For Economic Data, U.S. May Merge L.A., Orange Counties

Southern Californians know the difference between Orange and Los Angeles counties. It’s Disneyland vs. the Getty Center. Republicans vs. Democrats. The Orange Crush vs. the East L.A. Interchange.

But to a committee of federal bureaucrats deciding how to collect economic data, Los Angeles and Orange counties are a single unit of smog-filled urban sprawl. The panel is moving ahead with a proposal to combine the two counties when reporting economic statistics. It’s a change that has drawn protests from state and local officials as well as regional economists worried that it will mask changes in the economy.

The recommendation of the Metropolitan Standards Review Committee would combine two of the nation’s most populous counties in compiling such statistics as regional unemployment, new private-sector jobs and welfare recipients, among other things.

The monthly data are analyzed by governments, social service agencies and economists to determine who has jobs, who needs training, what industries are growing and which are shrinking. Up to 30 federal surveys could be affected, according to local officials.

The two counties have been treated as separate statistical areas for 50 years.

Although it does not appear that there will be an immediate fiscal impact, local government officials worry that the change will obscure trends in the two counties, making it harder to win grants or argue for extra federal money to fund programs, said Candy Haggard, an Orange County official organizing efforts to fight the federal plan.

“If anything, they should be dividing our region into smaller units,” said Beverly Burr, a Santa Monica economist advising Los Angeles County officials on the changes.

The recommendation would create a statistical area with a population of more than 12.6 million, greater than all but four states, including California.

“This amounts to less information for the Information Age,” said Lisa Grobar, director of the Cal State Long Beach Economic Forecast Project.

“There is no small irony that these decisions are being made in Washington, D.C., and that they have no idea how important these statistics are to us. They say, ‘Oh, it’s just all Southern California,’ ” Grobar said. “If you look back over the past 10 years, you would see very important differences in the trends in the Los Angeles and Orange County economies.”

Local officials became alarmed about the proposal when the committee--part of the Office of Management and Budget--issued its recommendation in the Aug. 22 Federal Register. OMB officials will make the final decision on the proposal.

Southern California economists believe that the proposed rules would create dramatic distortions in reports that list the number of jobs in the region by industry. Such statistics are important tools for economic planning and the creation of public policy.

In the apparel industry, for example, Orange County is gaining jobs as it produces more surf wear, swimwear and high-end clothing from manufacturers such as St. John Knits in Irvine, said Esmael Adibi, an economist at Chapman University in Orange. Meanwhile, Los Angeles County is losing apparel jobs because it produces less-expensive clothing that can be manufactured more profitably in low-cost areas such as Mexico, Adibi said.

But if the government combined the data for both counties into a single report, it would look as if little change had occurred in the industry here.

Moreover, a combined report would show strong growth in the entertainment industry over the last five years. Yet virtually all of that employment growth has taken place in Los Angeles County and was of little benefit to Orange County, Adibi said.

The goal of the committee, said James Fitzsimmons, the Census Bureau official serving as its chairman, is to establish uniform rules to determine the boundaries of metropolitan areas in which federal agencies collect data.

The federal government reviews the standards for defining metropolitan areas every 10 years and can recommend changes. If adopted, the committee’s proposal would go into effect in 2003, Fitzsimmons said. The Office of Management and Budget is accepting comments on the committee’s recommendation through next Friday.

Under the 1990 rules, Southern California was broken into “Primary Metropolitan Statistical Areas,” urban areas with large-enough populations to be grouped on their own. Los Angeles, Orange and Ventura counties are each separate statistical areas. Riverside and San Bernardino counties make up another such area.

The plan to merge Los Angeles and Orange counties’ statistics was based on complicated guidelines. The proposal would create “Core-Based Statistical Areas” with populations as small as 10,000. If 25% or more of the residents of one county commuted to another for work, it would be considered as part of the larger county.

That rule would leave Orange County alone. But another rule says large core-based areas--with more than 2.5 million people--could be subdivided if fewer than 15% of the workers commute from one county to the urban core.

The whole decision revolves around commuters, because the committee believes that the number of commuters serves as a good proxy for economic integration between regions.

According to the 1990 census, 15.9% of the residents of Orange County commute to Los Angeles County. About 11% go in the reverse direction.

“Orange County looks like it has too many people commuting to Los Angeles,” Fitzsimmons said, adding that the 2000 census might change the picture.

Conversely, the geographic isolation of sparsely populated counties such as Imperial, Lake and San Benito would give them the status of independent core-based areas.

Burr’s analysis found that several other areas might be combined if the Office of Management and Budget adopts the committee’s proposals, but all of these include communities that are smaller than Orange County. The next-biggest is Fort Worth, population 1.4 million, which would be combined with Dallas.

Although the Bureau of Labor Statistics said it will still issue separate unemployment rates for Los Angeles and Orange counties, economist fear that the change in the way the data are collected will diminish its accuracy.

The Orange County business community is worried that being tossed into Los Angeles County’s economy will make it look less attractive to new businesses, said Julie Puentes of the Orange County Business Council.

Comments can be sent to Katherine K. Wallman, Chief Statistician, Offices of Information and Regulatory Affairs, Office of Management and Budget, Room 10201, New Executive Office Building, 725 17th St. NW, Washington, DC 20503. Fax: (202) 395-7245.