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United States / Analyst Insights
NorCal vs. SoCal: Fastest Growing Industries by Region

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by Madeline Hurley, Industry Analyst
Apr 12 2017

From the Redwood Forest to the Baja Coast, California is home to a diverse array of climates, people and cultures. Although Californians collectively agree that the West Coast is the best coast and that In N Out is the best burger in town, many residents struggle to agree on whether Northern or Sothern California is superior.  While the NorCal vs. SoCal rivalry is often over topics such as SF Giants vs. LA Dodgers and which region has better beaches or burritos, the two areas have differences deeper than baseball and Mexican cuisine. The two regions are composed of distinctly different age and income demographics, culture, weather, population density and industrial base.

Northern California

Home to technology giants such as Google, Apple, Cisco and Oracle, Northern California has largely been characterized by the dominance of Silicon Valley. With the vast majority of California’s technology companies located in about 4.0% of the state, the area has become a hub for both tech-based industries and industries that primarily cater to tech clients. Along those lines, the Greater Bay Area is home to 41.0% of the state’s $57.5 billion IT Consultingindustry establishments, while only housing 19.6% of California residents. Similarly, the Bay Area accounts for 40.2% of state establishments in the $33.2 billion Data Processing and Hosting industry, with all four of the industry’s major players headquartered in the area.


The thriving local economy has attracted numerous tech-based and other businesses to set up shop in the Bay Area. Due to a slew of new businesses requiring loans, the $27.6 billion Commercial Banking industry in California has expanded rapidly in NorCal, with the Greater Bay Area accounting for 24.1% of the state’s establishments. As more new businesses flock to NorCal, many people have moved to or settled down in the area. Partially driven by the rapidly expanding Bay Area, Housing Starts in California have increased at an annualized rate of 13.4%, compared with 11.7% nationally, over the past five years. As  more people flock to Silicon Valley, the $37.0 billion Residential Building Construction industry is expected to grow an annualized 3.4%, with 27.9% of industry establishments in the Bay Area.

Although the Bay Area houses the majority of NorCal’s population, wealth and industries, the remaining regions in NorCal are characterized by a strong industrial presence. Areas including Sacramento County, the Northern and Sierra regions and the San Joaquin Valley, although less population-dense, house Northern California’s farming and manufacturing base.  For example, the San Joaquin Valley accounts for 42.9% of California’s $7.2 billion Snack Food Production industry establishments, while only housing 10.6% of the state’s population.

Southern California

While only about one-third the size of Northern California, Southern California contains the majority of the Golden State’s population, businesses and industrial base. Los Angeles County accounts for more of the state’s employment than any other region, at 29.2%. Its SoCal counterparts Orange County, the San Diego Area and the Inland Empire Region are third, fourth and fifth, respectively, in this ranking. Although often associated with sunshine and the beach, SoCal plays a much more important role in the state economy than surf shops, taco joints and Disneyland.

Southern California is home to the movie studios, television broadcasters, talent agents and stars that make Hollywood an entertainment mecca. Proximity to agents, talent and media producers is integral for advertising agencies to thrive. An estimated 38.4% of industry establishments in the Advertising Agencies industry in California are located in Los Angeles County, far higher than the 26.0% of the population.

While SoCal is typically known for entertainment, there is a variety of other industries that have outsized representation in the region. Operators in the healthcare sector have grown sizably over the five years to 2017. The state’s population as a whole is aging, but it’s happening much more quickly in Los Angeles. According to public policy research from the University of Southern California, there are nearly 20 seniors for every 100 people of working age in the county, a ratio that has risen in recent years and is expected to double by 2040 as the last of the baby boomers reach retirement age. Los Angeles County’s rising senior population has given way to the heightened presence of the Nursing Care industry in California and the Home Care Providers industry in California. Establishments in Los Angeles County account for 32.5% and 38.5%, respectively, of industry totals, which is far higher than its share of the population.

Although hardnosed factory manufacturing work is not what one thinks of when dreaming about sunny SoCal, the majority of the state’s manufacturing industries are located in this region. In fact, The Aircraft, Engine and Parts Manufacturing industry in California is a fixture in the region. The area’s educated workforce and strong military presence have provided an adept workforce and solid demand, while weather conducive to year-round outdoor testing makes the location an ideal place for the industry. Collectively, these factors have prompted 43.7% of industry establishments to locate in the county. Craft brewing is another manufacturing industry prominent in SoCal. In the San Diego Area, specifically, there is a strong culture of craft brewing; 19.8% of establishments in the Breweries industry in California are located in this region, compared with 8.9% of the population.

California vs. The United States

Currently, the prosperous Californian economy is one of the highlights of the nation. At a time when slow and steady GDP growth is the expectation, California growth has outpaced the country in both job growth and output over the five years to 2017. IBISWorld expects that the GDP of the state will account for $2.3 trillion in 2017, which is the largest in the nation and would make it seventh-largest economy in the world. While it is also true that the Golden State is the most populous state in the nation, its impact on the national economy on a per capita level is still outsized. The state’s 39.6 million residents account for 12.4% of the national total, but its GDP represents 13.7% of total output. The diversity of the state’s economy and population can be attributed to its rapid growth.

The state’s population is aging at an accelerated rate, relative to the country at large. California’s 19 and under population actually dropped between 2011 and 2016, while its 64 and older contingent grew an annualized 3.9% during the same period, which outpaced the country at large. Its burgeoning senior population and famously warm weather have made the state a destination for retirees. In fact, 15.6% of the nation’s establishments in the Retirement Communities industry are located in California.

California is widely known as a destination location for more than just seniors. Construction has experienced rapid growth in recent years, as new entrants to the state have entered the housing market and existing inventory has dried up. The average home price in California has increased at an annualized rate of 8.6% over the five years to 2017, compared with the national average of 6.5%. Largely a result of this, residential construction in California has risen an annualized rate of 15.0% during the same period.  This has been an enormous boon to the Real Estate Sales and Brokerage industry. In 2017, California is expected to account for 19.0% of the industry’s national revenue.

Higher-than-average median and mean income levels typify the Californian economy, which has enabled consumers to afford these more expensive homes. A spike in investment in the technology sector has generated new jobs in high-paying fields. High and growing income levels have coalesced with growing health trends to prop up the Specialty Food Stores industry in California. A full 25.0% of the revenue for the national industry is accounted for in the Golden State.

However, not all sectors have prospered during the recovery. Manufacturing growth has also been down, relative to the rest of the nation, as high salaries and rising state tax levels have forced manufacturers to relocate to states with lower wage costs. Regulation has also affected some of these industries. The ban on plastic bags has caused the Plastic Film, Sheet and Bag Manufacturing industry to stumble in the state. While the industry’s revenue has grown nationwide since 2012, it has fallen in California.