified labor shortages in numerous
  other health care occupations

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Joint WIB and GCC project

• 1 million to train 100 new nurses and provide
  upgrade training to 170 existing nurses
• Partners Pierce College and Valley College

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Retail and Restaurant

• Fastest growing sector in coming years
• Minimum of 2,500 new jobs created
• 3 new major hotels in the region
• 10 new development projects driving growth,
  including Americana Town Center

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Story Behind Local Retail

• Retail employment is up 20 since June 2001
• Strong period of consumer spending driving
  economy since last recession
• Local municipalities are focusing on retail
  development projects in the state

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Manufacturing

• Employment has held steady in recent years after
  losing a quarter of its workforce in the past 5
  years
• The region once had over 100,000 manufacturing
  workers, compared to 13,674 today

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Helping Manufacturing

• WIB and Professional Development Center and GCC
  partnered on 4 educational seminars for
  manufacturers
• WIB developed a layoff aversion project to
  provide free resources and services to help
  manufacturers

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Finance and Insurance

• Banking consolidations and defections hurt
  employment throughout the 1990s
• Industry now being hammered by subprime meltdown

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Education

• K-12 employment has trended lower due to dropping
  enrollments

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Long-term Issues

• Poverty in the region
• Baby boomer impact
• Disney Creative Campus
• Entertainment technology
• Retail shortage

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Poverty Study

• 47 of poverty population statistically
  disappeared from Glendale from 1999 to 2005
• Number of families in poverty in Glendale
  declined by 46

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Unique to Glendale?

• Yes and no
• Poverty population fell by only 8.9 in L.A.
  County during same period
• Family poverty level fell by only 6.9 in L.A.
• However, other regions with high housing
  appreciation have experienced similar changes

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Why the change?

• From 1999 to 2005, Glendales housing prices
  almost doubled (84 increase)
• Median condo/house price in 2005 598,000

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Did people stay in Glendale?

• Reason 1 Federal poverty level for individual
  in 1999 was 8,240/year (16,700 for family of 4)
• Verdugo WIB worked with many poverty-level
  residents through welfare-to-work
• Common characteristics difficulty speaking
  English and no vocational skills

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Other Arguments

• Reason 2 School districts with high housing
  appreciation have also seen a loss of families,
  particularly low income families
• Examples Long Beach, most of Orange County,
  South Bay
• Regions that have seen enrollment increases
  Inland Empire, Kern County, Fresno County

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Statistical Support

• Families in the city making 50,000 or less
  declined by 20.6 from 1999 to 2005
• Families making 100,000 or more increased by 47
  during the same period
• Are poverty families (at 16,000/year in 1999)
  now the 47 making over 100,000/year?

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Focus Group Test

• Top real estate management firms report a
  definite shift in clientele with more younger,
  affluent people renting (1,250 to 2,500/month)
• Many of the lower income families left

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Conclusion

• Basically seeing a simple cause-and-effect
  situation housing costs rise too high, poorer
  people cant afford to live in the city
• Implications Fundamental shift in the way people
  look at the city, how policy-makers plan for the
  future

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Baby Boomer Issue

• Probably key demographic driving local, massive
  hospital expansions
• Informal analysis Almost half Verdugo population
  in 35 to 64 age group by 2010
• Besides health care, other implications
• Hitting peak earnings years
• -- Positive areas Finance, retail,
  entertainment, restaurant.

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Another Baby Boomer Impact

• Over a third of Verdugo population in retirement
  range (55 and over) by 2010
• Impacted areas health care, recreation,
  restaurant, finance
• How many will actually retire? Savings rate
  issue, diminishing wealth, labor shortages

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Disney Creative Campus

• Over the long-term, this will likely be the
  strongest job creator
• Over 10,000 jobs added in Glendale
• The cluster effect (Porter)
• Expect smaller high-tech entertainment companies
  in the region

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Entertainment Technology

• The linkage between digital technology and
  entertainment
• Driving force behind constant skills upgrades of
  the workforce
• The problem of freelance status and training

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Joint GCC and WIB project

• Goal Provide upgrade training to 600 incumbent
  entertainment workers
• Partnering with 20 of top entertainment industry
  unions

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Retail Worker Shortage

• Many retailers (Glendale Galleria) having trouble
  finding enough workers
• Move of low income families out of the region
  mean loss of traditional retail labor pool

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Potential Major Economic Problems

• Region has very small Information Technology,
  Biotech, and Logistics
• Past positives
• These are projected to be some future growth
  areas for the state
• Region will likely miss out on some positive
  growth and job creation

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Other Problems

• The region is overly dependent on consumer
  spending-related industries (1800 companies in
  region 15-20 of workforce in retail/restaurant
  alone)
• The subprime meltdown, credit squeeze, declining
  home price declines will push U.S. economy near
  recession levels in 2008
• Local economy could be hit hard

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Subprime Impacting Finance

• Last 6 months, seen over a dozen major layoffs
  affecting 1,300 workers
• Glendale-Burbank is the title insurance capitol
  of Southern California with 13 of top 25
  companies in L.A. County
• State requesting National Emergency Grant to help
  address the subprime layoffs

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Impact of Armenian Economy

• 1998 study found 723 Armenian owned or managed
  businesses in Glendale
• Most of businesses were in the service sector
• Most relied on attracting customers from inside
  and outside of the region

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The Perfect Storm

• Entertainment strike or de facto strike
• Subprime meltdown in finance sector
• Slowdown in consumer spending sectors retail,
  restaurant/accommodations
• 4 industry sectors account for 40 of Verdugos
  workforce
• Tough times ahead for Verdugo???