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Tuesday, December 10th, 2013

Southern California’s Road Back by Joel Kotkin

[ Believe it or not, metro LA has fewer jobs today than it did in 1990, making it the only metro in America's top ten that can make that "boast." Today Joel Kotkin shares some of his thoughts on rebuilding - Aaron. ]

If the prospects for the United States remain relatively bright – despite two failed administrations – how about Southern California? Once a region that epitomized our country’s promise, the area still maintains enormous competitive advantages, if it ever gathers the wits to take advantage of them.

We are going to have to play catch-up. I have been doing regional rankings on such things as jobs, opportunities and family-friendliness for publications such as Forbes and the Daily Beast. In most of the surveys, Los Angeles-Orange County does very poorly, often even worse than much-maligned Riverside and San Bernardino. For example, in a list looking at “aspirational cities” – that is places to move to for better opportunities – L.A.-Orange County ranked dead last, scoring well below average in everything from unemployment to job creation, congestion and housing costs relative to incomes.

Yet, Southern California possesses unique advantages that include, but don’t end at, our still-formidable climatic and scenic advantages. The region is home to the country’s strongest ethnic economy, a still-potent industrial-technological complex and the largest culture industry in North America, if not the world.

In identifying these assets, we have to understand what we are not: Silicon Valley-San Francisco, or New York, where a relative cadre of the ultrarich, fueled by tech IPOs or Wall Street can sustain the local economy. Unlike the Bay Area, in particular, our economy must accommodate a much larger proportion of poorly educated people – almost a quarter of our adult population lacks a high school degree. This means our economy has to provide opportunities for a broader range of skills.

Nor are we a corporate center such as New York, Houston, Dallas or Chicago. We remain fundamentally a hub for small and ethnic businesses, home to a vast cadre of independent craftspeople and skilled workers, many of whom work for themselves. In fact, our region – L.A.-Orange and Riverside-San Bernardino – boasts the highest percentage of self-employed people of any major metropolitan area in the country, well ahead of the Bay Area, New York and Chicago.

Policy from Washington has not been favorable to this grass-roots economy. The “free money for the rich” policy of the Bernanke Federal Reserve has proven a huge boom to stock-jobbers and venture firms but has not done much to increase capital for small-scale firms. Yet it is to these small firms – dispersed, highly diverse and stubbornly individualistic – that remain our key long-term asset, and they need to become the primary focus on regional policy-makers.

Ethnic Networks

Immigration has slowed in recent years but the decades-long surge of migration, largely from Asia and Mexico, has transformed the area into one of the most diverse in the world. More to the point, Southern California has what one can call diversity in depth, that is, huge concentrations of key immigrant populations – Korean, Chinese, Mexican, Salvadoran, Filipino, Israeli, Russian – that are as large or larger than anywhere outside the respective homelands. Foreigners also account for many of our richest people, with five of 11 of L.A.’s wealthiest being born abroad.

These networks are critical in a place lacking a strong corporate presence. Our international connections come largely as the result of both the ethnic communities as well as our status as the largest port center in North America, which creates a market for everything from assembly of foreign-made parts to trade finance and real estate investment. Southern California may be a bit of a desert when it comes to big money-center banks, but it’s home to scores of ethnic banks, mainly Korean and Chinese, but also those serving Israeli, Armenian and other groups.

For the immigrants, what appeals about Southern California is that we offer a diverse, and dispersed, array of single-family neighborhoods. Both national and local data finds immigrants increasingly flocking to suburbs. Places like the San Gabriel Valley’s 626 area, Cerritos, Westminster, Garden Grove, Fullerton and, more recently, Irvine, have expanded the region’s geography of ethnic enclaves.

These enclaves drive whole economies, such as Mexicans in the wholesale produce industry or the development of electronics assembly and other trade-related industry by migrants largely from Taiwan. Global ties are critical here. Korean-Americans started largely in ethnic middleman businesses, but have been moving upscale, as their children acquire education. They, in turn, have helped attract investment from South Korea’s rising global corporations, including a new $200 million headquarters for Hyundai in Fountain Valley, as well as a $1 billion, 73-story new tower being built by Korean Air in downtown Los Angeles.

Tech Industrial Base

During the Cold War, Southern California sported one of the largest concentrations of scientists and engineers in the world. The end of the Cold War, at the beginning of the 1990s, severely reduced the region’s technical workforce, a process further accelerated by the movement out of the region of such large aerospace firms as Lockheed and Northrop. The region has roughly 300,000 fewer manufacturing jobs than it had a decade ago, largely due to losses in aerospace as well as in the garment industry.

Yet, despite the decades-long erosion, Southern California still enjoys the largest engineering workforce – some 70,000 people – in the country. It also graduates the most new engineers, although the vast majority of them appear to leave for greener pastures. One looming problem: a paucity of venture capital, where the region lags behind not just the Bay Area, but also San Diego and New York. This can be seen in the relative dearth of high-profile start-ups, particularly in fields like social media, now dominated by the Bay Area.

But the process of recovery in Southern California does not require imitating Silicon Valley. Instead we need to leverage our existing talent base – and recent graduates – and focus on the region’s traditional strength in the application of technology. A recent analysis of manufacturing by the economic modeling firm EMSI found strong growth in some very promising sectors, including the manufacturing of surgical and medical equipment, space vehicles and a wide array of food processing, an industry tied closely to the immigrant networks.

Cultural Complex

For most Americans, and even more so among foreigners, the image of Southern California is shaped by its cultural exports, not only in film and television but in fashion and design. This third sector epitomizes the uniqueness of the region, and provides an economic allure that can withstand both the generally poor business climate and the incentives offered by other regions.

After a period of some stagnation, Hollywood again is increasing employment. Roughly 130,000 people work in film-related industries in Los Angeles, which is now headed back to levels last seen a decade earlier but still well below the 146,000 jobs that existed in 1999.

At the same time, the sportswear and jeans business in Los Angeles, and the surfwear industry in Orange County, remain national leaders. Overall, the area’s fashion industry has retained a skilled production base – over twice that of rival New York’s – and has been aided, in part, by access to Hollywood, lower rents and labor costs than in New York.

Taken together, these sectors – ethnic business, sophisticated manufacturing and culture – could provide the basis for a renaissance in the local economy. The smaller firms in these fields, in particular, need a friendlier business climate, a more evolved skills-training program from local schools and a better-maintained infrastructure. More than anything, though, they require an understanding on the part of both government and business that their success remains the best means to reverse decades of relative decline.

Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

This piece originally appeared at The Orange County Register.

33 Comments
Topics: Demographic Analysis, Economic Development, Public Policy, Strategic Planning, Technology
Cities: Los Angeles

33 Responses to “Southern California’s Road Back by Joel Kotkin”

  1. SFB says:

    Oh for heaven’s sake, how can we take this stuff seriously? First of all, in the first sentence, Kotkin makes a hugely partisan and subjective statement, blaming President Obama for all the country’s ills (um, nothing to do with the intransigent and petty Congress which shut down the government then?). He then goes on to support his argument by citing a report about aspirational cities written by…Joel Kotkin! This is partisan hackery masquerading as scholarship. It’s the urban studies equivalent of Fox News.

  2. Eli says:

    I guess LA’s problems couldn’t possibly have anything to do with the car-centric, low-density, sprawl-heavy model of development that Kotkin has spend his career pushing and which LA has embraced to a greater extent than any other large American city.

    Why publish this crap?

  3. SFB, where does he say anything like what you accuse him of? Obama’s name never appears in the piece. The only reference to any president was “two failed administrations”, which clearly bipartisanly references Bush as well as Obama. As for the critique of Bernanke’s bailouts, I hear it every day from someone on the left.

    What part of this was from Fox News? Was it the focus on ethnic businesses? Saying to build up Hollywood or tech?

    I beat the Tea Party up all the time in this blog. I’ve savagely criticized Chris Christie and John Kasich. But never does a Tea Partier show up and start bashing me as an MSNBC shill or some such. (Only a couple of times a couple people asked whether I was being paid to represent projects I supported – not an unreasonable question). Instead, it’s invariably people from the left who blow a sprocket when you deviate from their party line. Even the most innocuous statements can set a leftist off.

    Too many urbanists spend way too much time inside their own echo-chamber. I think it’s a terrible mistake to barf on Kotkin and not be willing to allow your own prejudices to be challenged, even if you don’t ultimately adopt his point of view. But it’s easier to just wallow in smug self-superiority by dismissing anyone who doesn’t agree with you as a partisan hack.

  4. SFB says:

    @Aaron,
    The last two administrations have both been Obama administrations. There was the first Obama administration from 2009-2012 and now there is the second Obama administration, which began earlier this year. For example, see the language here:
    http://bits.blogs.nytimes.com/2012/11/07/focus-of-the-f-c-c-in-a-second-obama-administration-more-spectrum/?_r=0

    You can do better than this.

    The problem is that Kotkin cites his own material as evidence for the point he is trying to make. “What I write is correct, because it fits with what I wrote before”. That’s where he gets into Fox News territory- depending on an echo chamber for research. Whatever good points he makes – and in spite of the evidence I am prepared to think that he might have some good points – are lost by partisan jabs and sloppy citation policy. I just can’t take it seriously.

  5. Matthew Hall says:

    Kotkin’s discussion of L.A. as an immigrant city is intriguing. New York has centuries of immigrant history, but L.A. had the highest percentage of native born Americans of any major metro as late as the 1960s. It’s immigrant history is only a few decades long. That makes it more like Atlanta, Houston, or Miami than the traditional centers of migration along the east coast and in the industrial midwest. America isn’t one society in any respect, including with respect to immigration.

  6. Nate says:

    Despite being liberal in my general political and economic preferences, I read Kotkin regularly to get a different perspective. Unfortunately, he litters his writing with petty asides that obscure the fact that there is a large swath of common ground for left-leaning urbanists and libertarian urbanists.

    Tossing off “two failed administrations” is an example of language that really isn’t helpful. The piece would have read fine without it, and it’s a massive assertion regardless of whether you are liberal or conservative, or whether it refers to both Obama administrations or the Obama and Bush administrations.

    For what it’s worth, Kotkin has regular writing gigs with the Wall Street Journal and Forbes, and I’ve always taken if for granted that he needs to throw in enough jabs at liberals to satisfy his right-leaning editors, since the thrust of his pieces are often not conservative enough to satisfy a right-wing audience. But here? He should leave them out if he wants to reach the most people.

  7. Derek Rutherford says:

    I suspect that LA is hurt more by cost-increasing CA state regulations that the other big cities in CA. An array of small, sometimes ethnic-based, industrial companies is going to both (1) be more sensitive to higher costs driven by compliance with governmental regulations and (2) less able to influence the regulations in the first place.

    Larger companies have lobbyists who can usually influence how rules and regs are drafted; a comparably-sized set of smallish businesses generally won’t be able to exercise the same level of influence. And when smaller companies are negatively impacted by a high cost-base (in LA’s case, both government- and housing-driven) there are no newspaper articles written about companies leaving or conducting lay-offs. There is simply the “invisible” lack of hiring and dynamism. No one notices much the first year; after 20 years, the lack of dynamism is obvious in retrospect and is behind the stats cited by Kotkin. The “animal spirits” have gone elsewhere.

    Kotkin correctly cites the important role of smaller industrial companies and ethnic enclaves in LA’s history. I think what we have witnessed is that LA’s mojo in this area has faded away – perhaps it can be better found today in Houston or Miami?

    I am also reminded of the recent stories about Sriracha production being halted. If that small-ish company were to relocate out of the LA area, it would be the rare ‘visible’ example of this effect.

  8. George Mattei says:

    I wonder if LA hasn’t just reached the point that NY, Chicago, Philly, Detroit, et. al. reached 50 years ago. One of the problems with our society is that we look at everything like the stock market nowadays. No earnings this quarter? Fire the CEO.

    Realistically, no metro area can grow indefinitely, unless they are very slow-pedestrian-growth areas, and then they never make it to LA’s status. Any city that’s a boom town reaches a point where the accumulated baggage, changes in economic landscape and lack of resources (in LA its lack of land) slow it down. No matter how much of an economic engine it has, a city’s footprint will grow to serve that engine, and then stop growing.

    It’s the same in business. Remember when Apple, Microsoft and Starbucks were the new high-growth industries? Now they are blue-chippers. Internet companies like Amazon and Google are reaching the same plateau. Their advantage is not in being nimble and low-cost, but in size and specialization. The key for a blue-chip is to look to adapt, change and diversify to survive and continue to prosper, if much more slowly than before.
    If LA manages itself right, it can become the urban equivalent of Starbucks or Microsoft. If it doesn’t it could become a nouveau-rust belt, which is the equivalent of being Kodak or Blockbuster.

  9. Chris Barnett says:

    I agree with George: nothing grows to the sky.

    Infrastructure, especially traffic congestion and water supply, probably impose significant growth limitations going forward.

    The LA CSA (LA/Orange County plus Riverside/San Bernardino/Ontario) has grown to 18 million and the ocean, mountains, desert, and Camp Pendleton limit further easy geographic expansion.

    Since the LA/Orange County urbanized area is more densely populated than the NY one, increasing density and building new places for people to work is harder.

  10. h st ll says:

    Actually not too bad for a Kotkin piece. Has a much more objective feel than most of his writing – shame he can’t do this more often.

    I know it’s opposite to everything he believes in, but it would be nice if he had included the need to further densify and take away the power of the NIMBYs, both for additional jobs (construction) , tax revenues (new residents) and a lowering of costs (more people able to utilize the same infrastructure).

  11. Joseph E says:

    “metro LA has fewer jobs today than it did in 1990, making it the only metro in America’s top ten that can make that “boast.” ”

    While I’ll believe that is true, due to the loss of many mid and low income industrial jobs, it is also true that Los Angeles has continued to gain population and has continued to grow per capita GDP and income in the past 10 years. The BEA says the LA-OC metro area has experienced a 0.96% annual per capita GDP growth rate from 2001-2012 (the longest period available on the first site I found), while the population has grown by about 0.4% a year as well, from 9.5 million in 2000 to now 10 million people just in LA County alone. Is LA really doing badly, since the terrible 1990’s recession?

    A large segment of the populations, especially people without high school educations, have suffered from unemployment, property values have skyrocketed, especially along the coast and in central Los Angeles. This is the same problem experienced in Chicago, and even in fast-growing cities like DC, San Francisco and Houston; median wages have stagnated for the past 20 years nation-wide, while the top 20% and especially the top 1% have seen growth in wealth and income.

    Most of Joel Kotkin’s criticism of the LA Metro really come down to slow population and economic growth. His list of “Aspirational cities” rankings were dominated by percentage job growth and low unemployment rates, and domestic in-migration; these are areas where Los Angeles is going to look bad, because all the flat land has been built on, population growth comes from births and international migration, and the economy is mature not booming.

    On the other hand, I would agree with the 3 areas where the LA area has strengths. The diverse population of immigrants, the draw of the media and arts industries, and the large number of educated people produced by local universities are all strengths that should serve California well in the coming decades.

    To continue to grow, Los Angeles needs to change rules that limit new construction, especially of residential housing, and continue the shift away from car commuting so that the infamous traffic is no longer a limit on quality of life.

  12. Alki says:

    First of all, Aaron you made the claim that metro LA has less jobs now than it did in 1990. How is that even possible when the population has grown by over 1.5 million people in the past 20 years?

    http://www.census.gov/population/cen2000/phc-t29/tab03a.pdf
    http://www.census.gov/prod/cen2010/briefs/c2010br-01.pdf

    Did 1.5 million go on welfare? If you got your numbers from Kotkin, they are most likely a lie.

    I lived in LA for 10 years. During my time there, all Kotkin did was knock anything that benefited the vast majority of Angelenos……..better mass transit and bus service, a centralized business district, and reducing freeway development and the use of cars…..despite the fact LA has some of the worst smog in the country. His mantra was that state regulations and taxes were killing California and more specifically LA.

    And yet, CA cities like SF and San Diego have continued to grow and prosper despite those higher costs of doing business. He consistently ignores that LA’s problems are pretty endemic to LA……..widespread corruption, a lack of cohesiveness when dealing with issues, globalization and the downsizing of the US defense budget that led the the loss of many thousands of jobs and an infrastructure that is badly taxed. He champions sprawl and undisciplined growth because that’s what he thinks makes for a dynamic metro……..forever citing Dallas and Phoenix as his model.

    He’s an ideologue and cypher. His wikipedia entry says it all:

    “Kotkin argues that the model of urban development as exemplified by pre-automobile cities such as New York City and Paris is outdated in many cases. Kotkin believes in a “back to basics” approach which stresses nurturing the middle class and families with traditional suburban development. He states that the current trend of growth of suburbs will be the dominant pattern around the world.[2] As a result, one of his arguments is that rail transit is not always ideal for modern cities and suburbs.[3]”

    http://en.wikipedia.org/wiki/Joel_Kotkin

  13. @Alki, the numbers are from the Bureau of Labor Statistics Current Employment Statistics program. This is the official times series for jobs data in the US. LA had 5,308,200 jobs in 1990. It had 5,264,600 in 2012. That’s a loss of 43,600 jobs. (This is LA metro, and doesn’t include the Inland Empire, which is its own metro area). Whether you agree with Kotkin or not, LA has been one of the worst performers since the end of the Cold War. It’s easy to blame to peace dividend and that surely played a huge role, but as the recent Sriracha shutdown shows. Fixing this stuff seldom looms large in the urbanist dialogue.

  14. SFB says:

    The difference between the Census numbers (showing a growth in LA employment) and the Labor Statistics numbers (showing a drop) are a cyclical effect- 2012 is the end of a long economic downturn. It might be true that LA is lagging other cities for economic opportunity, but it would require a proper analysis, and even assuming there was relative underperformance by LA, there are different possible explanations (see comment #2, above from @Eli). Kotkin has a track record of selecting whatever examples he needs to fit his agenda, so we can’t rely on him for anything.

  15. Keep in mind that LA’s recent population growth is nothing to write home about either. It only grew by 3.75% during the 2000s. Clearly there are more than cyclical trends at work. LA is a “sick man” metro. (Contrast with the Bay Area).

  16. Alon Levy says:

    Okay, so if your idea of LA excludes its fastest-growing exurbs, then it doesn’t have much population growth. And this is interesting because… why exactly? The job numbers are at least interesting insofar as they imply the area is undergoing job sprawl, but the population growth numbers are completely predictable and say very little about the health of the SoCal economy.

    Also, Alki, you’re giving Kotkin too much credit when you say he champions “undisciplined growth.” In fact Kotkihn wants growth to be disciplined, with zoning restrictions that prohibit higher density. When Hollywood proposed permitting taller buildings, he opposed it on the grounds that it’s forcing people to live in high-rises. Sprawl isn’t the result of unplanned market forces responding to popular desire. It’s the result of a century of government regulations passed by vile people who associate urban density with non-mainstream culture (this was ethnic white enclaves in the late 19th century, and is unreal America today) and engage in urban planning aimed at squashing it, forcing everyone to be their idea of normal. When Kotkin et al say “the middle class,” they never mean people who have a certain range of incomes; they mean people whose cultural values they approve of. Kotkin’s innovation is that he’s not nativist about it; he’s okay with immigrants, as long as they act and aspire to be exactly like Americans.

  17. Tone says:

    It’s not particularly surprising that a big Metro area like LA has slow growth. That’s what happens to mature economies.

  18. Alki says:

    @Aaron…….there is no question that Metro LA’s boom days are over. Not arguing that point. What I am saying is that a metro area doesn’t add 1.5 million people with no job growth. Forget the LA metro area………even LA county had population growth from 1990-2010….nearly 1 million people were added:

    http://en.wikipedia.org/wiki/Los_Angeles_County,_California#Demographics

    And while I didn’t have time to research BLS…….ironically, I did find this chart from New Geography:

    http://www.newgeography.com/content/00515-average-annual-employment-growth-top-metro-areas-1990-2008

    It shows average annual job growth of .45% for LA metro from 1990 to 2008.

  19. Alki says:

    @Alon Levy……yeah, I see sprawl as undisciplined…..but as you point out, it. in fact, has been regulated into existence. Kotkin has an unremitting love for suburbs and an equally unremitting hatred for cities. Its rather remarkable.

  20. All I’m saying is that LA has fewer jobs than in 1990, which is true. If you don’t believe the Bureau of Labor Statistics, that’s fine, but those are the numbers the world uses.

    A surprisingly large number of people are indeed collecting benefits of some form. Over 100 million people live in households where at least one person is receiving a form of means-tested government benefits. There are 47 million people on food stamps alone. As California has the highest poverty rate in the country (especially using the new supplemental methodology that accounts for cost of living), it isn’t hard to speculate that a heckuva lot of Californians are receiving benefits of some sort, or otherwise using living arrangements like extended family households to make ends meet. (I don’t know for sure the data on the LA area or I’d give it to you).

    Keep in mind that during the 2000s the United States added 27 million people, but lost almost 2 million jobs. I don’t think people appreciate how bad the employment situation has been in recent years, particularly for people at the low end of the economic spectrum (hence the growth in benefit recipients).

  21. Alon Levy says:

    Over 100 million people live in households where at least one person is receiving a form of means-tested government benefits.

    And for either a majority or a near-majority it’s just Medicaid.

    As California has the highest poverty rate in the country…

    …only if you use a supplemental poverty measure adjusted by rent index. No “especially” there. Big difference between “expensive housing” and “expensive everything” – they’re correlated, but housing cost indices tend to overshoot overall cost indices (and can be especially misleading if they only look at market-rate housing, but I don’t know if the index in question makes that mistake). Without rent index adjustment, California has lower supplemental poverty than Texas, Indiana, and several other states.

    it isn’t hard to speculate that a heckuva lot of Californians are receiving benefits of some sort

    Since we’re discussing Kotkin, let me remind everyone that Kotkin is a big booster of the economy of North Dakota, a state that receives $1.46 in federal spending per dollar it pays in federal taxes. California gets $0.92. Receive Medicaid or food stamps, and you’re hopelessly dependent. Receive farm aid, resource extraction subsidies, and road subsidies, and you’re the next economic success story and you’re helping the middle class grow. And mobility. Always mobility. That word sounds so good.

  22. Alon Levy says:

    The link in the above comment doesn’t work for some reason. Here is a working version:

    https://www.census.gov/hhes/povmeas/methodology/supplemental/research/Renwick2009RevisedTables.pdf

  23. You’ve convinced me, Alon. Let’s start cancelling benefits to all these fake poor Californians who are only exploiting some statistical quirks. That should help top off Calpers pension fund.

  24. h st ll says:

    Aaron you sound mad. Alon destroyed your and Kotkin’s argument. You can admit it.

  25. h st ll says:

    Also to piggyback one of Alon’s points, Texas is now a net donor state (that Ca, among others, is subsidizing). Not too mention California having a 20% larger average income etc

    http://www.dallasnews.com/news/politics/headlines/20120805-texas-can-no-longer-complain-that-it-gives-more-than-it-gets-from-federal-government.ece

    “And the situation is not likely to flip back soon: With an exploding population of younger, more urban and increasingly poor residents — and a state government making cuts to its already minimal spending — more Texans will rely on the federal government for basic services in the years to come.
    The federal government spent about $9,000 per Texan in 2010. The state spent $2,200 — one of the lowest outlays in the country, according to the National Association of State Budget Officers.
    “If not for federal money, there just wouldn’t be much provided at all in some public services, and it’s pretty low to begin with,” said Eva De Luna Castro, a budget analyst for the Center for Public Policy Priorities in Austin, which advocates for poor and middle-income Texans. “We’re at the mercy of whatever happens in D.C.””

  26. h st ll says:

    err Texas is a net RECIPIENT state.

  27. Tone says:

    “All I’m saying is that LA has fewer jobs than in 1990, which is true. If you don’t believe the Bureau of Labor Statistics, that’s fine, but those are the numbers the world uses.”

    There is nothing controversial about this. It’s a fact taht the LA metro has had slow growth. Not sure why anyone would attempt to debate this.

  28. SFB says:

    @Tone
    The statistics are controversial, because 2012- the point when the reading was taken- is at the nadir of the economic cycle. The correct measure to use would be % job growth in LA over the last 5 years relative to the broader US. I have no idea how LA would compare on that metric.

  29. SFB says:

    @Tone
    Somebody might want to debate the statistics because they care about not drawing perverse conclusions based on cyclical factors.

  30. Tone says:

    Real GDP growth for 3 largest metros from 2010-2012:

    NY – 3.6%, 1.1%, 1.4%
    LA – -1.1%, 1.2%, 3.1%
    Chicago – 2.1%, 2.0%, 2.4%

  31. SFB says:

    @Tone,
    Those figures are more useful, but the 3.1% growth in 2012 hardly supports the idea that LA is lagging terribly. Probably LA got hit harder during the downturn because a greater proportion of its economy is contingent on discretionary entertainment-related spending; but it is growing more quickly now as people finally find a few more dollars for fun.

  32. Alon Levy says:

    Is Texas really a net recipient? The 2009 and 2010 data have it as a net donor, as long as you remember to adjust for the federal deficit. Texas got more money in federal spending than it paid in federal taxes those years, as did nearly all other states, because the US as a whole had way more federal spending than federal taxes. If you divide by the deficit, such that the US average should be $1.00, then Texas is still a net donor, and got $0.86 in 2010, actually a hair less than California’s $0.88 (link). North Dakota’s $1.47 is after this adjustment. Texas has a serious urban economy. It’s based on polluting industries and professional services to polluting industries, but it generates economic value. It’s North Dakota that’s a smug mining operation living off of taxes paid by poorer states.

  33. Tone says:

    Real Household income growth from 2011-2012 in top three metros:

    NY – 0.2%
    LA – -0.8%
    Chicago – 1.2%

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