The latest UCLA Anderson Forecast finds that while the local economy is benefiting from a growth in information sector jobs, the region could be doing better.

L.A. County’s information sector grew by 17 percent from 2005 to 2013, just cracking the Top 10 nationwide. At the same time, the area’s $80,400 average information sector salary ranked 21st in the nation.

William Yu, co-author of the forecast and economist at Anderson, said tech is still a bright spot for the regional economy, but said housing, regulation and education needed to be addressed to help it grow faster.

Question: What did you find was driving Silicon Beach growth?

Answer: From 2007 to 2013, the number of information sector firms increased a lot in Silicon Beach, West Los Angeles, Glendale and West Hollywood. It’s because we have a high percentage of entertainment businesses and we have a very vibrant startup and entrepreneurship spirit in Los Angeles.

What does that mean for job growth?

A lot of small firms popping up is a good thing, but it would be even better if these small firms could grow to mid-sized firms. That would be better because it would create more jobs. Tech can create income and wealth for the producer rapidly. Because of that their purchasing power will increase. The multiplier effect in the high-tech sector is very high; one additional job in the information high-tech sector will create five jobs in other sectors.

Is tech growth compensating for losses in other industries?

From 2001 to 2013, manufacturing jobs declined across the country. But the difference between Los Angeles and the Bay Area is, although their manufacturing sector is shrinking, they are able to compensate with the rapid increase of the information sector. We’re growing in recent years, but from a long-term perspective we are not growing fast enough.

There have been large amounts of venture capital pouring into L.A. tech companies, should we be worried about a bubble?

Investment still isn’t at the level of 1999, but you can see eventually there will be a small bubble burst in individual companies, not the whole industry. Los Angeles might be less vulnerable; we are pretty diverse. Not like San Francisco which is mostly information, software and application companies.

L.A. tech firms have concentrated in Santa Monica, any indication they will spread to other parts of L.A. County?

Absolutely. Housing is limited in Santa Monica. This kind of supply constraint will definitely limit the growth of tech companies. That is why we saw growth in Venice. We have some things downtown that are popping up, and its creating a revival. West Hollywood also is very vibrant.

The tech sector has been blamed for driving up real estate prices on the Westside. Any substance to that?

Because the purchasing power of tech is rapidly increasing and tech workers are more likely to buy a house in their local area, it is causing some kind of increase in housing prices. In the coastal areas of Los Angeles housing prices have increased faster than the pace of salaries because the housing supply is not very elastic: developers cannot build in those areas.

What needs to change in Los Angeles to boost the L.A. tech economy?

There are three things, and they are not just applied to tech companies.

Business friendliness: Los Angeles does not rank high compared to other cities due to regulations, zoning, red tape and a lot of things.

High cost of living: This is because of housing supply constraint. We should be more accommodating in terms of building. The only way to increase housing supply is to build up. That would also be very good for our future because high density would make our mass transportation more efficient.

Improve our human capital: We have low levels of human capital, the knowledge and habits needed to succeed at work. We need to help people to succeed in the 21st century. It’s not that easy to succeed in this economy without a college degree. In the past you might be able to get a job without a high school diploma, now you can’t get a job without a college degree. The next generation of Angelenos, we should educate them so companies can hire them.