1. Issue 1
An Introduction to the Economic Research Initiative and
Orange County’s Economic Structure
by Luis Nieves-Ruiz, AICP
Introduction to Economic Research Initiative
The United States is in the midst of an economic recession. According to the U.S Labor Department, more
than two million jobs were lost between January and March of this year. Florida is one of the states expected
to lose the greatest proportion of jobs along with Michigan, Hawaii, and Ohio (Hegenbaugh and Hansen,
2009). However, rather than dwelling on the present dire circumstances, one should focus on finding long
terms strategies to bring back prosperity and new investment to our area. The path to economic recovery
starts with understanding how to measure our area’s strengths and supporting the industry sectors that are
vital to the local economy.
The purpose of the Economic Research Initiative is to help assess prospects for economic recovery by
analyzing the business sectors that comprise Orange County’s economic structure. This project would bring
the local focus that is often missing from other economic publications currently available. It aims to provide
sound data that could be used to supplement other economic and land use projects in the County. Finally, the
project should help to generate a healthy discussion about the County’s economy and the best approaches to
spur economic growth.
One way in which it would look at the local economy is by using community indicators. These are points that,
when combined, generate a picture of what is happening in a local system (APA, 2004). Indicators can assist
in measuring the interaction between economic, environmental, and social factors that represent the whole
community. System or descriptive indicators are used to provide the most relevant information to policy
makers by summarizing individual characteristics of the community. Examples of some frequently used
economic indicators are the “bedroom tax” charged on hotel rooms, theme park attendance, and building
permits. Some of the indicators currently used to measure Florida’s economic activity may not completely
work for Orange County, because the state and county economies differ somewhat. Therefore, to help better
measure our economic vitality, it is important to create our own indicators focusing on Orange County’s areas
of economic specialization.
Orange County’s economic structure
Most economists have described Florida’s economy as a “three legged stool”, meaning the state’s economic
activity is mainly driven by three industries, each of them a leg of the stool. There are several variations of
this “stool” model. The one that is mostly mentioned is the retiree-real estate- tourism variation. However,
other sectors such as agriculture, construction, and the military, are also mentioned in other versions of the
model. It could be argued that some of the legs will change depending on the Florida region that is being
described. For example, industries catering to retirees make the bulk of economic activity on several parts of
the southern coast, but as you move northward, other activities take precedence, such as the military and
agriculture.
Most recently, the state of Florida has been extensively criticized for relying on an economic model built on
adding more homes and attracting more people. This model also supported a private economy comprised of
firms whose only role was to help entitle land for new development, finance real estate deals, and sell the
new homes. Now the model is said to be collapsing, as the influx of northerners that provided the steady
increase in tax revenues has virtually evaporated. News headlines describing this dynamic as a “Ponzi
Scheme”, “Paradise Lost”, and “the Sunset State” have pointed out the failures of this model.
Is Orange County in the same situation as the rest of the state? Orange County is certainly weathering the
ECONOMIC OUTLOOK MAY 2009

2. impacts of the economic recession. However, most economists have noted that Central Florida appears to be
more resilient than the rest of the state. While most coastal jurisdictions were feeling battered by the downturn
in the construction industry as early as 2007, the local economy was still producing a decent number of jobs.
This supports the argument that the local economic structure is somewhat different that the rest of the state.
Exhibit 1 compares the location quotients for five economic sectors for Orange County, the Orlando MSA, and
the State of Florida. Location quotients measure economic specialization by comparing the local economy
(Orange County) with a reference economy (the United States). Basic industries, those most important for
economic development, have a location quotient higher than 1. Industries are organized by economic sector
according to the North American Industrial Classification System (NAICS).
Exhibit 1: Comparison of Location Quotients for Selected Industry Groups
8
6
4
2
0
Amusements & Administrative & Specialty Trade
Accommodation Crop Prod.
Recreation Support Serv. Contract.
Florida 1.66 1.42 1.58 1.35 1.73
M SA 4.91 3.29 1.5 1.34 1.18
Orange 6.34 4.19 1.65 1.05 1.03
Source: BLS Location Quotient Calculator, 2009
Notice that there is a sharp difference in the location quotients. Orange County has more jobs in the
Amusements, Gambling and Recreation (NAICS 721) and the Accommodation (NAICS 721) sectors when
compared to the state and the region. These numbers show the important role that the “leisure” sector, which
includes convention and theme park business, plays in Orange County’s economy. On the other hand, the
state has a higher location quotient in the Specialty Trade Contractors (NAICS 238) and Crop Production
sectors (NAICS 111), two of the aforementioned “legs of the stool”. At the same time, there is a negligible
difference in the importance that the Administrative Support Services sector (NAICS 561) has in the three
economies. A more thorough look at the local economy is provided in Exhibit 2.
The table shows the top 25 industries by location quotient in Orange County. Our economy is heavily
specialized in “travel and leisure” and its supporting industries. That is not surprising to anyone who has visited
one of the area’s theme parks or attended a conference at the Orange County Convention Center. Overall,
Amusement and Theme parks (NAICS 713110), Convention and Visitors Bureaus (NAICS 561591), and Other
Travel Arrangement Services (NAICS 561599) had the highest location quotients. Other industries within
Transportation and Warehousing (NAICS 48), Accommodation and Food Services (NAICS 72), and
Administrative and Support Services (NAICS 56) also support the local tourism industry.
The County also has a relative strength in non-tourism related industries, such as Floriculture (NAICS
111422), Other Non Residential Exterior Contractors (NAICS 238192), Telemarketing and Other Contract
Centers (NAICS 561422), and Other Technical and Trade Schools (NAICS 611519).
Another common way of examining employment concentration is by identifying the location of these
businesses. In 2005, the year where data were more recently available, there were more than 39,000 firms in
Orange County. Most of these firms tend to be small. Over 50 percent of all these businesses employ less
ECONOMIC OUTLOOK MAY 2009

3. than five people. However, firms with 200 or more employees are responsible for more than a third of all local jobs.
Therefore, these large businesses play a very important role in Orange County’s economy.
Exhibit 2: Top 25 Industries by Location Quotient and Employment in Orange County
Location 2007
NAICS Sectors Industry Subsectors Quotient Employment
Agriculture, Forestry (11) Floriculture Production 4.5 1,278
Other Nonresidential Exterior Contr. 8.0 1,465
Construction (21) Other Building Exterior Contractors 5.5 1,608
New Housing Operative Builders 4.5 1,108
Commercial & Service Industry Mach. 4.4 2,604
Manufacturing (31-33)
Fertilizer, Mixing only, Manufacturing 7.7 338
Wholesale Trade (42) Fish/seafood Merchant Wholesalers 3.8 476
Retail Trade (44) Luggage/leather Goods Stores 5.0 419
Charter Bus 6.4 1,100
Transportation & Warehousing (48) Other Airport Operations 5.3 1,906
Line-haul Railroads 4.0 9
Real Estate and Rental Leasing (53) Other Machinery Rental & Leasing 4.1 1,050
Human Resources Consulting Services 4.6 1,798
Prof., Scientific & Technical Serv.(54) Drafting Serv. 3.9 238
Computer Facilities Management Serv. 3.4 1,074
Convention Visitors Bureaus 15.6 750
All Other Travel Arrangement Services 13.9 6,300
Convention & Trade Show Organizers 9.9 2,765
Administrative, Support, Serv. (56)
Tour Operators 9.2 1,489
Telemarketing & Other Contact Centers 3.8 7,363
Professional Employer Organizations 3.3 12,413
Educational Serv.(61) Other Technical & Trade schools 5.0 1,775
Amusement & Theme Parks 58.8 45,439
Arts, Entertainment, Rec.(71)
Other Performing Arts Companies 7.9 259
Accommodation & Food Svcs.(72) Hotels and Motels, except Casino Hotels 5.2 42,399
Source: BLS Location Quotient Calculator, 2009
To further study job concentration, the County was divided into six employment submarkets. The highest number
of jobs and establishments are in the Central employment submarkets (Exhibit 3). Three important activity centers
are located within this submarket: Downtown Orlando, the Maitland Center, and Orlando Central Park. These
submarket is also home to the two largest employers in Orange County: Florida Hospital and Orlando Regional
Healthcare. Besides health care providers, these submarket is also home to several government and corporate
offices.
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4. The Southwest submarket is the next largest employment center in the County. While it has fewer firms than the
Northeast and Northwest submarkets, the Southwest submarket has the second highest number of large
employers. Most of the firms in the “leisure” sector are located on this submarket including the theme parks and
the Orange County Convention Center.
The rest of the submarkets, except for the East, have almost the same number of jobs between them. Being home
to the Orlando International Airport, the Southeast market has a higher number of large employers than the rest of
the submarkets. Moreover, this is the home of the Burnham Institute and what is expected to become a future
medical city in the Lake Nona area. Thus, the importance of this submarket to the local economy will continue to
grow through the next ten years.
Exhibit 3: Location of Orange County’s Major Employers by Employment Submarket
Source: infoUSA Database, 2005
Conclusions
The purpose of the Economic Research Initiative is to examine Orange County’s economy in a comprehensive
way. The next series of articles would help to provide a thorough look at some of the leading industries in Orange
County and future economic growth. A list of the next articles in this series is included in the next page.
Today, Florida’s economy is at a “crossroads”. The old growth model is showing signs of fissures, and the “three-
legged stool “concept does not seem to apply to Orange County anymore . To be able bring back economic
prosperity, it is important to have a good understanding of how the local economy works. This means that we
need to know what industries are driving economic activity locally, their location, and how these economic sectors
are interrelated to each other. Economic indicators can be a useful tool to help measure the impact that the
different industries may have on the local economy.
ECONOMIC OUTLOOK MAY 2009

5. References
Bureau of Labor Statistics, U.S. Department of Labor. (March 2009). Economic New Release. The Employment
Situation: March 2009. Originally published on April 3, 2009. Retrieved on April 7, 2009 from http://
www.bls.gov/news.release/pdf/empsit.pdf
Bureau of Labor Statistics, U.S. Department of Labor. 2007 Location Quotient Statistics for Orange County, Orlando MSA,
and State of Florida. Retrieved on March 11, 2009 from http://data.bls.gov LOCATION_QUOTIENT/servlet/
lqc.ControllerServlet
Hegenbaugh, B. and Hansen, B. Jobs: Maps shows states hit hardest; forecasts for rebound . USA Today. Originally
published on February 10, 2009. Retrieved April 7, 2009 from http://www.usatoday.com/money/economy/
employment/2009-02-08-recession- unemployment-relocation_N.htm?csp=DailyBriefing&POE=click-refer
Howard , M.R. (2009). Florida Trend. Not a Lot of Jobs, But the Right Jobs. Originally published on April 1, 2009. Retrieved
on April 3, 2009 from http://floridatrend.com/article.asp?aid=50772
infoUSA Database License Group. (2005). Orange County Business Leads Report . Database provided by METRO PLAN
ORLANDO
Jackson, J.W. Florida should end Ponzi scheme based on growth, economist says. Orlando Sentinel. Originally
published on March 31, 2009. Retrieved on April 4, 2009 from http://www.orlandosentinel.com/business/orl-bk-
florida-economy-ponzi-scheme 033109,0,5455806.story
Phillips. R. (2003). Community Indicators. Planning Advisory Report 517 . [Electronic Version}
Orange County Growth Management Department
Issues Month of Publication
Planning Division
Research & Intergovernmental Coordination Section
Post Office Box 1393
Introduction May
Orlando, FL 32802-1393
Telephone: 407.836.5600
Fax: 407.836.5862 Nursery and Floriculture Production July
E-Mail: planning@ocfl.net
www.ocfl.net/planning
High Technology Sectors August
Leisure and Hospitality October
Health Care and Biotechnology December
ECONOMIC OUTLOOK MAY 2009