The Antelope Valley Labor Base Analysis

The Antelope Valley Labor Base Analysis Greater Antelope Valley Economic Alliance Alfred Gobar & Associates In cooperation with: GAVEA, Antelope Valley Bank, Lancaster, Los Angeles World Airports, Palmdale, Wells Fargo Bank

ANTELOPE VALLEY LABOR BASE ANALYSIS Prepared for: GREATER ANTELOPE VALLEY ECONOMIC ALLIANCE 2004 ALFRED GOBAR ASSOCIATES 300 S. Harbor Boulevard, Suite 900, Anaheim, CA 92805-3721 (714) 772-8900 FAX (714) 772-8911

Table of Contents ALFRED GOBAR ASSOCIATES CHAPTER PAGE I INTRODUCTION... I-1 Overview of Study and Methodology... I-1 Population Estimates and Census Required Adjustments... I-3 Regional Scale and Growth Overview... I-5 II EXECUTIVE SUMMARY... II-1 Antelope Valley Household Demographics (D)... II-1 Household and Worker Attitudes (A)... II-3 Labor Force Characteristics (L)... II-4 Commuter Workforce (C)... II-8 Economic Development (E)... II-9 III IV POPULATION AND LABOR BASE ANALYSES... III-1 Commuter Responses... III-7 Subarea and Resident Tenure Comparisons... III-7 Work Force Attitudes... III-10 Qualitative Work Issues... III-14 Commuter and Work Trends... III-14 Worker Medical Coverage... III-14 Reliance on Childcare... III-16 LABOR FORCE PROFILE... IV-1 Population and Labor Force Estimates... IV-1 Workforce Characteristics... IV-3 Employment Location... IV-7 Workforce Commuters... IV-8 Workforce Unionization... IV-11 General Workforce Characteristics... IV-12 V SUBAREA COMPARISONS... V-1 Subarea Comparison of Survey Responses... V-1 Secondary Socio-Demographic Data... V-7 VI ECONOMIC GROWTH FACTORS... VI-1 Residential Construction Trends... VI-1 Property Value Trends... VI-3 In-Store Taxable Retail Sales Trends... VI-4 Housing Affordability... VI-9 Economic Effect of New Households... VI-12 Model Assessment Approach... VI-12 Profile of Newcomer Households... VI-15 Economic Value of Newcomer Households... VI-16 Economic Effect of Housing Construction... VI-19 Economic Effect of Household Growth Versus Housing Construction... VI-21 Antelope Valley Labor Base Analysis i

Table of Contents ALFRED GOBAR ASSOCIATES EXHIBIT PAGE I-1 Map of Antelope Valley Region... I-7 I-2 2003 Population and Households Antelope Valley, California... I-8 III-1 III-2 IV-1 IV-2 IV-3 IV-4 Profile of Residents by Place of Work and Commute Time... III-18 Profile of Residents by Area and Length of Time Lived in Antelope Valley... III-19 Job Characteristics of Antelope Valley Labor Force Classified by Industry of Employment... IV-15 Commuting and Job Satisfaction Characteristics of Antelope Valley Labor Force Classified by Industry of Employment... IV-16 Commuting and Job Satisfaction Characteristics of Antelope Valley Labor Force Classified by Occupation of Employment... IV-17 Job Classification Characteristics of Antelope Valley Labor Force Classified by Occupation of Employment... IV-18 V-1 Selected Characteristics of Respondents by Place of Residence in the Antelope Valley... V-11 V-2 Summary Demographic and Income Benchmark Report Antelope Valley... V-13 VI-1 VI-2 VI-3 VI-4 VI-5 Total Residential Building Permit Units Antelope Valley Region by Subarea... VI-22 Total Residential Building Permit Units as a Percent of Southern California Antelope Valley Region by Subarea... VI-23 Total Residential Building Permit Units by Subarea as a Percent of Antelope Valley Antelope Valley Region by Subarea... VI-24 Total Residential Building Permit Values (000s) Antelope Valley Region by Subarea... VI-25 Ratio of Antelope Valley to Southern California Average Value Per Residential Permit Antelope Valley Region by Subarea... VI-26 Antelope Valley Labor Base Analysis ii

Table of Contents ALFRED GOBAR ASSOCIATES EXHIBIT PAGE VI-6 Summary of Property Value Trends in Antelope Valley... VI-27 VI-7 Taxable Retail Sales by Store Type, 1993-2002 Lancaster and Palmdale Area, California... VI-28 VI-8 Taxable Retail Sales Per Establishment by Store Type, 1993-2002 Lancaster and Palmdale Area, California... VI-29 VI-9 Taxable Retail Sales Per Capita and Per Establishment, Year 2002 Lancaster and Palmdale Area, California... VI-30 VI-10 Taxable Retail Sales Flows, Year 2002 Lancaster and Palmdale Area, California... VI-31 VI-11 VI-12 VI-13 VI-14 VI-15 Housing Affordability Antelope Valley 2003... VI-32 Impact Assessment for Analogous Regions Impact of 1,000 Newcomer Households Based on Mean Household Income 2004... VI-33 Employment Top 20 Industries Newcomer Household Impact Mean Income Method 2004... VI-34 Labor Income Top 20 Industries Newcomer Household Impact Mean Income Method 2004... VI-35 IMPLAN Assessment for Analogous Regions Impact of 1,000 Newcomer Households Based on Household Income Distribution 2004... VI-36 APPENDIX A Methodology for Antelope Valley Region Population Estimates... A-1 B Taxable Retail Sales... B-1 C IMPLAN Economic Assessment... C-1 Antelope Valley Labor Base Analysis iii

Chapter I Introduction Overview of Study and Methodology This report summarizes the results of the most recent in a series of six similar such studies of Antelope Valley s population, labor force characteristics, employment trends, development activity, and other measures of Antelope Valley s capacity to provide an environment for economic growth. This study serves to provide a timely assessment of labor resource potential for the benefit of businesses expanding or seeking to relocate to Antelope Valley. This analysis is sponsored by the Greater Antelope Valley Economic Alliance. The methodology employed in preparation of this labor base analysis included a review of secondary statistical data regarding population, employment, development trends, etc., in Antelope Valley. The focal research effort of this study centers on the sixth in a series of consumer surveys based on randomly selected telephone interviews of 600 local area households conducted over a 14-day period during December 2003. The interviews were conducted by a professional survey firm and edited by skilled supervisors for accuracy (10.0 percent of the surveys were revalidated). Specific socio-demographic factors investigated through the interview process included employment status, commute patterns, occupational characteristics, and a wide range of qualitative questions regarding various aspects of the local community. In each of the five prior surveys, a portion of the interview addressed special topics to gain a greater understanding of unique worker needs and labor base opportunities. The selection process for telephone interviews utilized randomly selected phone numbers of households located within the ZIP Codes of the Region investigated. Interviews were stratified in terms of the number of existing households in each of four geographic subareas used to define the Greater Antelope Valley Region. The defined boundaries of Antelope Valley assumed for purposes of this 2003 survey analysis are shown on the map in Exhibit I-1. The study area includes Antelope Valley Labor Base Analysis I-1

unincorporated as well as incorporated areas in Antelope Valley, embracing parts of Kern and Los Angeles Counties. Since the inception of this time-series study, the boundary definition of Antelope Valley has remained largely unchanged to facilitate comparison of findings from succeeding survey studies. The boundary definition was last modified for the 2000 study to include the City of Tehachapi and adjoining unincorporated Kern County (ZIP Code 93561). Since the 2000 survey, the City of Ridgecrest and its surrounding area has also been included as part of many economic development efforts sponsored by GAVEA. The defined boundary for the 2003 study, however, remains unchanged from the previous 2000 study to provide clearer comparison of changes affecting labor resource potential within Antelope Valley. Specific ZIP Codes and locational references of the study area, by county, are also noted in Exhibit I-1. A minimum 100 interviews were collected from each of the four subareas to assure an adequate sample size. As a consequence, the percentage distribution of interviews does not parallel the relative distribution of households. Achieving a minimum of 100 interviews per area and a proportionate distribution of all interviews in parallel with the geographic distribution of households would require nearly 1,700 interviews to be completed, substantially increasing the cost of collecting the information. The discontinuity of the sample distribution was accommodated through weighting factors applied to the aggregate data from each survey area. The distribution of households, number of interviews, and the weight assigned to each group of interviews are as follows: Geographic Region Total Households Interviews Obtained Weighted Interviews Lancaster 49,291 200 40.4% Palmdale 41,975 200 34.4 Los Angeles Outlying Area 7,347 100 6.0 Eastern Kern County 23,481 100 19.2 Total 122,094 600 100.0% As shown, the Los Angeles Outlying Area represents 6.0 percent of the sample universe but generated 100 total or 16.7 percent of all completed interviews. Responses from this area were weighted in relationship to the subarea s share of total Antelope Valley households but not the corresponding share of interviews. Similarly, the Eastern Kern County area represented 19.2 percent of the sample Antelope Valley Labor Base Analysis I-2

universe and 16.7 percent of the interviews. The 200 interviews completed in the Lancaster study area represented 33.3 percent of the total interviews but are assigned a weight of 40.4 percent consistent with the Lancaster area s share of the total households. An equal number of interviews were conducted in the Palmdale study area but were assigned a weight of 34.4 percent based on the share of total Antelope Valley households. In short, interview results from each of the four survey areas were weighted to reflect the corresponding proportionate share of the sample universe of households. Other information included in this report was taken from a multitude of standard data and agency specific sources. As an example, residential building permit data is based on the Bureau of Census Constructions Statistics Division, as well as the Cities of Lancaster and Palmdale, and Los Angeles County and Kern County for building activity in the unincorporated portions of Antelope Valley. Other sources referenced in this report include the Kern Council of Governments, County of Los Angeles (Department of Regional Planning) Research Division, County of Los Angeles Department of Public Building and Safety, State of California Department of Finance Population Research Unit, California Employment Development Department, Bureau of the Census, the California State Board of Equalization, and Anysite.com Integration Technologies, Inc. (a purveyor of standardized demographic data). Population Estimates and Census Required Adjustments Several data sources exist that estimate and project population and employment within a given geographic locale such as Antelope Valley. Each source provider, including government agencies such as the California Department of Finance, Los Angeles Economic Development Corporation, California Employment Development Department, etc., and commercial data purveyors such as Anysite.com employ a variety of reporting, estimating, and statistical techniques. Consequently, population and employment estimates obtained from one source provider invariably differ from the same supposed estimates available through another source provider. In addition, population estimates are initially calibrated to reflect the most recent decennial Census and then adjusted using alternative techniques to estimate growth at interim periods leading up to the release of data from the succeeding Census. Invariably, estimates made between decennial periods are subject to subsequent revision since Antelope Valley Labor Base Analysis I-3

the Census represents the most rigorous method of determining local area demographics. Adjustment to interim period estimates is necessary to ensure accurate and fair distribution of government subventions and to accurately assess trends affecting economic growth potential. Population figures used for the previous 2000 study were based on interim estimates from various agency sources, given 2000 Census data was not released until early 2001. As such, the estimated population for the latest labor market study is based on revisions dictated by 2000 Census and subsequent re-benchmarking of estimating techniques by the various source providers referenced. A more detailed review of Census related adjustments to population estimates for Antelope Valley is included in Appendix A of this report. In short, the 2000 Census identified a lower overall population base describing Antelope Valley in April 2000 than identified by estimates included in the previous study. The corresponding adjusted population estimates for Antelope Valley based on re-benchmarking dictated by the 2000 Census is summarized below in comparison to population estimates reported in previous studies: Antelope Valley Population Estimates * April 1, April 1, April 1, Population Estimate 1980 1986 1990 1993 1997 2000 2003 Population based on 2000 Benchmark 133,589 171,476 279,738 311,178 347,925 347,325 370,932 Previous Population Estimates 133,589 171,476 279,625 316,103 363,791 393,525 *All figures reflect year-average population unless specific date noted. After re-benchmarking population estimates to account for the 2000 Census, the resulting 2003 population estimate based on multiple agency sources remains below the level previously identified for Antelope Valley in 2000, from similar agency sources. For purpose of evaluating responses to the 2003 survey, Alfred Gobar Associates has utilized a single agency data source (Anysite.com Integration Technologies, Inc.) rather than several agency sources. Exhibit I-2 identifies the reference population and household estimates used to interpret survey results. Identified estimates describe various ZIP Code areas defining the Antelope Valley region. On the basis of this data source guiding the 2003 survey analysis, the population base of Antelope Valley is estimated to total 389,326 persons (including 3.32 percent in group quarters) and 122,094 households. Antelope Valley Labor Base Analysis I-4

Regional Scale and Growth Overview The Antelope Valley Region illustrated in Exhibit I-1 comprises 3,514 square miles, surpassing the median and average size of all counties Statewide: Area Square Miles Antelope Valley 3,514.2 Kern County 8,141.6 Los Angeles County 4,060.0 Median County Size Statewide 1,607.9 Average County Size Statewide 2,689.2 A summary of comparative rates of population growth for the subareas of Antelope Valley as well as for Kern County and Los Angeles County, illustrates the dynamic growth history of the Antelope Valley Region: ANNUAL COMPOUND PERCENTAGE RATE OF POPULATION GROWTH 14.00% 12.00% 1980-1990 1990-2000 2000-2003 10.00% ANNUAL RATE OF GROWTH 8.00% 6.00% 4.00% 2.00% 0.00% SE Kern Co. (Incl. Tehachapi) Unincorp. Los City of Lancaster City of Palmdale Angeles County Total Antelope Valley Los Angeles County Kern County Source: Alfred Gobar Associates. Because of relatively faster population growth observed in Antelope Valley versus Los Angles County and Kern County, this area has become an increasing share of the combined population base of both counties, as shown below: Antelope Valley Labor Base Analysis I-5

Antelope Valley as a Percent of Combined Population of Kern and Los Angeles Counties April 1980 1.70% April 1990 2.97 April 2000 3.41 2003 (Year Average) 3.47 Antelope Valley represents a land area equivalent to 28.8 percent of the combined land area of Los Angeles and Kern Counties. In contrast, Antelope Valley accounts for only 3.47 percent of the combined populations of Kern and Los Angeles Counties based on the most conservative estimate of population. Antelope Valley has the land resources to accommodate substantial future growth. Growth in population is typically stimulated by growth in employment opportunities, which is the basic area of investigation of these studies. Antelope Valley Labor Base Analysis I-6

EXHIBIT I-2 2003 POPULATION & HOUSEHOLDS ANTELOPE VALLEY, CA Geographic Region 2003 Survey Reference & Zipcode Location Population Households Lancaster 93534 37,397 13,644 93535 62,732 19,505 93536 52,039 16,142 152,168 49,291 Palmdale 93550 69,204 20,216 93551 38,065 11,874 93552 28,483 7,909 93591 7,081 1,976 142,833 41,975 Unicorporated LA County 93510 7,628 2,482 93543 12,042 3,557 93544 1,257 465 93553 1,499 570 93563 830 273 23,256 7,347 Eastern Kern County 93501 5,763 2,154 93505 8,657 3,134 93516 2,450 962 93523 8,353 2,487 93560 16,070 5,544 93561 29,776 9,200 71,069 23,481 Antelope Valley Overall 389,326 122,094 Source: Anysite Online; Alfred Gobar Associates. 8/17/2004 Hhld Pop by Zipcode - AV 1-04.xls/2003 Ref Pop I-8

Chapter II Executive Summary Antelope Valley Household Demographics (D) D-1 The resident household population of Antelope Valley is estimated at approximately 390,000 persons based on results of the 2003 survey. The above survey estimate is at variance with estimates that preceded the 2000 Census and also standard demographic data estimates for 2003. The difference results because of the comprehensive nature of the 2000 Census dictating adjustments to previous interim estimates and also larger household size reported by the 2003 survey respondents compared to standard statistical estimates. The Lancaster and Palmdale areas have consistently accounted for approximately 75.0 percent of total population in Antelope Valley since 1997. Over the same time period, the share of resident population in the Los Angeles Outlying area has been declining slightly (6.0 percent in 2003) and increasing slightly in the Eastern Kern County area (19.0 percent in 2003). D-2 The 1980 s represented a boom period in Antelope Valley with population growing at an average annual rate of 7.7 percent. During the 1990 s, the resident population grew at a much more modest rate of 2.7 percent per year on average. Since 2000, Antelope Valley has experienced a slight increase in growth with population increasing at an average annual rate of 2.9 percent per year. Moderate population growth tends to increase the average length of tenure reported by household residents. Responses to the 2003 survey underscore this observation. In 2003, survey respondents indicated they have lived in Antelope Valley 11.7 years on average, compared to 10.4 years reported in the two previous surveys and 9.8 years on average in 1990. D-3 The average income of households in Antelope Valley ($58,476 per year) reflects a 10.2 percent increase over the average income reported in 2000. The increase is attributed to a smaller proportion of respondents reporting total household income below $30,000 per year and significant increase in households reporting income above $100,000 per year (14.2 percent in 2003 Antelope Valley Labor Base Analysis II-1

versus 8.9 percent in 2000). The median income level of households responding to the 2003 survey is calculated at $46,530 per year (an 11.0 percent increase over the median household income level calculated in 2000). D-4 The average income of Antelope Valley households varies considerably depending on unique geographic, employment, and household factors. The average income of households with employed workers (whether full-time or part-time) is $70,608 per year compared to $37,522 per year for retiree households with no workers. Households with two full-time workers report an annual income of $83,504 per year on average compared to $54,701 per year for households with only one bread-winner working full-time. The lowest average income is reported for households in the Eastern Kern County area ($51,777 per year), followed by the Lancaster area ($55,569 per year), a function of the high proportion of households earning less than $30,000 per year. On average, households with workers that travel to jobs outside of Antelope Valley report higher income ($76,294 per year) than households with no workers that commute to jobs outside of Antelope Valley ($66,375 per year). Household income potential, however, is not strictly tied to the duration of the work commute. Households where all workers commute less than 16 minutes to work report higher annual incomes on average ($70,173 per year) than households with workers traveling 16 to 30 minutes to work ($62,843 per year). D-5 In terms of housing types, single-family detached residences describe the predominant form of housing in Antelope Valley, hosting 80.7 percent of respondent households. Overall, apartments host 8.5 percent of Antelope Valley households. Lastly, 6.5 percent of Antelope Valley households live in a condo or townhome-type residence and 4.3 percent live in mobile homes. With respect to homeownership, the 2003 survey indicates that 75.4 percent of all households in Antelope Valley are homeowners. About 14.0 percent of homeowner households have paid their mortgage in full (primarily retirees) and the rest report current mortgage payments of $979 per month on average. Renter households account for 24.6 percent of all households and report average rental cost of $654 per month in base rent. Antelope Valley remains a very affordable enclave in an otherwise costly Southern California housing Antelope Valley Labor Base Analysis II-2

market. The median monthly mortgage payment calculated from the survey ($810 per month) is an affordable cost for 65.0 percent of Antelope Valley households (mortgage payment not to exceed 33.0 percent of gross income). D-6 The survey indicates an increase in educational attainment among respondents. In 2003, the proportion of respondents with only a high school education or less is 37.0 percent, compared to 42.0 percent in 2000. Increasing educational attainment among Antelope Valley residents is due to a higher proportion of household members that have attended college level classes (35.0 percent in 2003 versus 30.0 percent in the previous surveys). The survey also indicates the ethnic/racial composition in Antelope Valley continues to grow increasingly diverse. D-7 The average size of Antelope Valley households has been steadily increasing (3.20 persons per household in 2003). Over this period, about 52.0 percent of all households have reported children living at home. About 31.0 percent of Antelope Valley children are under 6 years of age. About 22.0 percent of all households with children rely on some form of childcare. The proportion of households that rely on child care is highest for renter households (31.6 percent), households residing in Antelope Valley less than four years (30.0 percent), and households living within the Lancaster and Palmdale areas (about 26.0 percent). Surprisingly, a relatively high proportion of long-term resident households (29.0 percent) also rely on some form of childcare. Household and Worker Attitudes (A) A-1 The 2003 survey indicates subtle changes in household attitudes about community lifestyle factors including community services (police, fire, parks, etc.), schools, housing affordability, and job opportunities. Historically, household are more satisfied with the quality of community services, quality of schools, and affordability of housing than is true of job opportunities. The proportion of Antelope Valley households expressing satisfaction is highest in 2003 for housing affordability (85.0 percent), then community services (82.0 percent), followed by local schools (74.0 percent), and lastly local job opportunities (43.0 percent). Satisfaction with local job opportunities is about the same as reported in 2000, but remains below the level expressed in 1990 Antelope Valley Labor Base Analysis II-3

(63.0 percent) just before the recession and when high-paying aerospace jobs constituted a larger share of local employment. Satisfaction with housing affordability declined slightly from the previous three surveys (90.0 to 93.0 percent) but remains well above the level expressed in 1990 (73.0 percent). Household attitudes about community services and schools have remained relatively constant since 1990. A-2 Worker (employed respondents) attitudes expressed in 2003 generally affirm stable or improved work related attitudes since 1993, when the economy was in the depths of a recession. The 2003 survey indicates that about 92.0 percent of workers are satisfied with the type of job they are doing, comparable to the level of sentiment expressed during the previous three surveys. About 85.0 percent of workers express satisfaction with their job income compared to roughly 78.0 percent in 2000. Between 1990 and 2000, worker sentiments about job pay had declined in each succeeding survey. About 80.0 percent of workers express satisfaction with their daily commute. Worker sentiment about the job commute is down slightly from the level of satisfaction expressed in 2000 (82.0 percent) but higher than expressed in 1990 and 1993. A-3 Job satisfaction, time spent commuting, and perceived traffic congestion are among a multitude of factors that influence a worker s intention to take a job closer to home if similar work were available. The share of employed respondents (head of household) who expect they are somewhat likely or very likely to change jobs for similar employment near home jumped from 41.0 percent in 1990 to 51.0 percent by 1997, but has since declined during the latest two surveys to 42.0 percent in 2003. The recent decline is likely influenced by the recent economic slump that started at the end of 2000 and emerging recovery that has yet to produce substantial employment gains across most sectors of the economy. Labor Force Characteristics (L) L-1 Based on results of the 2003 survey, the total employed population in Antelope Valley is estimated at approximately 165,230 employed household adults, of which 112,850, or 68.0 percent, report working at jobs within Antelope Valley Labor Base Analysis II-4

Antelope Valley. The labor force pool of Antelope Valley, including working (full-time and part-time) and non-working adults (excluding homemakers, students, and retirees), is also estimated at approximately 192,100 household adults. Non-working adults include household members who are actively looking and not actively looking for work. One-half of non-working adults have not worked in over one year, suggesting that about 7.0 percent of the existing labor force in Antelope Valley is unemployed but actively seeking work. Adult household members that are students and homemakers represent a 15.7 percent immediate term increase in the available pool of workers within Antelope Valley, if primarily for part-time positions. Historically, an increasing proportion of homemakers in Antelope Valley have been joining the workforce, usually in part-time job positions. L-2 Changes in the composition of industry sectors employing Antelope Valley workers are generally consistent with broader national trends. The most substantial changes are related to the manufacturing and service sectors. In 1990, the manufacturing industry, including aerospace, employed 22.0 percent of Antelope Valley workers. Based on the 2003 survey results, the manufacturing and aerospace sectors employ about 7.0 percent of Antelope Valley workers, reflecting significant restructuring between 1993 and 1997. Since 1990, the services sector has been employing an increasing share of Antelope Valley workers, from as little as 27.0 percent in 1990 to about 50.0 percent in 2003. The bulk of Antelope Valley service sector workers are employed providing business and professional services, health services, education services, and miscellaneous personal, hospitality, and restaurant services. Employment skills of Antelope Valley workers can be distinguished according to the occupational classification of their current job. About 26.0 percent of Antelope Valley workers are currently employed in professional specialty occupations, 15.0 percent in service occupations (excluding protective services), 13.0 percent in sales and marketing occupations, 12.0 percent in executive/management occupations, and 10.0 percent in precision production occupations. L-3 The share of employed adult household members who work full-time (40+ hours per week) as distinct from part-time (less than 40 hours per week) has Antelope Valley Labor Base Analysis II-5

remained relatively constant for the past three surveys at about 83.0 percent. Industry sectors with a ratio of full-time workers exceeding the overall average include government (97.0 percent); transportation, communication, and utilities (94.0 percent); agriculture (89.0 percent); mining and construction (88.0 percent); wholesale trade (88.0 percent); and manufacturing (87.0 percent). About 17.0 percent of employed household adults report working part-time. Industry sectors with the highest proportion of part-time workers reported in the survey include retail trade (31.0 percent); services (20.0 percent); and finance, insurance, and real estate (17.0 percent). L-4 Overall since 1990, about 23.0 percent of all Antelope Valley workers on average have reported membership in a union, employee association, or other type of collective bargaining group. Results of the 2003 survey confirm the overall long-term average but also reflect a notable decline from the level of membership reported in 2000 (28.0 percent). The 2003 survey responses indicate increased membership in an organized labor group for workers in the transportation-communication-and-utilities, repair services, and government sectors but such increase is more than offset by significant declines for the construction, wholesale trade, business-professional services, and educational services sectors. Education and government continue to represent the two industry sectors with the highest level of worker membership in an organized labor group. Excluding the government and education sectors, the overall level of membership in organized labor groups among Antelope Valley workers is equal to about 15.0 percent. L-5 Approximately four out of five full-time workers have some type of medical plan offered by their employer. The ratio of employer-sponsored medical health coverage is highest among full-time workers (84.0 percent). Only 48.0 percent of part-time workers report being eligible to participate in an employersponsored medical health program. Interestingly, about 30.0 percent of parttime workers report working less than 20 hours per week. About 77.0 percent of workers traveling to jobs within Antelope Valley report having some type of employer-sponsored health program offered, compared to 82.0 percent for workers traveling to jobs outside of Antelope Valley. Between 5.0 and 10.0 percent of employer-sponsored medical health programs require full-time Antelope Valley Labor Base Analysis II-6

workers to pay the full cost of monthly premiums, compared to 17.0 percent for part-time workers. In general, 90.0 to 95.0 percent of workers with medical health benefits report the employer shares in the cost or pays the cost of monthly premiums. L-6 Historically, the proportion of employed household adults working at jobs within Antelope Valley has been on the decline, dropping from 68.7 percent in 1990 to 65.6 percent in 2000. The decline had been fueled by the nationwide economic recession beginning in 1990, continued aerospace restructuring through the 1990 s, and the associated restructuring of the local employment base in Antelope Valley. In 2003, the proportion of employed household adults working in Antelope Valley is 68.3 percent, signaling a potential rebound in the ability to produce jobs locally in response to economic growth throughout the region. Historically, about 73.0 percent of local jobs have been concentrated within the Lancaster and Palmdale areas, with Palmdale capturing increasing shares of Antelope Valley job growth relative to Lancaster. Since 2000, these two subareas have solidified their role as the host location for the dominant share of local job growth. In 2003, 17.0 percent of local jobs are reported in the Outlying Los Angeles County area and Eastern Kern County, compared to 20.0 percent in 2000. L-7 Workforce participation has been increasing among Antelope Valley households. In 1990, results of the survey indicated that 1.306 adults were employed per household, immediately prior to the economic recession and associated unemployment. Following the recession, the proportion of working adults per household has steadily increased and is equal to 1.353 persons per household in 2003. By comparison, the long-term average throughout Southern California is equal to approximately 1.20 employed persons per household. Active workforce participation among Antelope Valley households (estimated at 165,230 active workers in 2003) reflects a willingness to work, despite a relative absence of local area jobs. Based on the 2003 survey, the local civilian employment base (civilian jobs within Antelope Valley) is estimated at 112,850 jobs (excluding military personnel), or about of 0.90 local jobs per household. Consequently, about 52,380 employed household adults commute to jobs outside of Antelope Valley. Antelope Valley Labor Base Analysis II-7

Commuter Workforce (C ) C-1 One of Antelope Valley s major resources to attract new business is a labor force that exceeds the number of local jobs and could, by changing employment, become immediately available to new employers. Commuters are defined as working adult household members who travel to jobs outside of Antelope Valley. Based on the 2003 survey, 32.0 percent of the employed adult population reports commuting to jobs outside Antelope Valley. The average time commuters report traveling one way to work in 2003 is substantially longer (61 minutes) than reported by employed household members that travel to jobs within Antelope Valley (19 minutes). Commuters who travel to jobs in the Santa Clarita Valley area (the next closest employment center) report an average drive time of 44 minutes one way. Historically, the reported drive time of commuters has fluctuated from survey to survey but is generally reported as an hour drive on average. C-2 Commuters report traversing a wide cross-section of Southern California to their respective jobs. Four geographic sub-regions of Southern California identify the work location of about 72.0 percent of all commuters. In 2003, about 26.0 percent of all commuters travel to jobs in Central Los Angeles (south of the San Fernando Valley); 17.0 percent to jobs in West San Fernando Valley (west of the 405 Freeway); another 17.0 percent to jobs in the Santa Clarita Valley area; and about 12.0 percent to East San Fernando Valley (east of the 405 Freeway). Historically, the most notable change in the commuter patterns of Antelope Valley workers includes a significant drop in share of commuters traveling to East San Fernando Valley and significant increase traveling to Central Los Angeles. Commuters are 2.8 times more likely to carpool than workers that travel to jobs within Antelope Valley. In 2003, 17.0 percent of all commuters report carpooling to work, with the incidence of carpooling highest among commuters traveling 30 to 60 minutes each way (23.4 percent), and to jobs in the Santa Clarita Valley area (20.0 percent). C-3 In 2003, the five employment industries accounting for the largest share of commuters include business and professional services (14.4 percent); health Antelope Valley Labor Base Analysis II-8

services (12.2 percent); transportation, communication and utility services (11.2 percent); miscellaneous personal services (10.4 percent); and government (10.3 percent). Together these five industries account for 58.7 percent of all commuters, while in pervious surveys the top five industries accounted for as much as 69.7 percent of all commuters. The proportion of commuters employed in the business and professional services sector and the government sector denote the most notable change from previous surveys. The top four occupation specialties represented among commuters in 2003 include professional specialty (22.7 percent); service occupations excluding protective services (18.0 percent); precision production and repair occupations (12.7 percent); and executive, managerial, and administrative occupations (12.3 percent). Notable changes for 2003 include a significant drop in share of commuters who are operators, assemblers, inspectors, and technicians. C-4 The proportion of commuters who indicate traffic congestion is worse now than two years previous has steadily declined from 84.0 percent in 1990 to 43.0 percent in 2003. By comparison, the proportion of commuters that believe conditions are better has also declined from 17.0 percent in 1993 to 12.0 percent in 2003. These changes have been offset by an increase in proportion of commuters that indicate conditions remain the same. In 2003, attitudes expressed about commute congestion are less positive. The proportion of commuters who believe traffic is always congested jumped to 41.0 percent from about 32.0 percent during the previous three surveys. Conversely, the proportion of commuters that believe their drive is never congested dropped significantly from 18.0 percent in 2000 to 13.0 percent in 2003. Economic Development (E) E-1 Antelope Valley represents a unique workplace and living environment but continues to function as a component part of Southern California, competing with other sub-regions for employment and housing growth. Since 1990, the volume of residential permit activity in Antelope Valley has fluctuated between 950 and 2,700 units per year. In 1989 just before the onset of the 1990 recession, over 13,000 residential construction permits were issued in Antelope Valley Labor Base Analysis II-9

Antelope Valley. It is highly unlikely that Antelope Valley, or any other region of Southern California, will experience the volume of residential building activity realized in the years preceding the 1990 recession. Since 2000, Antelope Valley has emerged as a competitive housing market with the ability to consistently capture a 2.0 percent share of total housing development activity throughout Southern California. The current competitive position of the Antelope Valley housing market has supported 1,600 to 1,900 residential permits per year on a consistent basis. Over the mid-term, it is expected that Antelope Valley will continue to function as a competitive alternative to housing offered in the Santa Clarita Valley and other Los Angeles metropolitan locations. Within Antelope Valley, 80.0 to 90.0 percent of residential development is expected to be located in the Lancaster and Palmdale areas over the mid-term. E-2 It is not likely that housing in Antelope Valley will be immune to pricing pressure affecting most other housing markets throughout Southern California. In 2000, the average per unit value of residential permits issued in Antelope Valley had an index value of 0.79, compared to the average per unit permit value describing new residential housing permits throughout all of Southern California. In 2003, the index value of housing permits in Antelope Valley equals 0.98 times the corresponding value describing all of Southern California. The recent increase in housing value has had a positive effect on real estate values generating property tax used to fund community service functions (police, fire, parks, etc.) and to a lesser extent local school improvements. Since 2000, the total assessed value of all real estate in the City of Lancaster and City of Palmdale has increased 23.0 percent compared to an absolute 3.1 percent drop between 1993 and 2000. The recent increase far exceeds property value adjustments that the County Assessor can automatically impose under law and, consequently, reflects increased private market sales activity within Antelope Valley (a trend supported by nearly 10,200 new and existing home sales reported in 2003). E-3 Combined taxable retail sales performance describing stores within the City of Lancaster and City of Palmdale provides a good proxy measure of the effectiveness of the Antelope Valley retail sector in satisfying growing demand Antelope Valley Labor Base Analysis II-10

of the region s resident population. Constant dollar (inflation-adjusted) taxable retail sales at stores in the Lancaster-Palmdale area grew at an average annual rate of 5.1 percent over a 10-year period ending 2002. The 5.1 percent annual rate compares to an effective 1.96 percent average annual rate for a similar 10-year period ending in 1998. Since the previous survey in 2000, retail sales growth in Antelope Valley has been significantly stronger. In relation to a 2002 theoretical level of expenditure potential describing Antelope Valley residents ($8,100 per capita), the Lancaster-Palmdale retail complex is satisfying consumer demands in overall terms but is still experiencing significant outflow of support potential in the apparel; eating and drinking (restaurants); home furnishings, appliance and electronics; and specialty retail sectors. Outflow of retail support potential is attributed to several factors including household vacation expenditures, work location expenditures (by commuters), limited product and price selection in Antelope Valley relative to options available in the Los Angeles metro area, and individual consumer preferences that may favor out-of-area businesses. By and large, the strength of the Lancaster-Palmdale retail complex has significantly improved in the last three years. E-4 The Antelope Valley region is emerging, once again, as an attractive option for homebuyers facing escalating housing costs throughout Southern California. As many as 1,600 new households moved to the Antelope Valley region in 2003. The arrival of new households in response to housing market opportunities also represents a form of economic development, as does the influx of households in direct response to business relocation and expansion efforts, promoted most directly by GAVEA. Because of the recent increase in local housing activity and associated household growth, the economic effect describing newcomer households has been evaluated through the use of IMPLAN, an economic assessment model. IMPLAN has been used to assess the value of economic activity stimulated by consumption demands of newcomer households (households residing in Antelope Valley less than four years). Economic activity evaluated considers 528 distinct economic sectors used to describe related consumption, production, employment, and other economic interactions stimulated by household demands (food purchases, Antelope Valley Labor Base Analysis II-11

dining, hospitals, schools, retail stores, bakery delivery services, banks lending to local businesses, etc.). The projected economic effect is summarized below for 1,000 newcomer households with an average household income of approximately $50,000 per year: Economic Impact of 1,000 Newly Arrived Households Based on Average Income - Excluding Home Construction or Sale Level of Effect Total Output (000 s) Employment Labor Income (000 s) Total Direct $49,535 323 $11,030 Total Indirect 6,668 63 2,745 Total Induced 7,858 85 3,010 Total $64,058 473 $16,785 E-5 The overall total economic impact describing 1,000 newcomer households equates to $64.1 million per year (the value of purchases, savings deposits, mortgage and rent payments, wages, etc. associated with the daily living demands of the newcomer households). The total annual value of economic activity generated is about 1.29 times the direct infusion of expenditure by each new household. In effect, for every $1.00 of economic activity brought into Antelope Valley directly by newcomer households, another $0.29 in stimulated value is created through indirect and induced economic activity. In addition, the arrival of 1,000 newcomer households also stimulates the need for approximately 470 additional local jobs, mostly population-serving jobs, supported by labor income (wages and salary) equal to approximately $35,500 per job created. E6 Total jobs stimulated by newcomer households should be distinguished from jobs associated with business relocation and expansion programs that have also attracted households to Antelope Valley Lance Campers, Starwood, Deluxe Corporation, etc. Employees arriving in Antelope Valley to work at manufacturing, aerospace, and regional headquarter locations cited above should generally be included among the 1,000 newcomer households, not the 470 local jobs created to satisfy household consumption demand. A portion of the 470 local jobs created, however, is likely be filled by working members of newcomer households. The 2003 survey indicates there are an average of Antelope Valley Labor Base Analysis II-12

1.28 workers per newcomer household, including an average of 0.24 workers per household employed less than full-time (less than 40 hours per week) and 0.66 workers per household who travel to jobs within Antelope Valley. E7 Economic effect of new household arrivals described above excludes economic activity describing the construction of new homes built to host many newcomer households. Within four years of arriving, nearly 60.0 percent of newcomer households have purchased a new or existing home within Antelope Valley. Using the IMPLAN assessment approach, the economic effect associated with the construction of 1,000 new homes has also been evaluated based on a 2003 effective average permit value per residential unit of approximately $170,490. Based on this increment of construction value, the corresponding economic effect in Antelope Valley is summarized below: Economic Impact of 1,000 New Homes Constructed Based on Average Building Permit Value Level of Effect Total Output (000 s) Employment Labor Income (000 s) Total Direct $170,490 928 $35,443 Total Indirect 61,713 620 25,588 Total Induced 30,843 330 11,808 Total $263,040 1,878 $72,833 E8 Overall, the construction of 1,000 residential units is projected to generate $263 million dollars in total economic activity driven by home building activity (excluding initial land acquisition or subsequent home sales). Stimulated local employment demand equates to approximately 930 local jobs directly related to the construction of housing units (approximately 0.93 jobs per unit). Home construction activity is also projected to create demand for another 950 jobs indirectly related to unit construction activity or otherwise induced by the consumption demands of workers. Labor income (wages and salaries) generated in connection with local employment demands is equal to approximately $38,800 in annual earnings per job. E9 The economic effect of constructing 1,000 homes is substantial, particularly since annual housing construction activity in Antelope Valley is likely approaching a pace twice the level of activity simulated above. The total Antelope Valley Labor Base Analysis II-13

value of economic effect of constructing 1,000 new homes ($263.0 million) is roughly four times the economic value describing annual consumption demands of 1,000 newcomer households ($64.0 million). The distinction is that the economic effect of housing construction is a one-time effect per unit built while the economic effect of household growth is a recurring annual effect for every newly arriving household. The impact of both economic growth events (homes being built, new households arriving) is significant but distinct. Antelope Valley Labor Base Analysis II-14

Chapter III Population and Labor Base Analyses This chapter of the report focuses on the results of the telephone surveys pertaining to demographic characteristics that describe respondent households, worker attitudes, commute patterns, and other work-related matters. The results of the latest survey are discussed in some cases in the context of previous survey results and information from secondary sources. Characteristics of the respondents to the 2003 survey compare with the four prior surveys as follows: Survey Response Comparisons 1990 1993 1997 2000 2003 Residential Tenure Years (Mean) 9.8 9.5 10.4 10.4 11.7 Household Description Single Male or Female Adult No Children 13% 14% 14% 12% 13% Two or More Adults Without Any Children at Home 31 32 33 35 35 Households Without Children 44% 46% 47% 46% 49% Two or More Adults With Children at Home 50% 49% 46% 48% 46% Single Adult With Children at Home 6 4 7 6 5 Households With Children 56% 54% 53% 54% 51% Number of People Per Household (Mean) 3.05 3.17 3.11 3.15 3.20 Age of Household Head (Mean Years) 43 43 44 45 46 Education Grade School or Less 3% 1% 1% 2% * Some High School 10 7 6 8 6 High School Graduate 33 34 34 32 31 High School or Less 46% 42% 41% 42% 37% Business/Technical School 3% 3% 5% 5% 5% Some College 30 31 31 30 35 College Graduate 17 16 15 15 16 Graduate School 5 8 8 8 7 Post High School 55% 58% 59% 58% 63% Antelope Valley Labor Base Analysis III-1

Survey Response Comparisons (Continued) 1990 1993 1997 2000 2003 Ethnicity White 86% 80% 73% 69% 68% Black 3 6 11 12 13 Asian 2 3 3 1 3 Hispanic, Latino 6 8 9 8 10 Mean Age (Head of Household) 3 2 1 7 4 Refused 1 1 3 3 3 Hispanic Ancestry 11% 13% 17% 16% 16% Household Income (Mean) $44,800 $47,100 $47,700 $53,054 $58,476 Homeownership Owners (Net) 78% 77% 73% 71% 75% Single-family Detached Home 85 88 90 92 91 Condominium, Townhouse 4 2 2 1 4 Apartment 1 * 1 * 1 Mobile Home 12 10 7 7 4 Renters (Net) 22% 23% 27% 29% 25% Single-family Detached Homes 41 39 48 48 48 Condominium Townhouse 9 12 14 10 16 Apartment 46 41 34 36 32 Mobile Home 5 7 4 5 4 *Less than 0.5 percent. The duration of resident tenure in Antelope Valley jumped from an average of 10.7 years during the 2000 survey to an average of 11.7 years by the end of 2003. The average duration of resident tenure in Antelope Valley has increased by more than 2.0 years on average since 1993, when the region was experiencing significant job loss associated with the economic recession and cutbacks in defense spending. The jump in average length of resident tenure during 2003 is due to a significantly larger share of households that indicate they have lived in the area longer than 15 years (45.6 percent) compared to households responding to the 2000 survey (35.1 percent). The proportion of respondent households with children under 18 years of age is the lowest reported since the 1990 survey (51.0 percent) and generally reflects a declining share of Single-Adult households with children. The smallest share of single-parent households was observed in the 1993 survey (4.0 percent). The share of households with children and two or more adults has fluctuated between 46.0 and Antelope Valley Labor Base Analysis III-2