Minutes from February 28, 2017 Open Board Meeting-Dr. John Husing, Economist

Tuesday, February 28, 2017

 Open Board of Directors Meeting

 San Bernardino Community College District
114 S. Del Rosa Drive
San Bernardino, CA 92408


Present: Patti Arlt, Deborah Barmack, Carole Beswick, Tom Brickley, Ann Bryan, Mike Burrows, Ken Coate, Kevin Dyerly, Ashley Gaines, Adam Eventov, Louis Goodwin, Scott Hofferber, Jay Jimenez, Mark Kaenel, Al Karnig, Lowell King, Bill Lemann, Patrick McClenahan, P.T. McEwen, John Mirau, Dan Murphy, Roman Nava, Vikki Ostermann, John Prentice, Michael Rivera, Elizabeth Romero, Khalil Saba, Kristine Scott, Paul Shimoff, Steve von Rajcs, Phil Waller, and Ray Wolfe.

Guests: Mark Cloud, Nick Grooters and Arnold San Miguel

Announcements: 1) This year we will have 28 members attending the advocacy trip to Washington, D.C.   Inland Action will again host a reception in Washington, D.C. on Tuesday, March 21, 2017.  We are very grateful for those that have already contributed toward the event and request member support to help underwrite the cost.  A donation/sponsorship form was e-mailed to the membership on February 14, 2017.  Committees were reminded of important timelines for issue papers.

M/S/P: Minutes from February 21, 2017.

Elizabeth Romero introduced Dr. John Husing, Economist.

The new administration committed in the campaign to lower taxes, repair infrastructure, shrink government, increase military and repeal/replace ACA, all of which will have their own impact. There is a good deal of anxiety in the market from all sectors as there is no clear idea of what the future may bring. Dr. Husing predicted that we will not see any great effects until 2018. The U.S. has regained the 8.7 million jobs lost (2008-2011) and added another 4.9 million, a gain of 4.3%.  We are now at a record high level of jobs with the recovery on a healthy pace (unlike the dot com craze and its subsequent implosion).  California’s loss was 1.2 million but has also recovered and added an additional 1,932,392 jobs.

The Inland Empire (IE) lost 142,933 jobs during the great recession from 2007-2010. Since that time an impressive 188,411 jobs were created. In 2014 job growth in the IE was the second largest in the State (following L.A.).  Distribution and logistics had the biggest gains but a noteworthy 12% of this growth was in the Healthcare arena.

The healthcare sector in our economy is strong and the only sector not to have lost jobs since 2000.  The potential repeal or major changes to the Affordable Care Act (ACA) will unsettle the insurance markets in addition to seriously increasing the number of uninsured in our area.  Prior to the ACA the IE’s uninsured totaled 51% of our residents.  The Inland Empire Health Plan (IEHP) is a Medi-Cal managed care plan that accounts for $1.23 billion to our local economy.  Many of our most vulnerable depend on this insurance.  The potential repeal of the ACA will change and jeopardize the existing Medi-Cal funding for IEHP, Loma Linda, Dignity Health and all other healthcare providers creating serious consequences in our economy.  Healthcare is our 4th largest sector of employment.   Unemployment that peaked at 10.6% in 2011 has been steadily dropping and is forecasted to be no more than 6% this year. Prices for petroleum are now down to 2003 levels which helps middle income areas like ours.

California’s desire to go all “green” negatively impacts the Inland Empire economy that relies on construction, logistics, and manufacturing. Large companies are unlikely to relocated here as our labor force is not as highly educated as other areas.  We look to our local entrepreneurs like Jack Dangermond- ESRI, Ahmad Adel Al-Khatib-SIGMAnet Inc, and Gordon Bourns-Bourns for our high tech employment.  Manufacturing should be a much larger sector but is clearly a declining area due to the unfriendly business practices in the State.  The IE saw only 4% growth in manufacturing. The rest of the country saw twice as much growth in this area.

Job quality comparisons between the State and the IE for 2011-2015 are as follows:

  • Lower paying- CA 51.4% IE 44.0%
  • Blue Collar- CA 18.6% IE 38.3%
  • Office- CA 14.4% IE 16.8%
  • Gov. & Private high pay- CA 15.6% IE .9%

The investment in our infrastructure will be costly, will likely create deficit spending and will put increased pressure on employment. Construction is being very cautious about new projects.  The home real estate industry has happily seen negative equity dropping from 54.9% in 2009 to 11.4% in 2015.  The rental market is very tight with high rents and shortage of availability.

Interest rates have been low and steady, encouraging home sales. The Federal Reserve has recently mentioned rate hikes and will do so fairly soon causing housing mortgage rates to increase.  Home prices peaked at a median of $368,000 but are now $280,000, where the market needs to be.  The Inland Empire still has a competitive price advantage and now the largest price tag gap between us and coastal areas.

Warehouse operations are and will be increasingly sophisticated. Our existing fulfillment and warehousing operations are critical in the IE and provide good median wage employment. It is no surprise that the IE, with available land, made up over 80% of industrial space construction in the Southern California market.  Although we’re building like mad, Industrial space is in a very tight market with vacancy at a mere 4% compared to 25% in 1991.  Employment in Distribution/Transportation has accounted for 23% of the job growth in the IE over the past five years.

The Inland Empire is larger than 25 of the 50 states in the nation. Everyone should be made aware that the Inland Empire is not just a suburb of L.A.

A Q & A period followed
Meeting adjourned at 8:35 a.m.