It looks like residents are voting with their feet in Los Angeles. The WSJ reports:
Which metro area in the U.S. has suffered a greater economic collapse over the last two decades than Detroit? Hint: It’s a common fundraising stop for President Obama. The answer, according to a new UCLA Anderson School of Management study, is Los Angeles.
Th researchers say Los Angeles has lost 3.1% of its employment base since 1990, more than Cleveland (-0.2%) and Detroit (-2.8%). Job growth over the same period has exceeded 50% in Phoenix, Orlando, Las Vegas, San Antonio, Houston and Dallas. Los Angeles “displays a tale of two cities in terms of job growth,” the study notes. “From 2005 to 2012, West L.A. had a payroll job growth of 3% while the rest of L.A. took a 5.1% hit in job loss.”
Unemployment in tony Manhattan Beach is 3.1% compared to 8.9% for Los Angeles County and 11.3% in the east L.A. suburb of Baldwin Park where more than 80% of residents are Latino. The poverty rate is 2.9% in Manhattan Beach (85% white) versus 26.8% in East Los Angeles and 26.2% in Compton, which are predominantly black and Latino.
The economists offer three reason for the east-west bifurcation: high cost-of-living, low human capital and an unfriendly business environment. Limited residential building permits have squeezed the housing supply and driven up costs, making it harder to attract and keep middle-income workers. Los Angeles County experienced a net domestic migration outflow of 115,651 residents between 2007 and 2011.
Meantime, “the exodus of high-skill workers due to the contraction of the aerospace industry out of L.A.” has depressed the region’s labor talent. L.A.’s public schools have failed to fill this skills gap.
The study says that flourishing metro areas like Houston and San Antonio with low-educated workforces make up for their skills deficit by being far more hospitable to business. San Antonio and Houston received an overall grade of A+ on the 2013 Thumbtack Small Business Friendliness Survey. Los Angeles County got a D. (Tax code D+; licensing D; regulation D; zoning D; ease of starting a business D+.) L.A.’s hostile business environment harms the poor and middle class far more than the affluent.
The theme of Governor Jerry Brown’s re-election campaign is that California is back, baby. Maybe for the sultans of Hollywood, but the poor in East L.A. aren’t feeling that happy days are here again.
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