Water, Crime, Unions, Housing, Workforce, South Bay Investments
Quote of the Week
"The moral of the story is that the Omicron wave, the war in Ukraine and new lockdowns in China were more costly for growth abroad than they were at home. Domestic spending was remarkably resilient. It actually accelerated.”
Diane Swonk, chief economist for the accounting firm Grant Thornton
Big Picture
The California Coastal Commission recently recommended denying approval of a Huntington Beach based desalination plant that would produce 50 million gallons of drinking water per day, enough for 16% of the homes in the Orange County Water District, where 2.5 million people live.
The company making the $1.4 billion proposal, Poseidon Water, has operated a similar plant, the largest in the United States, down the coast in Carlsbad since 2015.
The commission’s staff highlighted a number of negative impacts the proposed project would have on the environment, including new data around more susceptibility to sea-level rise than was first understood when it was first proposed 25 years ago.
In response Governor Gavin Newsom stated that the desalination project should be approved — “We need more damn tools in the toolkit.”
But this is par for the course for CA.
Projects like these obviously have both positive and negative impacts on the environment. In this case, and another one I will reference below, public officials seemed to have the same play book - delay, delay, delay.
Meanwhile the private sector investors involved have to continue to defend a solid business plan that is filling a market need that is only growing. While other investors watch and learn.
The tacit of delay, delay, delay, always gets to the point where an argument can be made periodically by public officials that "things have changed" and therefore the project is no longer viable as first proposed. Then "please provide us a new proposal", as if cost was no object.
Another example of this behavior is with the SCIG project at the port of Los Angeles. It has been debated and delayed for almost 15 years, while the port of LA continues to deal with some of its worst congestion in decades.
Delay, delay, delay, on this project opened that door for the same "Things have changed" argument and a call more and more proposals. As the costs skyrocket and investors start thinking about other states to invest in.
California currently has 12 seawater desalination facilities in operation and desalination is widely used in other parts of the world, including the Middle East, but has been slower to catch on in the U.S.
The major reason has always been that takes a great deal of electricity to separate the salt from water, making the process unattractive for communities that have cheaper sources. But our environment is changing fast and we need technology more than ever to provide the water that will support where and how we want to live.
Let's not forget that the invention of reverse osmosis started with Sidney Loeb who studied for his Ph.D. at UCLA in the early 1960s. No one in the US really embraced what he discovered, so he moved to Israel where his expertise was quickly put to work with Israel’s first industrial-sized reverse-osmosis desalination plant launched in 2005.
Today, Israel sets the standard on water use and is a world leader in the exporting of water technologies. California should be no different.
Recommended reading: Let There Be Water: Israel's Solution for a Water-Starved Worldby by Seth M. Siegel.
LA's Water Supply
Wake up call: Though the average Southern Californian typically uses 125 gallons of water per day, the Metropolitan Water District currently has only about 80 gallons of water per person per day for the most water-starved sections of Ventura, San Bernardino and Los Angeles Counties.
Context: There’s a chance that the current megadrought in the Western U.S. (the worst drought in the region in 1,200 years) might last until 2030. (Fast Company)
LA's plans: Cities like L.A. are undergoing redesign initiatives—including lawn-free landscaping, streets that can better capture stormwater, and new water recycling technology—to deal with shortages in ways that go beyond the temporary new restrictions.
Initiatives:
L.A. County runs a “cash for grass” program that gives residents a rebate for replacing grass with drought-tolerant plants, which has already eliminated more than 2 million square feet of turf.
California cities can also save water by plugging leaks in pipelines and homes. Inside, switching to more efficient washing machines, showers, dishwashers, and other equipment can help reduce water use; along with reducing outdoor watering and fixing leaks, a recent Pacific Institute report estimates that such measures could allow cities to cut water use by 30% to 48%.
Future: Local governments might eventually decide to ban “nonfunctional grass,” following the example of Las Vegas, where lawns are now banned for decoration at offices or in medians.
Big investments:
Retrofitting more neighborhoods to better capture stormwater.
Hyperion, a sewage treatment plant near the beach next to LAX, currently treats wastewater and then dumps it into the ocean.
New technology being installed at the plant will filter and treat the water so that it’s clean enough to send into groundwater instead, for eventual reuse.
By 2035, the project expects to produce more than 200 million gallons of water per day, enough to meet nearly a third of L.A.’s water demand.
Local water authorities are also beginning to work to clean up contaminated groundwater, a process that is expensive but now worth doing in the face of extreme water shortages.
Eventually, the area may also use desalination plants that process ocean water into drinking water, though the technology still has challenges.
Ag: At some point the state may also rethink how water is used by agriculture. Some 80% of the state’s water goes to farming, not cities, and arguably some of the produce grown in California’s Central Valley might make more sense to grow in regions that get more rain (or, potentially, in indoor vertical farms that use 90% less water than traditional field farms).
Good News for Leisure & Hospitality Workers
The lowest-income workers are seeing big increases in pay.
Chart:
Total compensation for all workers in the U.S. in Q1 was up 4.5% from last year.
Total comp in the leisure and hospitality sector rose 8.4% year over year.
Looking back: During COVID LA’s regional economy was particularly hard hit by the COVID economic shutdown with ~40% of jobs at risk. The majority were tied to these industries.
Today: Leisure and hospitality employment increased 28 percent over this past year in the LA metro area.
Data: Employment in leisure and hospitality increased by 5,800 jobs. Within this sector:
Accommodations and food services registered 84 percent of the gain, adding 4,900 jobs
Arts, entertainment and recreation posted 900 job additions
Food services and drinking places provided most of the momentum in accommodations and food services, adding adding 3,800 jobs.
MidSize Cities & Jobs
Midsize cities - pop. under 2.3 million - in states with fairly low income taxes, or none at all are hot job markets. (WSJ)
They are: Austin, Texas; Nashville, Tenn.; Raleigh, N.C.; Salt Lake City; and Jacksonville, Fla.
Commonalities:
They are home to large universities, state capitals or high-tech employers.
Florida, Texas and Tennessee have no personal state income tax, while North Carolina and Utah have income and corporate tax rates of roughly 5% or less.
Challenge: Employers find it hard to get staff in an array of sectors.
Larger cities remained at the bottom of the rankings this year. New York took 41st place, Chicago was 40th and Los Angeles was 26th.
Why: Many workers left larger cities during the pandemic, seeking out jobs they could perform remotely in smaller, more affordable areas in the South and West.
What's next: That could reverse, if more employers require in-person attendance and workers return to downtown offices and worksites.
Chart: Good news for CA’s tech and entertainment hubs dominate the rankings in one area: the fastest-growing salaries. Of the 10 large cities with the fastest wage growth in 2021, six of them were on the West Coast: San Jose, Calif., San Francisco, Seattle, Fresno, Calif., San Diego and Los Angeles.
Yet: While rising wages are generally good news for workers, the steep increases in some West Coast cities reflect that workers are migrating to less expensive areas.
The South Bay is the Place to Invest
Trends:
In 2021, 333 multifamily properties sold in the market, up from 198 the year before.
In 2021, 26 office buildings traded hands, up from 21 the year before.
Industrial sales have held relatively steady.
Multifamily developments are in high demand in Long Beach, where a lot of new developments are planned or have opened.
Why: Proximity to the ports, beach, L.A. and Orange County.
Residential: New companies in area are attracting people wanting to live in the area.
Listen up LA: The economic drivers in place in the area are significant and from a business standpoint, the region's cities, like Long Beach, are extremely business-friendly and pro-development.
Private Sector Unions Have Some New Fans
Support for labor unions among college graduates has increased from 55% in the late 1990s to around 70% in the last few years.
It is even higher among younger college graduates. (NYT)
Explanation:
The college-educated have taken more frontline jobs at companies like Starbucks and Amazon.
It was harder for them to reach the middle class than for previous generations.
In many cases, the workers have endured bouts of unemployment.
Complain of being trapped in jobs that don’t make good use of their skills.
New Mentality:
The economic grand bargain available to their parents — go to college, work hard, enjoy a comfortable lifestyle — has broken down.
Any they see unionizing as a way to resurrect it.
Context: Jesse Rothstein, a former chief economist of the U.S. Labor Department, found in a 2021 paper that the job prospects for recent college graduates began to weaken around 2005, then suffered a significant blow during the Great Recession and had not fully recovered a decade later.
Gen Z Stands Down
It is a challenge to get Gen Z workers to work in person all the time.
That's based on survey findings from ADP Research Institute. The new report, "People at Work 2022: A Global Workforce View".
Data: 71% of 18 to 24 year olds said that "if my employer insisted on me returning to my workplace full-time, I would consider looking for another job." That's a higher rate than among older workers - 64%.
Solutions: More flexibility in work hours and locations could be a way to attract and retain workers hesitant to go back in the office full-time.
Challenge: The dichotomy between people who have to go into the office and who don't. Companies should be aware and make sure that they are providing the same employee experience and career progression to their on-site workers as they are their remote workers to keep those workers engaged and retained.
Stolen Guns Tied to Rise in Killings
Gun thefts are on the rise in major cities across the U.S., a factor police and criminologists say is helping fuel the growing homicide rate.
Data: The number of stolen guns reported to police rose by 29% in 10 major U.S. cities over the past two years. (WSJ)
Why:
The number of federal background checks for gun purchases hit 21 million in 2020, a record.
First-time gun owners guns are frequently being stolen from cars after their owners left them there, something more-experienced owners know not to do.
LA Chart: There were 100 people shot in the city in March. That is lower than any time in the past six months, and far below the 140 victims struck by gunfire last August. However, it is more than any other March since 2018. (xtown)
Leadership in the Community
City Year Los Angeles was built on the belief more than three decades ago that uniting and empowering diverse teams of idealistic young people and supporting them as they solve some of our country’s most difficult challenges can change the world for the better.
Please help them celebrate 15 years of service to the students of LA at their Annual fundraiser, Spring Break, on Saturday May 7 at Sony Studios.
Check out the Sponsorship Menu for Spring Break here and for more information or for sponsorship opportunities, contact Dana Mangaliman Perez at dmperez@cityyear.org.