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Venture Capital Data Shows L.A. Struggling to Meet Diversity Goals

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The Los Angeles Business Journal shared findings from a UCLA Luskin report that analyzed the diversity of venture capital investments in the Los Angeles region in 2022. While Greater L.A. leads the country for the amount of capital funded to entrepreneurs from diverse backgrounds, progress in meeting racial and gender equity goals is lagging, according to the report led by Jasmine Hill, assistant professor of public policy. Hill’s team produced the report in partnership with PledgeLA, the Annenberg Foundation’s coalition of Los Angeles-based tech and venture capital firms that have committed to prioritizing equitable access to capital. The researchers found that less than one-third of PledgeLA firms’ 2022 investments went to companies led by women, Black or Latino founders, and these companies received only 4.6% ($6.4 billion) of the $139 billion invested. “If we’re being honest, it’s still way below where any of us would want it to be,” one founding member of PledgeLA said.

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New Book by Fairlie Reveals Risks and Rewards of the U.S. Startup Economy

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A new book co-authored by Robert Fairlie, chair of Public Policy at UCLA Luskin, provides a broad view of entrepreneurship that challenges the assumption that startup companies in the United States create jobs and power economic growth. Federal, state and local governments spend billions of dollars each year on incubators, loan programs, tax breaks and investor incentives to encourage the formation of job-creating businesses, yet these expenditures are often made without knowing whether they lead to lasting, decent-paying jobs. In “The Promise and Peril of Entrepreneurship: Job Creation and Survival Among US Startups,” published by MIT Press, Fairlie and co-authors Zachary Kroff, Javier Miranda and Nikolas Zolas use a comprehensive new data set to provide clarity. Their findings show that startup job creation and survival rates are much lower than those typically reported by federal sources. Official statistics indicate that each startup creates six new jobs on average, and 50% of startups survive up to five years. However, those numbers reflect only new businesses that have employees, not the millions of startups that launch without employees every year, the authors found. “Understanding the early-stage dynamics of entrepreneurship is important,” they write. “Starting a business is difficult, with many potential barriers and risks,” including the legal requirements and resources needed to hire employees. The authors also explore who owns startups, focusing on differences by race and ethnicity and documenting how some minority groups face significant barriers to entrepreneurship. Fairlie’s book is among five recently getting capsule reviews by the Financial Times, which lauds its use of reliably sourced data and says it will “help those seeking to nurture an entrepreneurial culture themselves: the policymakers, academics, incubator operators and business degree students.”

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Tilly on Worrisome Economic Signals From California

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A Barron’s article about concerns that California’s climbing jobless rate and other economic indicators may be harbingers of a national economic downturn quoted Chris Tilly, UCLA Luskin professor of urban planning and an expert on labor and workplace trends. Tilly said four broad employment sectors in the state are either shrinking or stagnant: construction, particularly residential construction; durable goods; wholesale; and information, which includes media and entertainment jobs. The state economy, the largest in the U.S., grew by an annual rate of 0.4% in 2022, so it’s difficult to call California a “bad economy,” Tilly said. Still, “California is not in a recession at this point, but it is a risk,” and the state “may be a leading indicator for what’s happening elsewhere.”

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‘Taking the Raw Edges Off Capitalism’

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Dan Mitchell, UCLA Luskin professor emeritus of public policy, wrote an essay for Zocalo Public Square about efforts in 1930s California to build a social safety net for older Americans, with lessons for today’s debates on aging and “entitlements.” The campaigns, which predated the launch of Social Security, included the Townsend Plan, which called for the federal government to give $200 a month to every American over 60, and the Ham and Eggs initiative, which called on the state of California to give $30 to adults over 50 every Thursday. While these efforts failed, their larger ideas would triumph. “Social Security was not inspired by the Townsend Plan, but it was part of the New Deal’s larger idea of taking the raw edges off capitalism through government intervention,” Mitchell wrote. Advocates for the aging population remained a force in California politics for years, fighting battles that foreshadowed today’s struggle over how to divide the economic pie between younger and older generations.

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Shoup on the Business Sense of Paid Parking

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The San Francisco Chronicle spoke with Donald Shoup, distinguished research professor of urban planning at UCLA Luskin, about a plan to extend hours of paid street parking from 6 p.m. to 10 p.m. The proposal is projected to raise $18 million in annual revenue for San Francisco, but restaurant owners argue that curtailing free parking now would stall efforts to revive the city’s COVID-battered economy. Shoup said the proposal could actually boost business, opening up spaces for customers that might currently be taken by employee cars left in the spots for hours. Shoup’s groundbreaking research on parking has recently been in the public eye, with stories in the Washington Post and Business Insider about policy shifts around the country. In addition, reviews of the new book “Paved Paradise,” which puts a spotlight on Shoup’s work, have appeared in publications including the Wall Street Journal, New Yorker, New Republic and Bloomberg’s CityLab.

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Yin on Risks of ‘Buy Now, Pay Later’ Plans

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Wesley Yin, associate professor of public policy and economics, spoke to USA Today about the rapid growth in “buy now, pay later” credit, which has come under the scrutiny of the Consumer Financial Protection Bureau. The loans are especially appealing to young shoppers and people with low income or poor credit, and the federal agency found that borrowers may be unaware of late fees and other consumer risks. Yin drew a parallel to the easy credit of the pre-2008 mortgage industry, which helped trigger the Great Recession, but said the macroeconomic implications of the “buy now, pay later” programs are less worrisome. He noted that the growing popularity of this form of credit may be a symptom of a deeper problem in the economy. “Is it a luxury to want an iPhone, or is it a luxury to want a new sofa?” he said. “The fact that people can’t pay for it, I think, is the issue.”

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Tilly on Rise in Union Organizing

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Urban Planning chair Chris Tilly spoke to the Wall Street Journal about a steep rise in the number of U.S. workplaces where employees have started trying to organize unions. In the first half of the year, workers at 1,411 U.S. workplaces filed petitions with the National Labor Relations Board, the first step in joining a union. That figure represents a 69% increase from the same period in 2021 and the most of any year since 2015. The story also cited a Gallup poll last year that found that 68% of Americans approve of unions, the highest share since 1965. Still, the share of American workers who belong to unions — roughly 10% — remains low by historical standards. Economists say workers, whether in unions or not, are benefiting from a significant labor shortage in some industries where employers are struggling to fill open positions. “Tight labor markets certainly are conducive to organizing and to workers having more leverage in general,” Tilly said.

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Tilly on Retail Workers’ Fight for Better Conditions

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Grocery Dive spoke with Urban Planning chair Chris Tilly about evolving labor dynamics in the supermarket industry and other large retailers. Energized by a pandemic-spurred labor shortage, workers and labor advocates have made progress in their quest for better working conditions, including higher pay, guaranteed hours, and stronger health and retirement benefits. However, in an age of declining union membership and pressure on businesses to hold down expenses, it will be difficult for workers to make significant long-term gains in their relationships with large companies, Tilly said. In the past, publicly traded retailers were often controlled by families that could make workers a priority, but today they frequently answer to large-scale investors, like mutual fund managers, who are focused on quarterly results, he said. “Shareholders trying to squeeze dividends and increase share price … shifted the balance of power within public companies,” Tilly said.

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Manville Responds to Oakland A’s Stadium Proposal

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Associate Professor of Urban Planning Michael Manville spoke to Courthouse News about the Oakland A’s stadium proposal for the Port of Oakland. At a public hearing, the proposed $12 billion ballpark project at California’s third largest port in Oakland sparked significant controversy. Many industry workers are concerned about losing the Port’s Howard Terminal to a huge development, and the proposal has already prompted three lawsuits in opposition. According to Manville, such large projects are “magnets for controversy” which can deter developers who have to fend off lawsuits. He explained that many urban planners advise against using valuable land for stadiums. “If the value comes from building housing and commercial, then just build housing and commercial,” Manville said. “Oakland has a lot of needs. Certainly there’s many things they could put that money into that could be a better use of those funds.”

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Manville on Affordable Housing’s Impact on Property Values

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Associate Professor of Urban Planning Michael Manville was featured in an Orange County Register article about a recent study on the relationship among affordable housing, property value and crime. Research by the Livable Cities Lab at UC Irvine examined the impact of affordable developments in Orange County and found that affordable housing did not increase crime or drag down housing values. In many cases, there was a positive impact on property values after affordable housing was built. Manville explained that affordable housing is highly regulated and “we put it in places where lower-income people are already likely to live.” He said that while the addition of affordable housing can bring down property values in affluent, exclusive areas, it is rarely allowed to do so. But he added, “The purpose of public policy is not to keep your home value high.”

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