Since 1990 Los Angeles County has added a paltry 34,000 jobs while its population has grown 1.2 million. In contrast, the Bay Area, which added roughly the same number of people during the same time, gained a net 500,000 jobs, mostly in the suburbs. . . The problem now, however, are the factors in L.A. that drive industry away, such as ultra-high electricity prices and a high level of regulation. Even amidst the recent industrial boom in many other parts of the country, Los Angeles has continued to lose manufacturing jobs; Los Angeles’ industrial job count stands at 363,900, still the largest number in the nation, but down sharply from 900,000 just a decade ago. . . Today San Francisco and its immediate environs, despite its much smaller population, is home to virtually every powerful politician in the state: both its U.S. Senators, the Governor, the Lieutenant Governor and the Attorney General. Not surprisingly, state policies on everything from greenhouse gases, urban density and transit to social issues follows lines that originate in, and largely benefit, San Francisco.
More recently, research has identified serious consequences to national economies, beyond the fact that many households cannot afford to live, much less buy a home in the metropolitan areas with excessive land use regulation. Because residents such area have less income to spend due to the higher house costs, job creation and economic growth are hobbled. Rising inequality is also being cited as a consequence of excessive land use regulation.
Little has changed since 2010 despite all the talk about “peak car” and a supposed massive shift towards transit. Single occupant driving remains by far the largest mode of transport to work in the 53 major metropolitan areas (with over 1,000,000 population), having moved from 73.5 percent of commutes to 73.6 percent.
Policies that increase housing costs have a clear constituency in all homeowners, but they hurt renters and anyone who is hoping to move to an expensive city. The burden of land use regulations are borne disproportionately by low-income people who spend a larger proportion of their income on housing relative to higher income people. These regressive effects of land use policy extend beyond reducing welfare if the least-advantaged Americans. Additionally, rules that increase the cost of housing in the country’s most productive cities reduce income mobility and economic growth.
Other major economic divides—between capital and labor, Wall Street versus Main Street—defined politics for much of the 20th century. But today’s tangible-intangible divide is particularly tragic because it undermines America’s peculiar advantage in being a powerhouse in both the material and non-material worlds. No other large country can say that, certainly not China, Japan, or Germany, industrial powerhouses short on resources, while our closest cousins, such as Canada, Australia, and New Zealand, remain, for the most part, dependent on commodity trade.
California policy is dominated by a rich coastal elite who control most of the media, finance campaigns, rule over the universities and generally dominate all discussion. The result is extreme inequality, persistent nation-leading poverty, high housing costs, and limited opportunity for California’s most disadvantaged populations. And, California’s most disadvantaged will pay the most for California’s next downturn. They won’t write checks, because they can’t. Their net worth won’t decline, because it’s already at or below zero. They’ll pay a far higher cost in broken homes, broken families, and broken lives.
The decline has been, if anything, more rapid in 59th place Los Angeles. This process began with the loss of more than 90,000 aerospace jobs since the end of the Cold War. Los Angeles’ industrial job count stands at 363,900 — still the largest in the nations but down sharply from 900,000 just a decade ago.
The winners grew from 718,000 to 1,102,000 jobs, or up 54%, but this is dwarfed by the colossal loss of 4.1 million out of 6.7 million jobs, a loss of 61% in manufacturing jobs. The losers are somewhat like set 2, just not quite so extreme. Included are the two counties which lost the most—Cook (Chicago) and Los Angeles- 650,000 and 500,000!
The DOF projects that the the state will grow from 37.3 million residents in 2010 to 51.7 million in 2060. This is a 0.7 percent annual growth rate over the next 50 years. By contrast, California’s growth rate was 1.7 percent annually over the last 50 years (1960-2010), and a much higher 3.0 percent in the growth heyday of 1940 to 1990. However, even with this slower rate, California is expected to grow slightly more quickly than the nation (0.6 percent annually).
“Today, many jobs that used to be considered non-tradable services are now tradable services. Back-office accounting functions can be done anywhere, as can legal research or title research. Just about any job that is done at a computer is now a tradable service. Unless they have a monopoly, tradable goods and tradable service providers face relentless price competition. California’s high-cost environment is forcing them to relocate to lower-cost communities to survive. Tradable producers won’t be providing 21st Century California jobs.”
None of this should be surprising. The attractive inner city developments, especially the Pearl District, do not provide for the economic needs or wants of most people, as the population trend data indicates. Few households are drawn to buy less than one-half the space they want at nearly three times the price per square foot they would pay in outer suburbs like Forest Grove, Wilsonville or Hazel Dell.
The Golden State has historically led the United States and the world in technology, quality of life, social innovation, entertainment, and public policy. But in recent decades its lead has ebbed. The reasons for this are various. But there is one area of decay whose story is a parable for California’s other plights—that area is infrastructure.
California has met the future, and it really doesn’t work. As the mounting panic surrounding the drought suggests, the Golden State, once renowned for meeting human and geographic challenges, is losing its ability to cope with crises. As a result, the great American land of opportunity is devolving into something that resembles feudalism, a society dominated by rich and poor, with little opportunity for upward mobility for the state’s middle- and working classes.
Texas continues to dominate major metropolitan area growth. Among the 53 major metropolitan areas (with more than 1 million population), Texas cities occupied three of five top positions in population growth, and four of the top 10 (Figure 1).
The state that had earlier earned its own “California Dream” label now limits the dream of homeownership principally to people either fortunate enough to have purchased their homes years ago and to the more affluent. Many middle income residents may have to face the choice of renting permanently or moving away.