1c?. COUNTY ECONOMIC REPORTS IMPERIAL Prepared by: Michael J. Bracken Development Management Group For questions regarding this report, please contact: Kevin Kane, Ph.D. Associate Regional Planner Research & Analysis Southern California Association of Governments 900 Wilshire Blvd., Ste. 1700 Los Angeles, CA 90020 (213) 236-1828 kane@scag.ca.gov www.scag.ca.gov 2 Southern California Association of Governments TABLE OF CONTENTS Executive Summary II A. Status of the Imperial County Economy 1 B. Industry & Occupational Analysis 4 C. Agriculture Production as a Leading Industry 9 D. Income & Poverty Statistics 14 E. Educational Attainment and Earnings 18 F. Imperial County Housing Market 20 G. Consumer Confidence (Retail Sales & Use Tax & Spending) 28 H. Education Test Scores 29 I. 32 Economic Outlook for 2020 J. References 34 I 10th Annual Southern California Economic Summit EXECUTIVE SUMMARY Imperial County is in the southeast corner of California and shares borders with San Diego County, Riverside County, Yuma County (Arizona) and Mexico (State of Baja California and the region/City of Mexicali). The County has a 2019 population of 190,266 which represents a decrease of 266 persons from one year ago. Over the next five (5) years, it is projected the County population will increase by a total of 3.1% (or about .6% per annum) which is slightly less than the projected growth of the State of California as a whole. The economy of the region continues to be based on the following industries: A. Agriculture (Livestock and Crops) B. Energy Production (Solar, Wind, Geothermal) C. Prison/Detention Facilities (Federal and State) D. Border Security (namely Department of Homeland Security) E. Logistics (Goods Movement of Agriculture Products and Products Assembled in Mexicali through the Maquiladora Program). F. Local Serving Small Businesses (Traditional Retail, Restaurants and Service-Oriented) G. Local/Regional Government and Related Services (Police, Fire, Education) The Imperial Valley historically has higher unemployment rates than other areas in California. This is a function of three factors. First, the region’s largest industry is agriculture, which has seasonal elements impacting labor. Next, the region is located along an international border (Mexico). The greater Mexicali Valley (located just south of the international border) has a population of approximately 1,100,000 or about five times that of Imperial County. The sheer size of Mexicali and proximity to Imperial County provides for greater immigration/migration for work, shopping, entertainment and housing which influences unemployment rates as people (from both sides of the border) enter and leave the labor force. II Finally, Imperial County is more rural in nature than most areas in California. Population density in California is approximately 251 persons per square mile while population density in Imperial County is only 42 persons per square mile. The region struggles with socioeconomic issues as a result of lack of job opportunities in higher paying industries and low educational achievement. Since the Great Recession, the region has experienced significant economic investment in the form of utility scale renewable power production facilities (solar, wind, geothermal). Additionally, some foreign-direct investment has taken place through the EB-5 Visa program. The EB-5 Visa program administered through the United States Customs and Immigration Service (USCIS) provides an opportunity to for permanent residency in the United States by foreign nationals that invest a minimum of $500,000 into a business/development that generates 10 or more permanent full-time jobs. As the renewable portfolio standard (RPS) requirements continue to increase, so has investment in the region. California has met the RPS standard of a minimum of 33% (SBX1-2) and is now working toward the implementation of SB350 which increases the RPS standard to 50% by 2030. In September 2018, former California Governor Jerry Brown signed SB 100 into law, which sets the bar for California to generate 100% of energy through renewable sources by the year 2045. Imperial County has been a leader in renewable power generation. In 2018, Imperial County produced 8,067 GWh of renewable energy, which ranks them as sixth by County in renewable energy production in the State of California (behind Kern, Los Angeles, Contra Costa, San Bernardino and Riverside Counties). Overall, Imperial County produces about 13% of California’s 62,960 GWh of renewable energy. The report that follows will provide a statistical understanding of the region’s economy, after which the report will conclude with a forecast section to guide potential investors, government officials, business leaders and residents into 2020. Southern California Association of Governments A. STATUS OF THE IMPERIAL COUNTY ECONOMY Overall, the economy of Imperial County is stable. Gross domestic product (GDP) for the region is estimated to have exceeded $6 billion in 2018, an all-time high. The GDP equals about $32,491 per capita in the region. By comparison, the GDP per capita of the United States is about $62,600. The EXHIBIT A-1 GDP of the Imperial County region (per capita) compares to that of Italy ($34,206) and The Bahamas ($34,003) and would be ranked 26th in the world by per capita GDP if it were a stand-alone nation. GROSS DOMESTIC PRODUCT (GDP) OF IMPERIAL COUNTY (EL CENTRO MSA) 2012-2018 6.3 6.2 6.1 in Billions of $ 6.0 5.9 5.8 5.7 5.6 5.5 5.4  2012  2013  2014  2015  2016 2   017  2018 Sources: Bureau of Economic Analysis & DMG Economics As of September 2019 (October 18, 2019 release), the unemployment rate in Imperial County was 20.6%. This figure is higher than the same period in 2018 (19.3%), though lower than it has been from the period of 2008-2016 when it averaged about 25.4%. As a reference point, unemployment at the height of the “Great Recession” was 32%. The total number of persons in the labor force decreased by 1,800 over the past year from 74,500 to 72,700. The total amount employed is now 57,700 which is about 2,400 less than it was at this time last year (October 2018). DMG, Inc. holds that one reason why Imperial County sees fluctuations in labor force size is due to the proximity of Imperial County to Mexicali, Mexico (a region over five-times the size of Imperial County). There is a significant labor force in Mexicali that enters and leaves the United States through Mexicali. Also, as the quality of jobs in the United States continues to increase, persons working in more labor intensive (and lower paid) industries in Imperial County tend to migrate to higher paying jobs in other regions/states. The transitory nature of Imperial County’s primary economic engine (agriculture) coupled with its proximity to Mexicali often creates pronounced swings in labor and employment/ unemployment figures. EXHIBITS A-1 - A-5 provides trend data regarding the labor force, employment, total persons unemployed and the unemployment percentage. 1 10th Annual Southern California Economic Summit EXHIBIT A-2 TOTAL AVAILABLE IMPERIAL COUNTY LABOR FORCE (2004-2019e) 80,000   Total Persons 75,000   70,000   65,000   60,000   55,000   2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019e Source: State of California Employment Development Department EXHIBIT A-3 TOTAL PERSONS EMPLOYED IN IMPERIAL COUNTY (2004-2019e) 69,000   Persons Employed 64,000   59,000   54,000   49,000   44,000   2004 2005 2006 2007 2008 Source: State of California Employment Development Department 2 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019e Southern California Association of Governments EXHIBIT A-4 TOTAL PERSONS UNEMPLOYED IN IMPERIAL COUNTY (2004-2019e) 69,000   Persons Employed 64,000   59,000   54,000   49,000   44,000   2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019e Source: State of California Employment Development Department EXHIBIT A-5 IMPERIAL COUNTY UNEMPLOYMENT RATE (2004-2019e) % of Laborforce Unemployed 30% 28% 26% 24% 22% 20% 18% 16% 14% 12% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019e Source: State of California Employment Development Department 3 10th Annual Southern California Economic Summit B. INDUSTRY & OCCUPATIONAL ANALYSIS1 Approximately 30% of the total jobs in Imperial County are within government agencies (local, state and federal). The seven incorporated cities along with the school and utility districts account for local jobs while state jobs are driven by the presence of state prisons and Federal jobs are predominately by border security (Department of Homeland Security) and a privately-operated immigration detention facility. The greatest numbers of private sector jobs are associated with the agriculture (farming, transportation and some administrative support) and retail sectors (sales). EXHIBIT B-1.1 thru B-1.4 provide a breakdown of the number of jobs by occupation and a comparison between 2015-2019. Over the period shown, the greatest job losses have been in the fields of Construction (-1,800), Sales (-900) and Office/ Administrative (-600) while the greatest gains have been seen in Farming (+2,300), Food Preparation (+1,700), Healthcare Practitioners (+900) and Education (+600). EXHIBIT B shows historical job distribution (2015-2019). Note that B-1.1 is an overall distribution chart (that is marginally understandable), while B-1.2, B-1.3 and B-1.4 provide a more digestible view. B-1.2 is specific to job categories whereby the total jobs have ranged between X and Y while B-1.3 comprises of job categories of between X and Y total employment and B-1.4 is for those job categories with less than 1,000 total participants. There is some overlap in total employed in certain job categories between B-1.2 and B-1.3, this is due to volatility in that particular job category. EXHIBIT B-1.1 DISTRIBUTION OF JOBS BY OCCUPATION TYPE 8,000 2015 2016 2017 2018 2019 7,000 Job Count 6,000 5,000 4,000 3,000 2,000 Arts/Entertainment Sports Legal Life/Physical Social Science Architect Engineer Computer Mathematical Healtcare Support Health Practitioner Tech Business Financial Operations Community Social Services Construction Extraction Maintenance Repair Food Prep Service Building Grounds Maintenance Production Personal Care Education Training Protective Services Management Farming Transportation Moving Office Admin Support 0 Sales 1,000 Source: State of California Employment Development Department 1 Economist Note: The graphs and analysis in this section are based on minimum current employment of between 100 persons within a specific category (position). While this could be considered low in terms of pure numbers, consider that the population of Imperial County is about 190,000. Scaled in comparison to Los Angeles County where the population is about 10.25 million people, the same minimum requirement ratio is 54 persons per Imperial County person. Another way to explain it is for each 100 persons employed in a position in Imperial County, it would take 5,400 persons in Los Angeles County to reach the same scaled ratio. 4 Southern California Association of Governments EXHIBIT B-1.2 DISTRIBUTION OF JOBS BY OCCUPATION TYPE (2K-8K TOTAL EMPLOYED) 8,000 2015 2016 2017 2018 2019 Job Count 7,000 6,000 5,000 4,000 3,000 2,000 Sales Office /Admin Support Transportation /Moving Farming Management Protective Services Education /Training Personal Care Source: State of California Employment Development Department EXHIBIT B-1.3 DISTRIBUTION OF JOBS BY OCCUPATION TYPE (1K-4K TOTAL EMPLOYED) 4,000 2015 2016 2017 2018 2019 3,500 Job Count 3,000 2,500 2,000 1,500 Source: State of California Employment Development Department Healtcare Support Health Practitioner /Tech Business/ Financial Operations Community Social Services Construction Extraction Maintenance Repair Food Prep Service Building Grounds Maintenance Production 1,000 5 10th Annual Southern California Economic Summit EXHIBIT B-1.4 DISTRIBUTION OF JOBS BY OCCUPATION TYPE (UNDER 1K TOTAL EMPLOYED) 800 2015 2016 2017 2018 2019 700 Job Count 600 500 400 300 200 100 Computer /Mathematical Architect /Engineer Source: State of California Employment Development Department 6 Life/Physical /Social Science Legal Arts/Entertainment /Sports Southern California Association of Governments EXHIBIT B-2 provides an understanding of job/occupational distribution ranked by median annual pay. The total number of jobs within the region is listed in parenthesis (in thousands of jobs). As a reminder the comparative ratio between Imperial County and Los Angeles County is 1:54, meaning if an industry has 500 jobs in Imperial County, it would have EXHIBIT B-2 to have 27,000 jobs in Los Angeles County to have the same statistical significance on that economy. The median pay for all industries in Imperial County is $46,600 per year. Note that six of the seven largest occupational categories pay less than the median. 2019 OCCUPATIONAL CATEGORIES BY MEDIAN ANNUAL PAY (JOB COUNT IN THOUSANDS) $100,000 $90,000 $80,000 $70,000 $60,000 $50,000 $46,600 $40,000 Personal Care/Service (4.8) Farming (6.2) Food Prep/Serving (4.0) Building/Grounds Clean/Maint (1.5) Sales (6.3) Healthcare Support (1.1) Transportation/Logistics (4.0) Office/Admin Support (7.6) Production (1.2) All Occupational Median (58.6) Install/Main/Repair (2.1) Community/Social Service (1.4) Computer & Mathematicsal (.3) Arts/Design/Ent/Sports (.4) Construction (1.4) Education/Training (5.0) Business & Financial (2.0) Protective Service (3.6) Legal Occupations (.3) Architecture/Engineering (.3) Healthcare Practioners (2.5) Life/Physical/Social Sciences (.3) $20,000 Management (2.3) $30,000 Source: State of California Employment Development Department In terms of professions with anticipated growth, EXHIBIT B-3 provides total new opportunities as projected from 20162026 in Imperial County (minimum 1,500 positions). Only three (3) of the projected growth areas are in areas which provide a path to the middle class (office/administrative, farming/ranching managers, heavy equipment operators) sales, education, management, health care practitioner and farming/ranch/agriculture management) while seven (7) of the projected growth areas are in lower paying job classifications (farming (general labor), personal care, cashiers, janitorial, stock clerks, food preparation and retail sales). EXHIBIT B-4 shows the occupations that are expected to grow by a minimum of 1,500 jobs over the next ten (10) years by median salary/wage. Note that as California continues to step minimum wage to $15.00 per hour, these will change. Additionally, jobs that are traditionally 10% to 20% above minimum wage (such as a bank customer service representative/teller) will also move higher meaning such job is predicted to pay $17-$19 per hour in 2022. 7 10th Annual Southern California Economic Summit EXHIBIT B-3 PROFESSIONS WITH ANTICIPATED GROWTH BY NUMBER OF NEW POSITIONS (2016-2026) 13,000 11,000 7,000 5,000 Heavy Equipment Op & Truck Drivers Stock Clerks/Order Fullfillment $23,200 $22,900 Food Preparation Cashiers Farming/Ranching /Agriculture Mgrs Janitorial Office/Administrative Food Preparation Retail Sales Cashiers 1,000 Personal Care (Home Health) 3,000 Farming (General Labor) Number of Jobs 9,000 Source: State of California Employment Development Department EXHIBIT B-4 $100,000 PROJECTED HIGH GROWTH OCCUPATIONS (1,500+ JOBS BY PAY) 2016-2026 $100,500 $80,000 Source: State of California Employment Development Department 8 $23,700 $23,400 $23,400 Personal Care (Home Health) $23,900 Farming (General Labor) Heavy Equipment Op & Truck Drivers $0 Farming/Ranching /Agriculture Mgrs $20,000 Stock Clerks /Order Fullfillment $28,900 Retail Sales $29,100 Janitorial $36,900 $40,000 Office/Administrative $60,000 Southern California Association of Governments C. AGRICULTURE PRODUCTION AS A LEADING INDUSTRY Agriculture is the largest private sector industry in the Imperial Valley. In fact, about 36% of the GDP of Imperial County is based on agriculture production. Unfortunately, the direct jobs associated with the industry are traditionally low pay, agriculture supports many families in a variety of occupations (direct farming, professional/business (including accountants) and transportation. That said, as long as the overall ownership of agriculture production in the region is “family farms” (rather than out of area corporate ownership) farming will still produce significant wealth for the region, that is generally saved and reinvested back into Imperial County. The region actively farmed 537,192 acres in 2018. This is a decrease of about 0.39% from 2017 when 539,272 were farmed (a decrease of 2,080 acres). In 2018 Imperial County actively farmed 839 square miles of land. This is larger than the combined size of the cities of Los Angeles and San Diego. Exhibit J provides the total agriculture production for Imperial County. In 2018, agriculture production hit an all-time high of $2.226 billion (or about $4,144 per acre farmed). This represents an increase of $160.43 million (7.8%) from 2017. It is noted that the Imperial County region continues to expand the acreage utilized for organic crops. In 2018, 46,850 acres (73 square miles) was utilized to produce organic crops having a value $181.75 million ($3,879 per acre). This is up from 2014 when 25,156 acres (39 square miles) was utilized producing $159.94 million in value ($6,358 per acre). The lower production value per acre between 2014 and 2018 is attributed to the greater amount of overall land worldwide utilized for organic production, this lowering the overall prices to the wholesale market (and ultimately the consumer). The Imperial Valley exports a significant amount of crop/seed. International exports are focused on Japan (40%), Mexico (34%), Peoples Republic of Korea (South Korea) (7%) and Canada (5%). The products most often exported include hay/ straw, vegetables and seed. Overall, it is estimated that about $525-$550 million of agriculture product is exported (about 25% of total production). Domestically, Imperial Valley crops are most often exported to Hawaii and Florida (these two states account for over 95% of product export within the United States). The crops most often exported domestically include vegetables and nursery (plant) products. The agriculture industry as a whole in the Imperial Valley has weathered some difficult headwinds. Rising costs in the face of increasing minimum wage in California, increased transportation expenses and trade uncertainly is creating significant concern for local farmers. While not shown in figures (through 2018), there is some market disruption occurring at current (2019) as the trade war between China and the United States has impacted exports of hay/grass crops. Further, China has imposed new restrictions in relation to chemicals used on crops to control weeds and pests. Imperial County farmers are making strides to comply with these new restrictions, but it will take a few more years for most to be in full compliance. Labor continues to be of concerns. Minimum wage increases in California may push some crop production to other states/countries that have more labor available at less cost. Further complicating labor availability in Imperial County was described by one farm labor contractor as a “lack of coherent immigration policy by Congress and political rhetoric from the President”. Combine this with concerns that the “younger” generation is reported to have little interest in family farm business ownership that generally requires 12-16-hour days, seven (7) days a week and it is fair to say that long-term certainty in the industry is anything but stable. Water continues to be the top concern for Imperial Valley farmers. While California received a respite from the five (5) year drought (2012-2016) with some rain in the winter of 2017 and significant rain during the winter of 2019, drought conditions can quickly return. Pending water transfers to San Diego coupled with the potentially devastating impacts of exposed playa at the Salton Sea may generate additional issues. The State of California has not constructed any new water storage in decades and continues to “kick the can down the road” to lasting meaningful solutions to the Salton Sea. Farmers are working to decrease their dependency on labor and create crops that can thrive on less water as a means of working to mitigate the effects of policy (or lack thereof) issues. Additionally, some farmers continue to move more labor-intensive crops out of state and to neighboring countries. 9 10th Annual Southern California Economic Summit Picture 1: Traditional Lettuce Harvesting Value in Billions of $ EXHIBIT C-1 Picture 2: Automated Carrot Harvesting TOTAL AGRICULTURE PRODUCTION (IN BILLIONS OF $) BY YEAR 2.3 2.2 2.1 2.0 1.9 1.8 1.7 1.6 1.5 1.4 1.3 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: County of Imperial Agriculture Commissioner EXHIBIT C-2 provides historic production numbers for livestock. Much of the livestock production is specific to “feeder beef” which is the raising of calves to prepare them for market. During this time an individual animal may consume approximately 3 tons of feed. The profit (value) in an animal is a function of both market price and the cost of food. The production of livestock in the Imperial Valley declined about 17.5% between 2017 and 2018 from $452.17 million to $532.13 million. In 2018, the cattle market saw prices with a high of $130 per pound and a low of $1.03 per pound (which is considered relatively stable). Over the past twelve (12) months (November 2018 to November 2019), cattle market has seen a larger price fluctuation that in the prior year with a high of $1.30 per pound and a low of 94 cents per pound. Many cattle farmers in the Imperial Valley are considering or actively pursuing permits to increase their capacity. As of this 10 writing, it appears that another 50,000 head of cattle may be permitted to be raised in the region, which will substantially increase the overall value of cattle production (so long as prices stay stable). This is a significant change from one year ago when cattle farmers were thought to be thinning herds as there was an anticipated “glut” of cattle in the marketplace. The change in business behavior is largely attributed to the increase in branded or boutique cattle farming. In the simplest of terms, consider that it wasn’t often that folks purchasing beef at a grocer were concerned with the “name brand”. Today, names such as Harris and Brandt have seen higher demand, thus creating a market for specialty or natural (organic/grass/corn) fed brands. Finally, One World Beef, the region’s only mass production beef processing facility continues to grow its business, thus helping drive a need for additional cattle production and creating additional employment opportunities. Southern California Association of Governments EXHIBIT C-2 TOTAL LIVESTOCK PRODUCTION (IN MILLIONS OF $) BY YEAR Value in Billions of $ 650 600 550 500 450 400 350 300 250 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: County of Imperial Agriculture Commissioner Field crops accounted for $507.85 million of production in 2018. This is marked a significant increase year over year (2017) of $142.03 million or 38.8%. The number of acres in production in 2018 was 341,229 (a 14,562 acre increase from 2017 which saw 326,667 acres farmed for field crops). Overall field crops took up more space (533 square miles) than the size of the entire City of Los Angeles (486 square miles). Overall field crop prices (blended) increased to $1,488 per acre from the 2017 figure of $1,119 per acre. Historic per acre production includes; $1,643 (2014), $1,208 (2015) and $1,142 (2016). Crop prices were higher for both Alfalfa and Bermuda Grass, while Sudan Grass and Wheat prices decreased. EXHIBIT C-3 As stated earlier, there is concern for the 2019 and 2020 crop as the trade issues with China are creating uncertainly for farmers. Further complicating farming in the Imperial Valley is competition from states such as Idaho and South Dakota relative to wheat. Some farmers predict that wheat (which is currently a $13.5 million annual crop over about 24,000 acres) may cease to exist in the region due to pricing pressures from other regions. The top five crops in this category (production value) include Alfalfa ($1218.5 million), Bermuda grass ($95.5 million), Sugar Beets ($54.9 million), Sudan grass ($52.7 million) and Klein Grass ($41.1 million). EXHIBIT C-3 provides a historical chart of field crop production in Imperial County. TOTAL FIELD CROP PRODUCTION (IN MILLIONS OF $) BY YEAR Value in Billions of $ 600 550 500 450 400 350 300 250 2006 2007 2008 Source: County of Imperial Agriculture Commissioner 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 11 10th Annual Southern California Economic Summit Vegetables and melons accounted for $984.47 million, a decrease (3.3%) over 2017 when crop production was $1.018.8 billion. The number of acres in production increased by about 3% from 128,769 acres (2017) to 132,604 acres (2018) Crop value per acre (blended) decreased from $7,912 per acre (2017) to $7,424 (2018) or about 6%. EXHIBIT C-4 1100 The crops with the highest production value for 2018 included Leaf Lettuce ($122.63 million), Head Lettuce ($115.16 million), Broccoli ($100.98 million) Onions ($98.64 million) and Spinach ($84.29 million). EXHIBIT C-4 reflects the historic production values for Vegetable and Melon crops. TOTAL VEGETABLE AND MELON CROP PRODUCTION (IN MILLIONS OF $) BY YEAR Value in Billions of $ 1000 900 800 700 600 500 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: County of Imperial Agriculture Commissioner Fruit and nut production decreased slightly from $85.2 million in 2017 to $83.9 million in 2018. At the same time, production acreage increased from 10,209 to 10,328 acres (an additional 119 acres). Production by acre for 2018 dropped to $8,125 from $8,279. The decline began from 2015 when production per acre was $9,487 per acre. Over the past two years, DMG, Inc. predicted this category would be a beneficiary of the region’s water supply certainty. DMG, Inc. has predicted that the more stable water supply in Imperial Valley (compared to California’s Central Valley) would result in a shift to some higher valued crops. Specifically, both EXHIBIT C-5 110 lemons and date (groves) have expanded by about 200 acres each in the past year. Imperial Valley produce crop (fruit and nut) is led by lemons and dates. Lemons accounted for $43.7 million of value in 2018 while dates accounted for $24.2 million of value. Combined, lemons and dates account for over 80% of the produce crop in Imperial Valley. Tangerines and grapefruit represented a production value of $4.1 and $3.2 million respectively in 2018. EXHIBIT C-5 below shows historic production. TOTAL FRUIT & NUT PRODUCTION (IN MILLIONS OF $) BY YEAR Value in Billions of $ 100 90 80 70 60 50 40 30 2006 2007 2008 Source: County of Imperial Agriculture Commissioner 12 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Southern California Association of Governments EXHIBIT C-6 shows the history of seed production in the region. Seed production is a vital component to the agriculture economy. There are farming entities that specialize in the generation of seed that is used locally, domestically and internationally. Further, primary research (interviews) with those in this segment of the industry shows that there is significant technology and testing involved in creating seeds that provide for higher production, greater drought tolerance and overall hardiness. In 2018, $109.21 million of seeds were produced versus $137.29 million in 2017. Overall some 53,000 acres were dedicated to seed production, a decrease of 20,000 acres from 2017. One explanation for the decrease could be efforts for Imperial Valley seed farmers to comply EXHIBIT C-6 with stricter weed and pesticide laws that impact the export of seeds to foreign countries. Crop value per acre increased to $2,059 per acre (2018) from $1,865 (2017). Alfalfa seed ($68.5 million) and Bermuda seed ($18.2 million) represented the greatest production value. The seed industry did see a disruption in 2018 that is continuing into 2019 from trade uncertainly with China. The market disruption is having ripple effects on various markets throughout the world. Inventories are reportedly at record levels as distributors seek new markets as world trade works to rebalance. TOTAL SEED & NURSERY PRODUCTION (IN MILLIONS OF $) BY YEAR Value in Billions of $ 140 120 100 80 60 40 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: County of Imperial Agriculture Commissioner The final segment of agriculture production analyzed was that of apiary which includes honey, wax and pollination (bee) production and use. While this industry accounted for about $8.46 million in 2018, a substantial increase of 44.9% over 2017 when total production was $5.84 million of production. EXHIBIT C-7 The core product in this category is pollination which accounts for $7.7 million of production while $694,000 of honey and $35,000 of wax was produced. EXHIBIT C-7 provides a history of apiary production. TOTAL APIARY (HONEY/WAX/POLLINATION) PRODUCTION (IN MILLIONS OF $) BY YEAR 9 Value in Billions of $ 8 7 6 5 4 3 2 1 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 13 10th Annual Southern California Economic Summit D. INCOME AND POVERTY STATISTICS Imperial County continues to see increases in Median Household Income. Between 2017 and 2018, the Median Household Income rose 3.15% (about $1,366 per year) to $44,779. There are two (2) factors that are driving increases in recent years. First, as the overall nation economies continues to thrive, wages are increasing modestly. Also, as California’s EXHIBIT D-1 minimum wage increases, workers at the lower end of the income spectrum (which make up a significant portion of the Imperial County workforce) are seeing higher paychecks. It is likely that the region will see 3-4% increases in this category annually for the next few years. MEDIAN HOUSEHOLD INCOME $44,779 $45,000 AnnualDollars $42,000 $39,000 $36,000 $33,000 $30,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: U.S. Census Bureau / Federal Reserve Economic Data (FRED) In terms of household income distribution, EXHIBIT D-2 shows a breakdown since 2010. There is noticeable improvement for families making less than $35,000 annually. For example, in 2014, 46.1% of households had an income under $35,000 annually. In 2018, this had dropped to 35.4%. While these families are still struggling, it is promising to see the drop in EXHIBIT D-2 lower income percentages. On the upper end, in 2014 27.7% of families had a household income of $75,000 or more. In 2018, this had increased to 42.5% of families. Overall, we are seeing a migration of incomes from the lower end (under $35,000 annually) to the middle and upper tiers. HOUSEHOLD INCOME DISTRIBUTION 2010-2018 Household Income Distribution 2010 2011 2012 2013 2014 2015 2016 2017 2018 25 % of Households 20 15 10 5 0 <$15,000 $15,000$24,999 $25,000$34,999 Sources: American Community Survey / Environics Analytics 14 $35,000$49,999 $50,000$74,999 $75,000$99,999 $100k$149,999 Over $150,000 Southern California Association of Governments EXHIBIT D-3 provides recent data on per capita incomes. Median per capita income dropped by about 6.58% or $1,218 between 2017 and 2018. The decrease is likely due to an increase in unemployment in the region over the last EXHIBIT D-3 year as well as a drop in the overall labor force. Also, many communities are starting to see the impact of reduced federal government assistance (social and food programs). PER CAPITA MEDIAN INCOME 2005-2018 $19,000   $18,500   $18,000   $17,500   $17,000   $16,500   $16,000   $15,500   $15,000   $14,500   $14,000   2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Sources: American Community Survey / Environics Analytics EXHIBIT D-4 below is presented for the first time this year in our forecast. There is significant discussion and debate in the United States over Income Inequality but few discuss or present measurements of such. DMG, Inc. presents a ratio calculation form 2010 to 2017 in which the median income for the top 20% of households is divided by the median income of the bottom 20% of households. While the raw number itself EXHIBIT D-4 16.50 likely has little meaning, the trend(s) over time do provide a more stastical understading. For example, in 2010 the Income Inequality Ratio was 13.94. This has increased to 15.93 over a seven-year period. In fact, the ratio has increased almost every year. This is during a time when California’s minimum wage has been increasing. INCOME INEQUALITY RATIO 16.00 15.50 15.00 14.50 14.00 13.50 13.00 12.50 2010 2011 2012 2013 2014 2015 2016 2017 Source: Federal Reserve Economic Data (FRED) 15 10th Annual Southern California Economic Summit EXHIBIT D-5 presents the percentage of Sub-Prime Borrowers in Imprerial County as a percentage of the population. The interest rate that consumers pay is a function of their credit (otherwise described as their history of repayment and inventory of other creditors). The lower someone’s credit score, the higher the interest rate. Additionally, the lower the credit score, the more likely it is that a consumer is alltogether refused credit. At the height of the Great Recession (2010), EXHIBIT D-5 some 46.6% of Imperial Valley borrowers had a credit score below 660 (which is essentially the “Mendoza Line” of prime versus sub-prime). At current (2019) this has fallen to 33.2% of borrowers. This means that Imperial Valley residents are rebuilding their credit as a function of time since the Great Recession and greater incomes/ability to repay as well as more recent repayment history. IMPERIAL COUNTY SUB-PRIME BORROWERS 48% 46% 44% 42% 40% 38% 36% 34% 32% 30% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: Federal Reserve Economic Data (FRED) The U.S. Federal definition of poverty is a household income for a family of four less than $25,750 (1/1/19). Pragmatically, this does not include families earning just over this amount (adjusted by family size) are still likely impoverished. EXHIBIT D-6 shows that poverty among “all persons” has leveled EXHIBIT D-6 at about 1 in 5 persons while poverty among those most vulnerable, children has climbed in the last year to 31% from 28%. This is despite minimum wage increases and is likely due to reductions in various social program assistance from the federal government. PERCENTAGE OF POPULATION (ALL RESIDENTS AND CHILDREN <18) LIVING IN POVERTY All Persons Under 18 40% 35% 30% 25% 20% 15% 10% 5% 0% 1990 Census 2000 2005-09 2006-10 2008-10 Census ACS ACS ACS Sources: American Community Survey / Census Reporter 16 2011 ACS 2012 ACS 2013 ACS 2014 ACS 2015 ACS 2016 CR 2017 CR 2018 ACS/CR Southern California Association of Governments HEALTHCARE AND COVERAGE The Imperial Valley is seeing an increase in the number of persons that are now covered in either a private or government sponsored health insurance program. EXHIBIT D-7 tracks the percentage of residents in Imperial County without health insurance starting in 2010. In 2010 and 2011, about 21% of the population was without coverage. By 2014, EXHIBIT D-7 this has been reduced to only 15% as full implementation of the Affordable Care Act (ACA) started to take effect. Since 2015, the percentage of those without health insurance has declined each year to a current low of 7.9%. This means that over 92% of Imperial County residents have health insurance. PERCENTAGE OF RESIDENTS WITHOUT HEALTH INSURANCE 25% 20% 15% 10% 5% 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: American Community Survey 17 10th Annual Southern California Economic Summit E. EDUCATIONAL ATTAINMENT AND EARNINGS Economic opportunity in the United States is tied to workforce education and training. The Imperial Valley has historically had some of the lowest levels of education attainment by adults 25+ in both California and nationwide. This directly impacts economic opportunity. EXHIBIT E-1 provides an understanding of the highest level of education achieved by adults within the region. In total, 29.8% of adults 25+ lack a high school diploma or equivalent. An additional 26% only have a high school diploma (or equivalent). Only about 14.8% of adults 25 and over have a bachelor’s degree or better. those with a 9th grade education or less has reduced by 20% in just three (3) years. The percentage with some high school, but no diploma has held steady while those completing high school (or equivalent) has increased from 22% to 26%. As the United States works to complete in a more global economy where technology has been introduced and plays a role in almost every industry sector, the lack of education directly impacts the employability of over one-half of adults within the region. The region is slowly making strides but must continue to be competitive long-term. The trend over the past four years has been that Imperial County residents are slowly becoming more educated. In fact, EXHIBIT E-1 EDUCATIONAL ATTAINMENT ADULTS 25+ (2016 2019) 2016 2017 2018 –2019 30% % of Adults Attaining 25% 20% 15% 10% 5% 0% Less than 9th Grade Source: Environics Analytics 18 Some High School, No Diploma High School Grad (or GED) Some College, Associate's No Degree Degree Bachelor's Degree Master's Degree Professional School Degree Doctorage Degree Southern California Association of Governments Education impacts earnings. EXHIBIT E-2 shows earnings of various levels of adults based on education for selected years from 2008-2018. While almost all persons saw their income impacted (in average) by the economic downturn, it remains that persons with a high school diploma makes about $12,000 a year more than someone without. College graduates (on EXHIBIT E-2 average) make $20,000 more a year than someone with only a high school diploma and three-times as much as someone that dropped out of high school. This single chart, more than any other, points to the direct impact educational achievement has upon the ability for a person to support themselves and their family. MEDIAN EARNINGS OF ADULTS 25+ BY EDUCATIONAL ATTAINMENT