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Wednesday, Feb 1, 2023

Los Angeles Has Work to Do on Job Creation

Cleveland and Detroit – cities that have become shorthand for widespread urban failure – have nothing on Los Angeles when it comes to long-term decline in payroll jobs. Dead last among major U.S. cities, Los Angeles has lost a painful 3.1 percent of its payroll jobs since 1990, even as the population grew nearly 11 percent. By contrast, payroll jobs in the United States overall grew by 26 percent during the same period.

As the UCLA Anderson Forecast makes clear, the recent modest economic bounce masks a long-term jobs crisis. City government is staggering under a heavy burden of pension liabilities and neglected infrastructure. These burdens will crush us if we endure another two decades of job losses. It’s time for Los Angeles to wake up; in fact, it’s well past time.

There is a lesson to be learned in Northern California. The popular myth is that San Francisco and Santa Clara counties are booming with plentiful tech jobs, but of the region’s two biggest cities, San Jose has lost 3 percent of its job base since 2000 and San Francisco has gained a modest 1.5 percent. This highlights what happens when the transformative forces of global trade and the microprocessor are unleashed before we are fully prepared: terrific jobs, but only for the highly skilled.

Efforts to foster job growth must focus on multiple strategies. First, we need to attract, foster and retain the entrepreneurs, innovators and creative types who are driving economic growth in the postindustrial world. And we must nurture an educational system that can prepare the rest of us for good jobs in an increasingly globalized, technology-intensive world, where robots and microprocessors are displacing workers faster than the workers can be retrained. Robots work long hours for low wages in crummy working conditions – and they never join unions.

The attributes that once positioned Los Angeles as a global gateway city – and might yet again – are threatened. Ports, rail lines and highways are vital links in the transport of goods and raw materials, but traffic congestion, potholes, cracked sidewalks and aging bridges reduce the usefulness of this infrastructure that supports thousands of middle-class jobs.

Public infrastructure

Quality-of-life public infrastructure is also crucial to attracting talented creative types who have many options but choose to live where there can find quality affordable schools, nice neighborhoods, biking and hiking trails, and easy commutes. That no longer describes much of Los Angeles. The city grew up in an autocentric age, when the critical public assets were roads that quickly and easily got us to our far-flung private castles in the suburbs. Those roads are now jammed and few public or natural spaces survive. Yes, there’s Silicon Beach in Santa Monica and Venice, in part because the one thing we could not pave over was the ocean.

Idyllic winters are not enough to attract potential employers or keep those already here – such as Northrop Grumman, Occidental Petroleum and Dimensional Fund Advisors – when their core markets shift elsewhere and the cost of staying includes disproportionate bureaucratic hurdles and high taxes. They take good jobs with them when they leave.

Quality, affordable education at every level can help attract, create and keep jobs in Los Angeles. Yet Los Angeles ranks fifth from the bottom among 30 large cities in overall educational attainment, and that’s a measure that counts only years of schooling, not quality. Years are not enough. In this era of microprocessors and robots, students need to be problem-solvers, analytical thinkers, curious and creative – human talents that computers can’t match … yet.

UCLA Anderson School of Management, for example, draws talent to Los Angeles. About 40 percent of our incoming students are California residents. A decade after graduation, however, about 78 percent of our alumni remain in California – a majority in Southern California. They create ventures, expand established companies and provide economic benefits that lift their surrounding communities.

Talented graduates are eager to turn what they’ve learned into reality and Los Angeles can be a promising training ground to launch 21st century global careers. The diversity of Los Angeles – a microcosm of globalization with so many ethnicities, languages and cultures – is a strength. Yet we fail to develop that potential if we can’t create enough of the types of jobs that give talent a reason to stay.

The reach of public universities like UCLA extends far beyond the walls of its labs or classrooms because its faculty, programs and students have the potential to improve the business, education, health, infrastructure and cultural life of the city. Yet we too must do a better job of putting our research into practice as well as imparting knowledge and skills at a cost that does not exclude all but the very rich.

Of course, job growth won’t accelerate just by investing in and reforming K-12 and higher education unless we also address fundamental quality-of-life issues such as affordable housing, commuting and a business climate many view as inhospitable. But universities like ours are crucial to build on the special assets of Los Angeles to create a growing 21st century economy. Los Angeles has always attracted the dreamers and innovators who create opportunity and spawn new ventures.

We ignore the lessons of Detroit and Cleveland at our peril. It’s time for all of us in Los Angeles to wake up and rebuild.

Edward E. Leamer is director of the UCLA Anderson Forecast. Judy D. Olian is dean of the UCLA Anderson School of Management.


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