Growth is the Answer: The Question is Where Do We Start?
Quote of the Week
"Recovering our workforce is not about the employed vs. unemployed; it’s about the unengaged."
The Demographic Drought: Bridging the gap in our Labor Force
The Big Picture
What contributes to a region's success is growth. Whether its population, good paying jobs, private sector investment, skilled workers, new businesses, to name a few.
Recent data from the Metropolitan Policy Program at Brookings shows that from 2010-2020, many major U.S. cities grew faster than the previous decade, while Los Angeles' growth declined during the past three decades, reaching a new low of 2.8% in the last ten years.
LA’s slow growth started in the 1990s, even as young movers, especially millennials, flocked to major cities in the aftermath of the 2007-2009 Great Recession. At the time suburban and small city housing and employment opportunities were less available.
Today there are more and more opportunities in a growing number of cities throughout the U.S.
Eight of the 10 million-plus cities bested their early 2000s growth, including New York, which registered a 7.7% gain, and led by Phoenix and Houston, at rates of 11.2% and 9.8% respectively.
What is driving these trends is the economic and lifestyle opportunities these regions are able to offer their residents, from a diverse range of good paying jobs, lower taxes, more affordable housing, business friendly policies, and a better quality of life. All things needed to build an economy around.
LA made some other bets, with some upsides and downsides:
LA went all in during the past 15 years building out and modernizing its physical infrastructure - LAX, Metro, Port, LADWP, etc. And though these projects have invested billions into the region to facilitate people, goods and resources, and provided good paying jobs, they have not been enough to stimulate the growth we need to build a more diverse economy.
LA promoted tourism and succeeded in attracting 50 million visitors (pre-covid) who spent billions in LA’s communities, generated hundreds of millions in tax dollars for city funds, and supported hundreds of thousands of jobs. But COVID’s impact on this industry was devastating and recovery efforts continue.
LA became a hotbed for Hollywood’s demand for content, aerospace’s and technology’s demand for engineers and healthcare and life sciences demand for talent. Yet, most of these growing industries tend to be capital rich, while lacking the economic footprint (civic and community leadership, workforce, tax base, etc.) to qualify as a true economic anchor. They also tend to compete with one another for the region’s limited pool of highly skilled and well compensated talent.
But the public sector took their eye off the ball on a number of things that I have written about before.
I recently discovered this quote from 2013, from LA’s newly elected Mayor Eric Garcetti who was asked about LA losing headquarters and his response was “I realized one daily transoceanic flight was worth more than a Fortune 500 company.”
And a comment from former City Council member Jose Huizar who was under surveillance “I don’t give a F… about affordable housing.”
No wonder why more companies continue to decide to invest and grow outside the City of LA’s boundaries.
The chart below shows what regions in Southern California have grown the most as job centers, which ones maintained their status and the losers. One will notice the growth that is happening is outside the central location of LA. (With the expansion of Apple and other companies I should update this chart with Culver City.)
The chart below from Brookings also highlights another challenge for the entire LA metro region. Change in jobs at young firms is down -11.1% in the past decade. Not a good indicator of growth!
Today the jobs recovery is gaining steam in a number of U.S. metros, according to a recent update from the Economic Innovation group, except, the LA Metro job numbers are down 5.2% within the last year.
As we move further into 2022 it is likely that more metros will speed up their recovery and with the right initiatives in place LA should find itself in the positive growth column by the end of the year.
But it needs to do a number of things to make that happen. Starting with looking at increasing the number of employment opportunities in the region and helping Angelenos secure the skills to get those jobs.
The Los Angeles Economic and Workforce Development Board has identified great opportunities as unique to the basin due to supplier specializations, diverse industry clusters, and labor market pooling.
These sectors are: Advanced/Clean Manufacturing, Healthcare, Biosciences and Biotechnology, Green Technology, Information Technology (IT), Security, Logistics, and Utilities.
The County’s and City’s workforce investment board manages the spending of more than $100 million (I know the city’s number is $50m, but cannot figure out the overall county spend) in public funds annually to help Angelenos acquire the skills and training necessary to secure some of these jobs.
The problem is the public and private sector do not know which programs best train the most employees, lead to the biggest wage gains, satisfy employers the most, and squeeze the best results out of every dollar.
It is estimated that only 43% of the local workforce is educated or trained to the middle-skill level, while 44% are low-skilled workers competing for a dwindling number of low-skill jobs.
While many of LA’s leading and competitive industries have occupations that require both substantial work experience and education beyond a high school diploma.
Addressing this “skills gap” through education and training is critical to developing a vibrant labor force that meets the needs of high-demand employment sectors in the Los Angeles.
Both public and private sectors need to better mobilize the business and workforce communities to develop this workforce and that starts with better leveraging of federal, state, and local resources to close skills gaps and require better metrics for tracking the results of the public money we spend on job development and direct funds to the most effective and efficient programs.
Followed by upscaling of apprenticeship opportunities to equip a new labor force with necessary skills and training to individually advance career pathways and reduce Los Angeles’ middle-skill employment gap.
That is how you engage Angelenos in their own future and LA’s future.
I would like to challenge whoever is the next Mayor of LA to raise the City’s labor force participation rate by three percentage points, bringing it from 64% to 67%. That alone would bring 100,000 Angelenos into the workforce and hopefully in to jobs that not only provide great wages but a career path.
Britain’s rate stands at 77% and Germany’s at 76%. We should strive to be more like our global peers in labor force participation. That is one path to growing LA.