Orange County surpasses pre-recession peak by 40,000 jobs

Emerging industry clusters and continued strong investment in Orange County have helped push employment past pre-recession levels by more than 40,400 jobs, while driving labor force participation to a five-year high of 51.4 percent, a new report shows.

The study, by Wallace Walrod, Chief Economist for the Orange County Business Council, provides a positive forecast for the county, suggesting it could be play a leading-edge role in the innovation economy.

“Alongside traditional industries, Orange County has been able to cultivate a number of industry clusters which promote higher economic growth by creating a self-sustaining, virtuous cycle of innovation, productivity and employment creation,” the report stated.

The innovation economy and in-depth economic analyses covering each of the six counties represented by the Southern California Association of Governments (SCAG) will highlight the Seventh Annual Southern California Economic Summit at the L.A. Hotel Downtown. More than 400 business and elected leaders are expected to attend the Summit, sponsored by SCAG and the Southern California Leadership Council.

For Orange County, venture capital investment has become a major economic driver, particularly in the Irvine area – home to a growing number of high-tech start-ups. Venture capital funding jumped to $855.5 million in 2015 and totaled $581.4 million during the first nine months of 2016. This, along with a well-educated workforce and partnerships between educational institutions, economic development organizations and private companies have cultivated a climate of innovation and entrepreneurship.

A notable example is the University of California, Irvine’s, The Cove – a 31,000-quare-foot facility of collaborative workspace which provides local start-ups with access to research, prototyping, funding, incubation and acceleration.

“Orange County’s highly concentrated industry clusters help to not only drive general economic activity, but also increase the regional specialization and subsequent innovative capabilities,” the report stated. “As a result, Orange County has been able to improve its innovative climate, serving to attract and inspire many start-ups in the area.”

The county’s traditional industries continue to see strong gains as well. Construction saw the largest percentage growth of employment (9.9 percent during the past year), followed by educational and health services (4.6 percent) and leisure and hospitality (4.5 percent).

“The strength and resilience of Orange County’s economy has become even more apparent in the post-recession era, as the county has led Southern California’s economic recovery and enjoys pre-recession levels of economic activity as well one of the nation’s highest qualities of life,” the report stated.

It notes that challenges remain for Orange County, notably a high cost of living, a skills gap in some high-tech fields and automation, which could make relatively low-skill jobs – and even some higher-skill positions – obsolete.

Michele Martinez, a Santa Ana City Council member and President of SCAG, said the report underscores the need for strong partnerships and collaboration.

“Innovation is the lifeblood of economic growth and job creation, and for us to remain at the forefront, we need to work together more than ever,” Martinez said. “We have to leverage our strengths and address our weaknesses in order to continue on this positive trajectory.”

She warned that high housing costs are forcing millennials out of the county, while an aging population is placing a heavier burden on government services such as healthcare and transportation.

Hasan Ikhrata, Executive Director of SCAG, said the Economic Summit is an opportunity to look at new directions the six-county region can take to improve its economic viability.

“The innovation economy, in particular, offers great promise for our region,” Ikhrata said. “Taking advantage of that requires commitment and collaboration involving business, government and the education community. The Summit is a platform for that discussion. What happens after that will determine our success.”