Milken survey says Orange County economy is best in 11 years
- Keith Agnello
- Dec 30, 2016
- 3 min read
I know more than a few of you think I’m too bullish about Orange County’s economy.
Well, my optimism is not unique.
Take the Milken Institute’s annual regional economic yardstick for 2016. It scored Orange County as 19th best market among the 200 largest metro areas. The report cited Orange County’s “improved job and wage performance, along with a growing high-tech sector.”
This marks the county’s highest “best cities” ranking in 11 years, and it came in a year that saw the local score improve by the biggest ranking jump into the Top 25, a 27-position upswing from 46th in 2015.
The institute’s ranking is based on historical patterns in “job creation, wage gains, and technology developments” while shunning “business costs, cost-of-living components, and quality-of-life conditions, such as commute times or crime rates” because “these measures, although important, are prone to wide variations and can be highly subjective.”
Here are six things the Milken report tells us about Orange County’s economy:
1. Good company
The San Jose market was tops in the Milken ranking. Again.
Provo, Utah, and Austin, Texas, tied for second. Then came San Francisco and Dallas.
Other California markets in the Top 25: Oakland ranked 18th, just ahead of Orange County; Santa Rosa was 20th; and San Luis Obispo was 25th.
Elsewhere from Southern California: Inland Empire improved, ranking 44th vs. 60th in 2015; Los Angeles did better, too, climbing to 48th vs. 77th; but San Diego dipped, ranking 32nd vs. 19th.
2. Long road back
This is no gimme. The Milken metrics are not always kind to Orange County.
The last time Orange County got a better score was 2005, when it ranked 17th as the last decade’s boom was peaking. Previously, Orange County had been ranked as high as 10th in 2002.
In the years between Top 25 rankings, the Milken index placed Orange County in the bottom half of the 200 markets tracked for four consecutive years surrounding the Great Recession: 106th in 2008; 122nd in 2009; 172nd in 2010 and 165th in 2011. In 2012, the local ranking barely got back into the top half with a 97 score.
Returning to the Top 25 is no small feat.
3. Tech power
Fast-growing local high-tech firms were instrumental to the higher ranking.
The institute found that Orange County’s high-tech sector ranked 23rd out of the 200 markets studied in size and ranked second for the diversity of specialties within the local technology industry.
Orange County attracted $1billion in venture capital in 2015 – its best performance since just after the turn of the century. Its professional, scientific and technical services sector grew 20 percent in the five years ending 2015, adding 20,800 jobs, the institute said.
I often hear grousing by local business leaders that Orange County isn’t like tech giant Silicon Valley. But no place is, so just enjoy our vibrant local tech sector.
4. UCI boost
The report gave credit to UC Irvine as a leading catalyst as the school grows into a well-known hub for scientific innovation.
UCI has been taking in “record-breaking research and philanthropic funding” that should grow its staff, facilities and impact on the local economy, the institute wrote.
“The continuing health and ambition of this key regional asset will benefit the metro, helping train its workforce and attracting innovative firms,” the report stated.
I wish UCI had a bigger local voice as a counterweight to another Orange County school with professors that don’t seem to understand the region’s strengths.
5. Some questions
The report’s Orange County glow came with some caveats.
Job growth is good, but not exceptional. While the local hiring pace was 3.5 percent better than the national expansion, the report noted Orange County had the lowest job growth of the Top 25, “speaking to the fast pace of job creation among peer regions.”
In addition, a common complaint was noted: Too much congestion and too pricey housing that makes Orange County “less attractive to residents from outside Southern California.”
6. Next up
The report is based primarily on 2010-15 data, with a heavy emphasis on the more current trends.
So a year from now, 2010’s economic ugliness will be minimized in Orange County’s next Milken scorecard.
My trusty spreadsheet tells me this will largely cut out the last year of the downturn when, for example, local job counts fell by 1.2 percent.
Replacing that year in the institute’s math will be 2016, with Orange County job counts up 2.8 percent through November. I think it’s a good bet that Orange County’s Milken ranking will be even better for 2017.
Contact the writer: jlansner@scng.com
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