LA's Entrepreneurs are the Key to a More Equitable Economy
Quote of the Week
“A new type of career path has emerged, with half of the Gen Z [age 18 to 22] talent pool actually choosing to start their careers in freelance rather than full-time employment.”
Hayden Brown, Upwork Inc. Chief Executive
Big Picture
Last week I met an entrepreneur from the San Gabriel Valley who is in the process of redeveloping a commercial property into a ghost kitchen to support her food business, along with other small businesses in her community.
She is now in her third year on this project and had a lot to say about the bureaucracy of LA County.
Her request to add a drive through required her to tear down the entire building and rebuild it slightly to the side and back a few feet. Which they have done.
Even after going through other hoops, she continues to wait on someone at the county to set a hearing to advance the project forward. Meanwhile she keeps paying the bills - electricity, water, taxes, etc., which have now reached into the tens of thousands of dollars.
When her development is completed, it will support an estimated 25 jobs.
Why does this matter?
The LA Metro region has the nation's highest unemployment rate for metros areas. (See chart) By the numbers California in total has 1.4 million residents who are unemployed and 400,000 of them reside in LA County.
This group is part of a growing number of Californians, one in six, who receive some form of government assistance because they either do not have a job, lack the skills to secure a job, or do earn enough to cover the rising costs of living in California.
For some, the prospects of self-employment, has become much more alluring. The percentage of self-employed Americans has reached its highest level in the past 11 years.
A March survey conducted by Gusto and the National Assn. of Women Business Owners found that of the women who started new businesses during the pandemic, nearly half were women of color. They were more than twice as likely as white women to say that they started their new businesses because they were laid off or worried about their financial situation.
LA County has long been home to a large segment of minority and women owned businesses, but more of them are finding our state and local government much more receptive to taxing and regulating them, then being responsive to them, as my opening comments suggest.
The good news is that LA's economy continues to evolve with good paying jobs in manufacturing, entertainment, tech, new space, and aerospace jobs, to name a few, but at the same time we are producing too many low paying jobs, which forces our public sector to grow in order to provide services and programs to those in greatest need.
The County of LA is now the region's largest employer with almost 115,000 people and an example on how government continues to become less of a catalyst to fostering economic growth and more a substitute for it.
The path forward will require a better balance and that starts with the development of a diverse business advisory cabinet that will work with our public sector leaders on a pro-economy and pro-jobs agenda that immediately focus es on those local ordinances and policies that continue to forestal economic growth in the region.
Business leaders should demand and deserve a consistent seat at the table to offer meaningful and substantive input to help the city and county attract private sector investment, businesses, skilled talent, and an integration into the global economy; all things that have historically helped improve a region's living standards.
Until then, It would be great if just one of the County's 115,000 employers could pick up the phone and help an entrepreneur achieve their dream, while putting Angelenos back to work.
Stat of the Week
Economists at JPMorgan Chase estimate the U.S. immigrant population this year is about three million lower than if pre-2017 immigration trends had continued.
Millennials Confront High Inflation for the First Time
The good news for younger workers is that it isn’t just prices that are going up; pay is rising, too, especially for less-skilled workers and the very young.
The bad news is that for the typical worker between 25 and 34 years old, price increases have been outpacing wage gains in recent months. (NYT)
How are they paying for things: 16% of Americans have earned money doing household chores and running errands for other people via online apps and websites. (Pew Research Center)
Data:
30% of people ages 18-29 did such jobs, compared with 18% of people ages 30-49. The ratio was lower among older people.
30% of Hispanics did so, compares with 20% of Black people, 19% of Asians and 12% of White people.
25% of lower-income people have done these jobs, compared with 13% of middle-income people and 9% of high-income earners.
More than half of the online gig workers said they wanted to save extra money or cover gaps in their incomes.
Roughly six in 10 gig workers said the money they earned has been essential or important for meeting their basic needs.
SoCal's Enviro Foot Print
On average 1 in every 7 tanks of gas, diesel or jet fuel pumped in southern California last year came from the Amazon rainforest.
Among the top 25 largest corporate consumers are companies such as Costco, PepsiCo and Amazon, according to a report by the environmental groups Stand.earth and Amazon Watch.
Workers Become Their Own Bosses
The % of U.S. workers who are self-employed has risen to the highest in 11 years.
Data:
In October, they represented 5.9% of U.S. workers, versus 5.4% in February 2020.
The number of unincorporated self-employed workers has risen by 500,000 since the start of the pandemic, Labor Department data show, to 9.44 million.
This year, the share of U.S. workers who work for a company with at least 1,000 employees has fallen for the first time since 2004.
Why: More people are looking for flexibility, anxious about covid exposure, upset about vaccine mandates or simply disenchanted with pre-pandemic office life.
Who exactly:
Women, especially those who had never before started a business, took up entrepreneurship, spurring a wave of first-time business ventures that experts say is a pandemic silver lining worth investing in.
Human resources platform firm Gusto found that 49% of people who started businesses during 2020 were women, up from 27% in recent years, according to a May survey of about 1,500 business owners who used Gusto’s software.
A March survey conducted by Gusto and the National Assn. of Women Business Owners found that of the women who started new businesses during the pandemic, nearly half were women of color. They were more than twice as likely as white women to say that they started their new businesses because they were laid off or worried about their financial situation. (LA Times)
Chart: Monthly volume of business applications (WSJ)
LA's Startup Scene
dot.LA has produced one image where they tried to best represent the collection of the thousands of startups that call greater LA home. (illustrator Semira Chadorchi)
Where is the money going:This recently updated investor list hosts a ton of information, along with another list highlighting Angels (300 active venture firms and 100 angels) that have a physical presence in LA or the SoCal area today.
Community Leadership
Cal State Long Beach is ranked the No. 3 university in the nation for advancing economic and social mobility, according to the newly released 2021 Social Mobility Index, an annual report that measures the extent of a four-year college or university’s impact in providing opportunities for economically disadvantaged students to graduate into well-paying jobs.
The Beach moved up two spots from last year’s Social Mobility Index ranking and from No. 7 in 2019. The Social Mobility Index is calculated on five factors: published tuition, percent of student body whose family income is below $48,000, graduation rate, median salary approximately five years after graduation, and university endowment.
CollegeNET, the organization that publishes the Index, aims to “change the generally accepted value system in the U.S. that views as ‘best’ those institutions that are rich and replace it with one where ‘best’ instead means those institutions that are acting to solve the urgent problem of declining economic mobility in our country.”
In separate rankings, The Beach was recognized as the No. 2 master’s-level university in the nation and the No. 1 university in the West for best value by Washington Monthly. Cal State Long Beach is also a top producer of degrees awarded to Hispanic students.