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

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.


 

Report Finds Equity Gaps in L.A. Tech Sector

A new study led by UCLA Luskin Public Policy faculty member Jasmine Hill analyzes the diversity of 2022 venture capital investments in Greater Los Angeles. Released today, the report assesses investments made by 75 venture capital firms that are members of the PledgeLA initiative, which prioritizes equitable access to capital. Hill’s research team determined that less than one-third of the firms’ investments in 2022 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. However, venture capital firms led by underrepresented minorities and those with a diversity thesis were almost twice as likely to back Latino and women founders and four times more likely to invest in Black founders. “Los Angeles has long surpassed the portfolio diversity typical of venture capital on the national level,” Hill said, “but there is a considerable journey ahead before PledgeLA firms reflect the region’s diversity.” The research team, which used a cross-section of data to create a holistic view of the Los Angeles tech ecosystem, included master of public policy student Sydney Smanpongse and public affairs major June Paniouchkine from the Luskin School and UCLA master of economics student Joleen Chiu. The report was commissioned by PledgeLA, launched by the Annenberg Foundation and the Office of the Mayor of Los Angeles to measurably increase diversity, equity and community engagement in the tech sector. In June, PledgeLA announced a new regional goal called “50 in 5,” which seeks to drive 50% of all venture investments to companies led by women, Black and Latino founders by 2028.

Read the full report

Read the PledgeLA news release


 

Torres-Gil on Retirement Security for Latinas

A New York Times story on efforts to equip Latinas to save for retirement cited Fernando Torres-Gil, professor of social welfare and public policy. Latinas, who are among the longest-living yet lowest-earning groups in America, have faced challenges ensuring that their later years are financially secure. But that trend is changing, in part due to an increasing number of Hispanic women who are entering higher education. “They’re recognizing that they have to depend on themselves first, and they’re far more likely than previous cohorts to invest or have access to 401(k)s,” said Torres-Gil, an authority on demographics, disability and the politics of aging. He teaches his students that social programs meant to lift women out of poverty are essential. “We have to reinforce for them the critical importance of keeping Social Security,” he said. “Because a lot of them know it’s important for their elders, but they don’t think they’ll ever see a check themselves.”


 

Manville on Bay Area’s Housing Dilemma

Michael Manville, associate professor of urban planning, spoke to Courthouse News about the current housing crisis in the Bay Area. Affordable housing for middle- and low-income families is scarce, especially in the East Bay, in part because investors are outbidding traditional homeowners to buy multiple single-family homes. In addition, cities are simply are not building enough housing to meet demand. Manville commented on the city of Berkeley’s report on housing, saying, “Institutional investors like to buy in the Bay Area because the Bay Area doesn’t build housing. These companies feed off scarcity.” He added, “Berkeley needs more housing. The main way to keep it affordable is to build new housing so rich people don’t buy it up.”


 

Climate Change Action at the Community Level

A Streetsblog Cal article highlighted reports published by the UCLA Luskin Center for Innovation that evaluate the effectiveness of the state’s Transformative Climate Communities (TCC) program in five different communities. The TCC program helps fund the development and implementation of community-defined, neighborhood-level plans to reduce greenhouse gas emissions. “The most transformative element of TCC may also be its most foundational: the community engagement and collaborative processes that anchor each neighborhood’s efforts,” according to the reports. So far, the TCC program has been implemented in Fresno, Ontario, Stockton, and the Watts and Northeast San Fernando Valley neighborhoods of Los Angeles, and 18 more communities have received planning grants. “The TCC award not only brings a significant influx of financial resources to the community, but also reinforces the cross-sector partnerships that were built before and during the TCC application process,” the Center for Innovation found. “Empowering members of historically underserved communities can catalyze change for the long-term.”


A Focus on Front-Line Communities in the Fight for Climate Justice

An ABC7 News report on President Joe Biden’s pledge to prioritize environmental justice in disadvantaged communities highlighted an action plan put forward by the UCLA Luskin Center for Innovation. Known as the Justice40 Initiative, Biden’s executive action ordered that 40% of the federal government’s investments in climate and clean infrastructure be used to benefit people in historically marginalized communities. The UCLA report provides guidance on steps needed to design and implement the initiative to be effective and equitable. “Southern Californians breathe some of the dirtiest air in the country. These are the types of communities that should be at the front lines of receiving the benefits of investments that are meant to reduce air pollution and fight the effects of climate change,” said Colleen Callahan, deputy director of the Center for Innovation and co-author of the report. Other media outlets covering the Justice40 report include La Opinión, Black Voice News and Asian Journal.

Storper on the Counterintuitive Truth About Global Investment

Urban Planning Distinguished Professor Michael Storper co-authored an article about the impact of international investment on domestic employment levels for the London School of Economics’ Global Investments and Local Development blog. “The world over, public policies for recovery from COVID-19 have cherished the idea of curbing foreign activities of domestic firms in order to boost domestic employment and wages. This represents a fundamental misconception about outward foreign direct investment,” Storper wrote with scholars Riccardo Crescenzi and Roberto Ganau. The authors conducted an in-depth analysis of U.S. local labor markets, detailed in a paper recently published in the Journal of Economic Geography. They found that firms with direct investment in other countries create jobs at home, a counterintuitive fact in an era of populism and calls for curbing global economic integration. The authors noted, however, that there is a downside in the form of increasing intra-regional inequalities between high-skilled and low-skilled workers.

Manville on Public Transit Investment and Ridership Trends

In a San Diego Union-Tribune article about the city’s new high-speed rail proposal, Michael Manville, associate professor of urban planning, highlighted the challenges of implementing public transportation improvements in cities primarily designed for automobile travel. San Diego recently proposed two tax increases to fund billions of dollars in bus and rail investments, but experts worry that it will follow the example of cities like Atlanta, Houston and Los Angeles, which invested heavily in public transit only to lose riders. Manville describes Los Angeles as a “cautionary tale,” explaining that “you can’t take a region that is overwhelmingly designed to facilitate automobile travel and change the way people move around just by laying some rail tracks over it.” To avoid decreases in ridership, transportation experts recommend making it harder to drive by eliminating street parking, ending freeway expansions, limiting suburban home construction and implementing policies like congestion pricing.


Ong on Fried Chicken and Gentrification

Paul Ong, director of the Center for Neighborhood Knowledge at UCLA Luskin, spoke to the Los Angeles Times about the impact of Chinatown’s most popular restaurant, Howlin’ Rays. While Chinatown locals have struggled to stay afloat as office and housing costs rise,  the Nashville-style hot fried chicken restaurant has attracted masses of Los Angeles locals and visitors since it opened in 2016, resulting in lines up to five hours long. Ong explained that new businesses like Howlin’ Rays attract a specific clientele, prompting increased investment and property development in Chinatown that alienates locals. After realizing that many locals didn’t have the time or money to try Howlin’ Rays, L.A. Times reporter Frank Shyong waited two hours in line to buy chicken to distribute to nearby business owners. “The biggest challenge is understanding how we all play a role in a much larger dynamic,” Ong remarked. “More broadly, we have to talk about what we want our cities to look like.”


Jacoby Comments on Employee Profit-Sharing in Sears’ Heyday

Sanford Jacoby, distinguished professor emeritus of public policy at UCLA Luskin, commented in a front-page New York Times article about the remarkably egalitarian employee profit-sharing program offered by Sears in its heyday. Before it was phased out in the 1970s, the stock-ownership plan allowed Sears workers at all ranks to build a comfortable nest egg. “People were retiring with nice chunks of change,” Jacoby said. “People loved this fund, and Sears was a wildly successful company.” But the approach favored men over women and also made workers even more exposed to their employer’s fate, said Jacoby, who also holds professorial appointments in history and management at UCLA. The article contrasted the program at Sears, which has declared bankruptcy, with policies at Amazon, which recently lifted its minimum hourly wage to $15 but also stopped giving stock to hundreds of thousands of employees. The decision underscores how lower-paid employees across corporate America have been locked out of profit-sharing and stock grants, the article said.