L.A.’s Economic Slide: A Who-Done-It Written Over Several Decades UCLA Luskin's Michael Storper and Zev Yaroslavsky unravel the past and future of the city at Town Hall Los Angeles gathering

By Stan Paul

Los Angeles has long been the setting for detective stories and Hollywood noir, but the real who-done-it is the region’s economy over the past several decades, according to UCLA Luskin School of Public Affairs researcher and author Michael Storper.

There are false leads and possibly a smoking gun to be found in solving how Los Angeles — a leader among cities for most of the 20th century — began an economic slide after 1970, falling behind regions such as the Bay Area.

Storper, the distinguished professor of regional and international development in the Luskin School’s Department of Urban Planning, put the city’s economic history under a magnifying glass during a conversation with former Los Angeles city councilman and county supervisor Zev Yaroslavsky on Feb. 8, 2017, at a gathering of Town Hall Los Angeles, a nonprofit leadership forum founded in 1937.

“1970 is an interesting moment; it’s not just an arbitrary date,” said Storper, whose comments reflected research from his recent book, “The Rise and Fall of Urban Economies: Lessons from San Francisco and Los Angeles.” “It’s pretty much the time when what we call the old economies about the middle of the 20th century, based principally on manufacturing, began to shift in what we would now call the new economy.”

Just the Facts

“We started with a simple fact that you can see,” said Storper. “We observed that in 1970 the Bay Area and greater Los Angeles were about equal in what we might call their wealth and development level,” using per capita income as a way to measure wealth, he explained. “Today the Bay Area is still number one, but we’re number 25 out of the regions that have more than 2 million people. That’s a really big slippage that does not put us, frankly, in the best of company.”

The time period in question included the IT revolution, finance revolution, “flipping the switch” for more globalization and the development of advanced services, Storper said. So, the Bay Area is now 30 percent richer than Los Angeles. “What that suggests is that the Bay Area somehow managed the transition more successfully than we did here in Southern California,” he said.

Since 1970, the Bay Area gave birth to Silicon Valley, refocused its economy in finance, landed several IT-related corporate headquarters and is currently winning in biotech. By contrast, greater Los Angeles lost high-wage aerospace and defense firms, as well as several corporate headquarters. “We grow in light manufacturing, but light manufacturing is the low-wage part of the economy,” he added.

And, while L.A. has Hollywood, or as Storper calls it, “the bright star, our super-dynamic, supernova,” it is not enough to float a region of 18 million people. “It has huge positive benefits, but it’s just not big enough,” he said.

“We have to ask ourselves, why is this happening, given that L.A. was the envy of the country and the world for much of the 20th century?” Storper said. “And, if you look at L.A., if you roll back the film to 1970, we had more engineers; we had a vibrant entrepreneurial culture; we had more tech firms; we had equal education levels; and we, in many ways, had better infrastructure than the Bay Area did.”

Storper said he is often asked if there is some kind of “optical illusion” at work, given that the Bay Area’s housing is so much more expensive than in L.A. Are people really better off in Northern California?

“The answer is yes,” Storper said. “When you correct for cost of living of each part of the part of the population at each income level, and the amount of money they spent on housing, they still come out with having somewhere between 20 to 25 percent higher per capita income than we do.”

Another question Storper is asked: Is it because L.A. is so much bigger? No, it’s not a question of geographical scale, Storper said. “Seventy-five percent of the population of the Bay Area lives in counties that are higher in per capita income than our richest county, which is Orange County. They have regionwide prosperity up in Northern California.”

Then Who Done It?

Storper said he and his co-researchers started looking into the different core sectors of the economy: aerospace, information technology, entertainment, finance, logistics, trade and biotech. They found very different stories about how IT and biotech firms, business leaders, leadership groups and public agencies use the resources of their regions to establish a foothold in the new economy.

“There’s a really strong business leadership group in the Bay Area,” Storper said. “We didn’t really know where things were going, but the Bay Area Council got on it early in the 1980s and said, ‘The future is in being the high-tech, high-wage, and high-skill economy. We’re never going to make it in manufacturing again. We’re too expensive and there’s no way to roll that back significantly,’ so they pushed a high-road vision for the Bay Area.”

And the Bay Area Council wasn’t acting alone, relying on business leadership networks. Storper said his researchers looked at the major firms of both regions and asked who sits the boards of directors.

“What emerges is an absolutely striking difference,” Storper said. “In the Bay Area it’s highly networked. They are all networked and talking to each other because they are all on each other’s boards of directors.” Not so for Los Angeles. “You look at L.A. and that’s not the case,” he said. “It’s a bunch of separate communities.”

In addition to industry, scientists and university-based researchers are more networked in the northern part of the state, said Storper, citing a seven times more per capita tendency for a university-based researcher to start a firm or to patent something that becomes commercialized in the Bay Area.

“And it’s not because our universities aren’t as good,” he said. “It’s because theirs are more connected than ours.”

For Storper, the core issue is whether we can “rebuild and change the way we do things and in particular rebuild our human connectivity” in order to be innovative and move forward in the new economy.

An Eyewitness

“I think that Michael’s book is one of the most important pieces of literature I’ve read on Los Angeles in an awful long time,” said Yarosklavsky, former Los Angeles councilman and five-term county supervisor, who spoke following Storper’s economic overview. “What it did was hold up a mirror to us those of us in public life, the private sector, stakeholders in the community. It said, ‘Here’s what’s been happening in the last 40 years.’”

Yaroslavsky, who was born and raised in Los Angeles and who has lived a public life as a civic leader, offered his observations.

“There are a lot of factors in why this happened. I think public investment is a huge piece of this puzzle,” said Yaroslavsky, who currently serves as director of the Los Angeles Initiative based at UCLA Luskin.

Investment in transportation is a prime example, according to Yaroslavsky. “Starting 1970 the BART system was under way,” he said. “By the time we cut the ribbon on the first 4.4 miles of the subway in Los Angeles, it was 1993.”

Going back to the early 1970s, Yaroslavsky said that San Francisco had plateaued while Los Angeles seemed to be on a roll.

“The Korean and Vietnam wars, the Cold War, the space race, and the aircraft and aerospace industries were a backbone of the regional economy, and there was no thought that this would dissipate any time soon,” he said. “As a result, San Francisco’s business leaders looked ahead to position their region for the economy of the future, while Los Angeles’ leaders were looking in the rear-view mirror, searching for ways to preserve aerospace, manufacturing, and other industries that had carried it since the war years.”

Yaroslavsky said that, within a span of 20 years, these portions of L.A.’s economic base had diminished or disappeared, while the Bay Area was on its way. And, he said, L.A. is still playing catch-up.

He also pointed out that much of the political power in the state was based in Northern California, citing the influence of Northern Californians as U.S. senators, state legislators and assembly speakers for half of the 40-year period.

“These were important in that considerable public resources were invested in the north to provide infrastructure for the burgeoning industries of the future,” he said. “The Bay Area had a focused vision of where they wanted to go, and their federal and state representatives partnered with them to help make it happen.”

Southern California did not have a similar cohesive, focused civic leadership with a road map of where they wanted to go, Yaroslavsky said. In fact, during this period most of the remaining Fortune 500 corporations that called L.A. home left.

But Yaroslavsky said that there are signs that Southern California is turning the corner, mentioning several voter-approved measures in the last six years that will provide hundreds of billions of dollars of transportation infrastructure investment in this region.

Political power has also shifted in Southern California’s favor, he said. “The leaders of our legislature are both from L.A. county. The region seems to be working more collaboratively in recent years than in the past.”

Yaroslavsky said L.A.’s economic future is promising, but cautioned that this cannot be taken for granted.

“We are competing with other metropolitan areas along the coast, across the country and around the world,” he said. “Investments in our infrastructure — transit, harbor, airports, and communications are critical to facilitate private sector expansion. Public education and housing costs also heavily influence where private investment is made.”

On the Right Track Transit expert Ethan Elkind’s lecture at UCLA Luskin covers railways in Los Angeles from the 1800s to today

By Zev Hurwitz

In a city famous for traffic jams and rush-hour gridlock, a return to rail may be putting Los Angeles on the right track.

Rail lines and transit policy were the focus of a UCLA Luskin School of Public Affairs lecture delivered by professor Ethan Elkind, director of the Climate Program at the UC Berkeley School of Law’s Center for Law, Energy and the Environment (CLEE) on Jan. 25, 2017. Elkind spoke about the history of rail transit in Los Angeles and what the future for trains in the county might look like.

Elkind began with a discussion about the early years of Los Angeles rail. Prior to the rise of the automobile, Los Angeles developed a complex system of electric streetcars, which became the primary mode of public transportation for the region.

“At its heyday, there were 1,164 miles of electric streetcars, covering four counties,” Elkind said. “By 1911, the average Angeleno rode the system at least one ride per day.”

Elkind displayed a map of the old Pacific Electric Railway system and its vast number of routes crisscrossing Southern California — a far cry from the relatively modest number of rail lines in Los Angeles today.

“For many Angelenos, they look at this map and it’s hard not to break down in tears at what used to be,” he said. “From Santa Monica to the San Gabriel Mountains you could literally get wherever you needed to go.”

The last streetcar ride took place in 1961, the demise attributed in part to a shift toward policies that favored automobile drivers, such as widening of streets and development of parking. Additionally, the street cars faced their own popularity decline, due in part to poor maintenance, scheduling issues and operator strikes.

Explosive population growth bred traffic congestion, Elkind said, which led one public figure to make addressing transportation a top issue.

“In 1973, City Councilman Tom Bradley ran for mayor of Los Angeles and for the first time made transit a priority,” Elkind said, noting an “overly ambitious” campaign promise by Bradley to break ground on a new rail line within 18 months of his inauguration.

Rail development in the 1970s was an attractive proposition for municipalities because the federal government granted 80 percent of the funds needed to construct a new rail line, contingent on a 20 percent match by local governments.

Ultimately, several tax-raising measures were passed by county voters that paved the way for the first crop of new rail lines in Los Angeles, beginning with a downtown-to-Long Beach route that opened as the Metro Blue Line in 1990 — nearly 20 years after Bradley’s 18-month promise.

Today, 105 miles of railway track reach different corners of Los Angeles County and draw more than 360,000 riders daily. More tracks are on the way, thanks to the 2016 passage of Proposition M, which raised sales taxes to pay for new rail projects, including an extension of the Purple Line subway to Westwood and a Green Line connector to LAX.

“Two cents of every dollar now go into transit,” Elkind said of Measure M’s passage. “It’s a big win. It will generate over $30 billion for transit over the next 40 years.”

Some obstacles remain for transit in Los Angeles, including an ongoing struggle to make projects more cost effective and efficient and keeping pace with continuing population growth for the region.

Elkind drew much of the material for his lecture from the research for his 2014 book, “Railtown: The Fight for the Los Angeles Metro Rail and the Future of the City.”

Zev Yaroslavsky, former Los Angeles county supervisor and director of the Los Angeles Initiative at UCLA Luskin, introduced Elkind — noting that Elkind had spoken earlier in the day to Yaroslavsky’s undergraduate capstone seminar about the history of transportation in Los Angeles.

“There are a lot of exciting dynamics that are going on in Los Angeles and Southern California in public transportation that are changing the face of the region,” Yaroslavsky said.

The event drew a big crowd that included Luskin and other UCLA students, as well as community members. The lecture was also streamed live online.

First-year MPP student Estefania Zavala attended the lecture because of her interest in transportation policy. “I think it was really interesting to hear about how equity plays a role in the system and what introducing a new Metro station in a really impoverished neighborhood does to gentrifying that neighborhood,” she said. “That’s really interesting to me as a graduate student.”

Transit issues are also personal to her. “It was a little bit frustrating just to hear about inefficiently the system has been laid out,” Zavala said, noting that, as a commuter from Azusa, she wishes that better transit options existed to get her to Westwood.

The Public Policy Department at the Luskin School of Public Affairs co-sponsored the event with the Department of History and the Lewis Center for Regional Policy Studies.

Zev Yaroslavsky

During a career in public life spanning nearly four decades, Zev Yaroslavsky has been at the forefront of Los Angeles County’s biggest issues, including transportation, the environment, health care, and cultural arts.  He has been a pioneering advocate for the region’s homeless population and has played a key role in efforts to reform the county’s law enforcement agencies.

Mr. Yaroslavsky was first elected to office in 1975, stunning the political establishment by winning the Los Angeles City Council’s coveted 5th District seat at the age of 26.  He honed his fiscal skills as chairman of the Council’s Finance Committee and earned a reputation for being unafraid to tackle controversial issues, including the Los Angeles Police Department’s use of excessive force and its improper spying on law-abiding residents.  He authored two landmark ballot initiatives, one which cut in half the size of new commercial developments near residential neighborhoods in the City of L.A., and the other which banned oil drilling along the city’s coastline.

In describing Mr. Yaroslavsky’s City Hall tenure, the Los Angeles Times wrote that he “was more often than not a dominant player in virtually every municipal initiative of note since he joined the City Council.”

In 1994, Mr. Yaroslavsky was elected to the five-member Los Angeles County Board of Supervisors, representing the western part of the county and a constituency of two million people.  He served five terms as the Board’s Third District representative.  Because of term limits, he retired from office on December 1, 2014.  Supervisor Yaroslavsky’s award-winning website, which ran from late 2009 until the end of his term, including blog entries and feature stories on County issues, programs and personalities, can be accessed here.

As a member of the Board of Supervisors, Mr. Yaroslavsky quickly emerged as a leader on fiscal, health care, transportation, cultural and environmental matters.  He authored several landmark ballot initiatives:  the 1996 park bond, which resulted in the preservation of a broad swath of rural open space and the development of urban parks throughout the county, and the 2002 trauma tax, approved by more than 73% of county voters—a measure credited with saving two public hospitals from closure and keeping the county’s emergency services intact.

Mr. Yaroslavsky was the driving force behind several major transit projects, including the hugely successful Orange Line busway across the San Fernando Valley, the Exposition Light Rail line from downtown to Santa Monica which will be completed at the end of 2015, and the subway—Purple Line—extension from Western Ave. to West Los Angeles which broke ground in 2014.

After the closure of Martin Luther King, Jr. hospital in south Los Angeles, Mr. Yaroslavsky proposed a partnership between the University of California and Los Angeles County upon which the recently re-opened hospital was modeled.  Mr. Yaroslavsky also launched the building of three innovative school-based health clinics in largely working-class neighborhoods where many residents are living below the poverty line and rarely seek medical attention.  He also led the effort to provide permanent supportive housing for thousands of homeless persons who’ve been identified as most likely to die if they remained on county streets.

During his public service career, Mr. Yaroslavsky was the county’s leader in the cultural arts.  The Los Angeles Times said of him before he retired, “It would be hard to find another major politician anywhere in the entire country with Yaroslavsky’s record for outright arts support and achievement.” He championed efforts to rebuild and modernize the world famous Hollywood Bowl amphitheater and was instrumental in the development of architect Frank Gehry’s iconic Walt Disney Concert Hall, home of the L.A. Philharmonic Orchestra.  He has also funded major investments in the County Museum of Art, the Museum of Natural History and the San Fernando Valley Performing Arts Center.

Mr. Yaroslavsky is also credited with playing a leading role in the sweeping reforms of the Los Angeles County Sheriff’s Department.  He is responsible for the creation of the Citizen’s Commission on Jail Violence in 2011 which recommended dozens of measures to restore constitutional policing and integrity to the Los Angeles County Sheriff’s Department and its jails.

Apart from his responsibilities as an elected official, Mr. Yaroslavsky has long been associated with the National Democratic Institute (NDI), a non-governmental organization headquartered in Washington, D.C., that promotes the development of democratic institutions in burgeoning democracies.  He has monitored five elections for NDI:  Romania (1990), Mexico (2000), Ukraine (2004), and Nigeria (2011 & 2015).  He has conducted seminars on local government finance and democratic institution-building in Russia, Ukraine, Turkey and Bosnia/Herzegovina.

Mr. Yaroslavsky is now the Director of the Los Angeles Initiative at the UCLA Luskin School of Public Affairs and the Department of History, focusing on the intersection of policy, politics and history of the Los Angeles region.

Mr. Yaroslavsky was born and raised in Los Angeles and earned an M.A. in British Imperial History and a B.A. in Economics and History, both from UCLA.  He is a graduate of Fairfax High School in Los Angeles.

Deep Divisions Along Class and Racial Lines in Los Angeles First Los Angeles County Quality of Life Index finds significant concerns about economic distress and other key issues among many county residents

By George Foulsham

The depth of financial insecurity in Los Angeles County is revealed in a new survey that shows 29 percent of residents have worried about going hungry in the last few years because they could not afford the cost of food, and 31 percent have worried about losing their homes and becoming homeless as a result.

But the survey also revealed a profound difference among ethnic groups when it comes to economic distress: Latinos were three to four times more likely to fear hunger and homelessness than were whites.

Those are just a few of many significant results from the first Los Angeles County Quality of Life Index (QLI), a project of the Los Angeles Initiative of the UCLA Luskin School of Public Affairs. The survey was prepared in partnership with the public opinion research firm Fairbank, Maslin, Maullin, Metz & Associates (FM3).

Interviews were conducted with 1,401 residents throughout the county. The survey has a margin of error of plus- or minus-2.6 percent. Respondents rated their satisfaction with up to 40 aspects of quality of life divided into nine categories. Responses were weighted according to the salience assigned to each factor by the survey participants.

The QLI found significant differences between ethnic groups and by class on financial, cost of living and economic fairness issues.

“Our survey represents a compelling class- and ethnic-based economic story,” said Zev Yaroslavsky, director of the Los Angeles Initiative. “Latinos in particular are standing out as having fundamental economic concerns. Almost 1 out of 3 people in L.A. County has worried about going hungry in the last few years, but among Latinos that number jumps to 44 percent — and 52 percent among Latino men.

“This represents a very high percentage of county residents experiencing intense economic stress,” he added.

The overall satisfaction score from the survey is 59, slightly above the midpoint (55 on a scale of 10-100). This rating will provide the baseline for succeeding years of the QLI, which will be an annual countywide survey.

“Half of residents with annual incomes under $30,000 and one-third of people earning between $30,000 and $60,000 feared having to skip meals due to their economic circumstances,” Yaroslavsky said. “Nearly half of Latinos surveyed (44 percent) worried about becoming homeless. There’s obviously a have/have-not divide. There’s something happening below the surface here that’s invisible to a lot of people’s eyes.”

Major aspects of life in Los Angeles County can be separated into positive, neutral and negative groupings.

On the positive side, neighborhood quality (71), health care (70) and, somewhat surprisingly, ethnic/race relations (69) are among the top scores. Education (54), jobs and the economy (52) and cost of living (50) are at the bottom of the scale. Among the categories in the middle of the pack are public safety (64), the environment (61) and transportation (58).

“Interestingly, our survey shows that people are not as concerned about getting along as they are about getting ahead,” Yaroslavsky said.

The Negatives

The cost of housing is the biggest factor dragging down the overall satisfaction score of county residents. Cost of living was the most salient category and also the lowest ranked, and housing costs are the most important of the specific components in the cost of living category. Forty-one percent of all respondents cited “cost of housing” as the most important factor in their cost of living rating.

The lowest satisfaction scores on the cost of housing came from Latinos (47) and those with a household income of less than $30,000 (47). Latinos, in fact, proved to be the most negative ethnic group on all cost of living measures — utilities, transportation, food, taxes, as well as housing. Asian-Americans, meanwhile, were the most positive group in this category.

On jobs and the economy, most respondents were satisfied with their current jobs and job security. But when the question turned to retirement security, the ability to get ahead, or whether the local L.A. economy is fair to all, some clear fault lines emerged. African-Americans assigned the lowest scores of any ethnic group for the ability to get ahead (57) and the fairness of the local economy (54). Those under 50 years of age were the least satisfied with their retirement security (53). And those who are currently unemployed gave a very low score (44) to their prospects of landing a job.

Finally, in a category that bridges the class spectrum, there is widespread concern about the public education system in L.A. County. Whites, African-Americans, college graduates, post-college graduates and those with household incomes more than $150,000 gave a rating of between 50 and 54 to the quality of public education.

Likewise, lower scores were given to the level of funding for K-12 public education and the training students are receiving for jobs of the future. The only good marks were given to access to higher education, led by Asian-American respondents and those who graduated from high school.

The Positives

The highest score went to neighborhood quality (71). Homeowners gave the most favorable rating in this category, which also addresses the availability of fresh, nutritious groceries and of parks.

The score for racial and ethnic relations (69) is an unexpected result considering the amount of recent media coverage devoted to racial strife throughout the country. L.A. County’s whites (78), Latinos (75), African-Americans (77) and Asian-Americans (74) are in almost total agreement about their own relations with different ethnic/racial groups.

While the category of interactions with local law enforcement revealed a more varied result — whites (79), Latinos (66), African-Americans (65) and Asian-Americans (70) — they all registered significantly higher than the overall quality of life rating, 59.

The quality of health care also received relatively positive scores, ranging from 76 by college graduates to 82 among those with a household income of more than $120,000.

The Neutrals

The daily commute to work is the driving force in the transportation category. If your commute is 15 minutes or less, the satisfaction level is high (80). It goes downhill from there based on the length of the drive: 30-44 minutes (56) and 45 minutes or longer (47).

The availability of public transportation also received slightly above average scores, topping out with Latinos (68) and African-Americans (68), groups that indicated they are more likely to use mass transit.

Other neutral rankings went to public safety — which includes safety from terrorism/mass shootings, violent crime, property crime, and earthquakes/fires — and the environment, which includes the quality of tap water and steps being taken  to deal with the drought, among other issues.

A breakdown of the questions and results can be found below.

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