Valley

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By CHRISTOPHER WOODARD

Staff Reporter

California’s economy is expected to cool somewhat this year, with job growth slowing from better than 3 percent to about 2 percent.

L.A. County’s economy also is likely to slow down, with job growth dipping to 1.6 percent from 2.4 percent last year.

OK, but what does that mean for the San Fernando Valley?

The truth is, no one really knows.

Despite the Valley’s 1.6 million residents and 600,000 private-sector jobs big enough to qualify as the nation’s sixth-largest city don’t expect any specific economic data. No one actively tracks many of the area’s key indicators. Or if they do, the information is often incomplete or out of date.

While the problem may sound arcane, the lack of solid economic data is a source of significant aggravation for business leaders and economists. Without a good reading of the economic climate, it’s difficult to say when an individual business or entire industry might need to change course.

“We’re blindfolded in terms of knowing where we are and where we need to go,” said Bob Scott, a Los Angeles city planner and vice chairman of the Economic Alliance of the San Fernando Valley. “When you can’t see where you are, and you can’t quantify yourself, it’s a little difficult to determine what your action plan ought to be.”

Scott sees the problem as symptomatic of L.A.’s indifference to the Valley, a perception that some say is driving a push to secede.

“The Valley is treated something like a colony,” said Scott. “We’re like the tail end of the elephant. We have a very large and important demographic area, but it’s not broken out by anyone.”

Jack Kyser, chief economist with the Economic Development Corp. of Los Angeles County, says the lack of good data is a problem that affects not only the Valley, but many geographic areas within Los Angeles. “The economic data system in the U.S. is not state of the art. The lower you go as you move from the U.S., to the state level, to the city level the more woebegone it gets,” he said.

Kyser said the state Employment Development Department’s monthly employment statistics are a good example of the rickety system. The figures are based on a statistical sampling of companies in California, but the survey is prone to discrepancies in many sectors.

In addition, the archaic classification system that state and federal governments have used since the 1920s called standard industrial classification codes doesn’t include a number of key economic sectors, such as next-generation industries like new media.

“It gets to be very, very frustrating. The data (in many areas) is hard to access, and it has a lot of specific twists you have to be aware of. It’s just very poor,” said Kyser.

And it doesn’t only cover employment. The state Board of Equalization tracks sales-tax revenue for the entire city, but does not provide a breakout for the Valley or any other sub-region of the city.

The Los Angeles Building and Safety Department does a good job tracking building permits, but it no longer provides breakouts for the Valley or other areas of L.A. because of cost constraints. The U.S. Census Bureau tracks personal income, but the data is only collected every 10 years and the last complete snapshot was taken nearly a decade ago.

The Los Angeles City Housing Department calculates apartment vacancy rates, but the system, which is based on electricity shut-offs and account transfers, is full of flaws. Many larger apartment complexes, for instance, can’t be tracked because they have master meters that don’t show individual accounts.

In some cases, data is actually withheld. The EDD carefully tracks unemployment insurance claims and can break down employment data by industry within specific zip codes. But John Rooney, president of the Valley Economic Development Center, complains that he and others have difficulty getting the department to release specific numbers.

That kind of information is key to helping business and government leaders chart the Valley’s course, Rooney said.

Phil Hardiman, who heads the labor-market information division that collects the data for the EDD, confirmed that his division withholds employment data in cases where it might be used to identify a certain employer in a small geographic area. For instance, if there’s only one entertainment company in a certain zip code, it would be easy for competitors to glean useful intelligence by using EDD figures.

The bigger problem with using zip codes to glean employment data is that the information is not always accurate, Hardiman said. That’s because the zip code the state uses comes from the company’s listed mailing address. Often, a business will use the address of its accounting firm for reporting purposes, thus skewing the results.

Hardiman said convincing the Legislature to change reporting requirements would involve substantial costs in additional staff time and computer modifications.

Rep. Brad Sherman, D-Woodland Hills, a former member of the state Franchise Tax Board, said the problem boils down to “a lack of enthusiasm for doing the extra work, both by government and by business.”

Sherman said the state Franchise Tax Board requires businesses to report retail sales in each jurisdiction in which they have stores, but they are not required to distinguish between sales in different parts of Los Angeles. As a result, smaller cities like Burbank and Glendale can obtain reliable data on sales-tax generation, but areas like the Valley aren’t broken out.

To provide ongoing tracking of areas within L.A. would require a change in the reporting laws, mandating that businesses provide a more complete breakdown of sales in each area of the city.

“For the slightest added burden, we would have some great figures,” said Sherman.

Out of a sense of frustration, Scott last year began spearheading an effort by the Economic Alliance to gather data on economic and social trends in the greater San Fernando Valley.

The Valley Information Project is expected to report its findings to the alliance some time in the first quarter. The alliance will then act as a clearinghouse for the information, using it primarily to help market the Valley to companies considering relocating there.

Meanwhile, Cal State Northridge, through its College of Business Administration and Economics, has set up its own San Fernando Valley Economic Research Center to catalog and track economic, social and demographic trends in the Valley.

Scott said that while the alliance’s information project and CSUN research center help fill the gaps, the information void won’t be plugged entirely until government agencies become more forthcoming with data.

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