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New Study Documents Lack of Economic Progress in South L.A. Over the Past 50 Years Researchers at UCLA Luskin’s Center for Neighborhood Knowledge list inequities in wages, housing, education and transportation

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In the half-century since the Kerner Commission’s report on urban unrest, South Los Angeles has experienced little economic progress, according to a new study by the Center for Neighborhood Knowledge, part of UCLA Luskin.

In 1960, South L.A. workers made 80 cents on the dollar compared to the average Los Angeles County worker. In the last 50 years, that gap has widened. Today, the average full-time, full-year worker in South L.A. earns about 60 cents on every dollar earned by the average county resident.

“This report is a sobering snapshot of the inequalities that have persisted in South Los Angeles 50 years since the 1968 report,” said Paul Ong, director of the Center for Neighborhood Knowledge.  Disparities in earnings are the main driver of income inequality. Earnings are critical in overall quality of life — low earnings can translate into less access to necessities, amenities, and opportunities.

Earnings in South L.A. have failed to catch up to county levels, according to the researchers. That widening pay gap is driven in part by a steady decline of male wages.

South Los Angeles is home to 722,000 persons, and epitomizes the plight of inner-city neighborhoods. It is the site where frustrations of a marginalized and neglected community boiled over in 1965 Watts riots and 1992 civil unrest. These reactions to the lack of progress should not have been unexpected given the realities documented by this CNK report.

In addition to earnings, the study also documents inequities in:

Housing

Homeownership, the principal mechanism for wealth accumulation for middle-class residents, is lower in South L.A. than the county and has declined over time. Today, fewer than one in three South L.A. residents own their home.

The high demand for housing has translated not only to higher cost but also higher home values. After adjusting for inflation, the average home is priced at nearly three times as much today as it was in 1960. This places financial strain on new buyers and puts ownership further out of reach for renters.

Transportation

Car ownership is critical in Los Angeles where, despite large investments in public transit, lacking a car can severely limit one’s access to job and educational opportunities. Availability of cars within households has improved over time; nonetheless, households in South LA are twice as likely to lack a car, according to the study. South LA residents remain three times as likely to rely on public transit for commuting.

Education

Educational attainment is critical in preparing children to be successful and productive adults. However, public schools have continued to be “separate and unequal.” Elementary school performance on standardized testing reveals persistent gaps between South LA and the most affluent neighborhoods in West L.A.

Early childhood preparation can be critical toward the goal of fostering successful students. Fifty years ago, recommendations concerning education specifically prioritized the expansion of preschool programs. In 1960, preschool enrollment was virtually non-existent in both South L.A. and the county.

In 1990, children in South L.A. were only half as likely as county children to be enrolled in a private preschool. This can be taken as an indicator of the wide gaps in the availability of resources for education to residents in South L.A. compared to the county. This gap has grown since then. In 2016, county children are four times as likely as South L.A. children to be enrolled in a private preschool.

View the full report.

Technical note

There are no definitive boundaries for South Los Angeles. Over time, the boundaries have shifted as the neighborhood has changed. This study is based on public use microdata areas (PUMAs), which are defined by the U.S. Census Bureau. These are reasonable approximations of the curfew area for the 1965 Watts Riot, the post-1992 Civil Unrest Rebuild L.A. zone, and the Los Angeles Times Neighborhood Mapping Project’s South Los Angeles area.

All data, with the exception of school performance, come from PUMS samples. The 1960 data are extracted from IPUMS. Additional data come from tract-level statistics reported by the U.S. Census Bureau. Data on elementary school performance combine assessment scores from California’s Standardized Testing and Reporting with historical information of schools, reported in the 1965 McCone Report.

This project was supported by the following partners: the Haynes Foundation, the Institute on Inequality and Democracy at UCLA Luskin, the UCLA Lewis Center, the UCLA Office of Equity, Diversity, and Inclusion, the UCLA Luskin Center for History and Policy, the UCLA Institute for Research on Labor and Employment, Professor Manisha Shah, and the UCLA Asian American Studies Center.

Jacoby Addresses Japanese Leaders on Sharing Economy

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UCLA Luskin’s Sanford M. Jacoby, distinguished research professor of public policy, management and history, spoke recently to leaders of the Japan Federation of Transport Workers Unions.   The federation is a branch of RENGO (Japan’s equivalent of the AFL-CIO) and currently has about 50,000 members — most of whom belong to enterprise unions affiliated with individual companies — said Jacoby, describing the Japanese system. Also attending the Nov. 20, 2017 meeting were several members of the Japanese Diet’s House of Councillors, the equivalent of the U.S. Senate, from the Democratic Party of Japan (Minshintō). Jacoby, an economist by training, spoke about the positive and negative aspects of a sharing economy. The primary focus of the talk was about companies such as Airbnb and Uber, which remain controversial in Japan and in European countries, explained Jacoby, who has studied Uber’s delayed entry into the Japanese market. Although Airbnb was recently legalized there in anticipation of the 2020 Olympics, Uber presents a different problem. Under current Japanese national transportation laws, a service such as Uber is unlawful. “There are contending forces to both legalize it and to prevent its entry into Japan,” said Jacoby, who studies employers, labor market institutions and international political economy. Rather than competing head-on with taxi companies, Uber has begun partnering with them. Jacoby said the situation remains uncertain, but this type of collaboration may be Uber’s future in Japan. — Stan Paul

Giving Microeconomics a Human Face Public Policy professor Manisha Shah’s research bridges a worldwide gap between health, economics and education

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By Stan Paul

At age 16, Manisha Shah went to the Andes Mountains of Ecuador — her first chance to dig into “real development work.” The task after a year of fundraising and training? Building latrines in rural communities. Soon after arrival, however, she realized that everyone there “already knew how” to build latrines.

What they actually needed was financing and supplies. “That is what we helped facilitate — paying for and transporting supplies to this faraway town in the middle of the mountains.”

The experience in Ecuador was transformative for Shah, now an associate professor of public policy at UCLA Luskin. It enhanced a developing global view nurtured as a child during family visits to see her grandparents in India, where she saw “poverty all around her.”

Her youthful travels helped put Shah on the path to her career in academia and research around the world — from Mexico to India, Tanzania to Indonesia — and eventually to the Luskin School of Public Affairs.

“Never in a million years would I have predicted that I would be a tenured professor at UCLA,” Shah said. “I feel so lucky to be doing what I love at one of the best universities in the world.”

Getting There

Today, Shah focuses her teaching and research on the intersection of applied microeconomics, health and development. She is supported by organizations that include the Bill and Melinda Gates Foundation, the William and Flora Hewlett Foundation, and the World Bank.

Scholar Manisha Shah clarifies a point for students during a lecture in the Public Affairs Building. Photo by George Foulsham

An example of her work is a recent study, “Investing in Human Capital Production: Evidence from India,” that fills a substantial gap in development literature related to whether early-life investments encourage more educational investments later on, whether low-skill wages in rural India increase school dropouts, and whether rural schools produce gains in consumption later in life. The results have widespread implications for family and individual well-being, economic growth and national competitiveness for the country of over a billion people.

Her research affiliations and teaching might suggest otherwise, but Shah’s path was not exactly a straight one. “I don’t think I had a direct route. In fact, it was very indirect,” said Shah, who sought work abroad after earning undergraduate degrees in economics and development
at Berkeley.

“I quickly learned how difficult it is to find a job that will actually pay you to do international work,” she said.

She wound up in a one-year program at the London School of Economics where her master’s thesis in development economics examined HIV/AIDS issues in India and how NGOs were working to fill gaps in countries that were slow to react to potential epidemics.

“This was 1996-97. Getting HIV in a developing country was a death sentence, and so many countries were doing little to publicly acknowledge they even had an HIV problem,” Shah said.

Next was Mexico, and work at the International Maize and Wheat Improvement Center. Shah is fluent in Spanish, and at the time thought she was “done with school and would never come back,” having achieved her goal of working in international development. “I loved the job.”

But there was a catch.

“I knew I wanted to keep doing this type of work, but I also started to realize that the people calling the shots, raising the money, directing things, all had Ph.D.s,” Shah said. So she spent a year doing the math — literally, taking the calculus, statistics and real analysis coursework she needed for a doctoral program at UC Berkeley. “There was almost no literature in economics on HIV/AIDS,” Shah said of her ongoing interest in the intersection of HIV and economics. “I learned that most interventions in development related to HIV/AIDS often targeted sex workers, as they tend to have higher rates of sexually transmitted infections and HIV/AIDS than the general adult population in most developing countries.”

Shah’s eyes were opened when she learned how many women in developing countries are employed in the sex sector. She saw the implications for public health and noted a lack of serious empirical study, which “began an important area of research for me.”

She recently co-edited the “Oxford Handbook of the Economics of Prostitution,” in which more than 40 researchers from around the world compiled and interpreted valuable economic data and research that may help lawmakers and government officials set policy guidelines concerning prostitution worldwide.

“A number of factors, including the proliferation of sexually transmitted infections and HIV/AIDS, especially in developing nations, have created the need to look at prostitution through an economic lens,” she said.

And yes, like the teenager who traveled to Ecuador decades ago, Shah is still interested in sanitation, a core issue at the intersection of human health and economics
in developing countries.

Research and Public Policy

Shah refers to herself as an applied microeconomist interested in development economics, health and education. “Most of my research fits into those bins,” Shah said.

She has written papers on the long-term impacts of positive rainfall shocks as well as drought in India on human capital outcomes of young children and adolescents, and risk-taking behaviors in the wake of natural disasters, as well as the effects of cash transfer programs on criminal behavior in Indonesia. Behind each are human stories of how policies affect large populations.

Shah’s research on HIV and the sex industry has wide-ranging implications for the health and well-being of not only adults but also vulnerable young people caught up in prostitution around the world.

“These days most of my work is either related to children or adolescents,” Shah said. “I often joke that my switch to research about children perfectly coincides with my becoming a mother. I remember researching questions about child development when I was pregnant and being surprised about how little we know about many important issues related to child cognitive/health and development.”

Shah is the principal investigator of a randomized controlled trial in Tanzania attempting to understand how to improve sexual and reproductive health outcomes for teenage girls. “I am really excited about this work,” said Shah, who was also recently awarded a National Science Foundation grant to better understand education outcomes for children in rural India.

After teaching stints at the University of Melbourne, Princeton University and UC Irvine, she joined the Luskin faculty in 2013. Today, she teaches microeconomics, development economics and serves as a faculty adviser for the Applied Policy Project (APP), a challenging yearlong requirement for master of public policy students at Luskin.

“Ironically, I learned in grad school that I actually enjoy teaching, and I was sort of good at it,” she said of her classroom duties. Her research topics are heavy, which could lead to frustration about things that should be happening but don’t. “But spend some time with our students and it will put you in a good mood,” she said.

“Our students make me optimistic, and that optimism can be infectious. I love how our students care so deeply about issues that matter to them.”

 

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

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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.”