This piece first appeared in The Orange County Register.
Every year over the past decade, in the Forbes’ annual “Best Places for Jobs” survey, we have been fortunate to assess Southern California’s job market and compare it to other large metropolitan areas. The results point to some strong points but also many long-term problems that regional leaders need to address.
Overall Southern California remains an economic powerhouse, with the nation’s largest collection of information workers, the third-largest business and professional sector and, remarkably, still the largest core of manufacturing employees. Our economic legacy remains strong, but the rest of the world is catching up on us, and fast.
The jobs race
Our rankings balance last year’s growth with short-term and medium-term trends, emphasizing momentum. This year Los Angeles ranked a mediocre 43rd out of the 71 largest metros; employment has grown by 5.7 percent over the decade. Contrast that with Dallas, which ranked No. 1 the last two years and has expanded employment at five times L.A.’s rate since 2006. The Big D replaced the dominant post-2010 economic behemoths to the north — San Francisco and Silicon Valley — but both are still solidly in the top 10, having enjoyed over 20 percent job growth over the past decade.
Within the region, job growth has been fastest the further you get from downtown. Orange County, for example, ranked 27th this year, enjoying a small edge over L.A. but the regional growth leader by far has been exurban Riverside-San Bernardino, which now ranks No. 10 on our overall list. Over the past decade, the region has enjoyed 15.3 percent job growth, which has actually accelerated from 2.6 percent in 2016 to a strong 3.8 percent rate last year.
The high-wage conundrum
Perhaps the biggest threat to Southern California’s economy is not a lack of jobs, but a shortage of those that pay higher wages to offset high housing costs. As Citylab recently reported, Los Angeles is now the most unaffordable place in the nation, in large part due to a relative dearth of higher-paying jobs.
In the higher-wage sectors like professional and business services (by far the largest sector with higher-wage jobs), no Southern California metro comes close in terms of growth to places like Austin, Dallas, Nashville, Orlando, Kansas City and San Francisco, where such jobs have increased by 20 to 30 percent since 2012. In contrast Los Angeles experienced a paltry 8 percent increase. As was the case in overall job creation, Orange County and the Inland Empire grew faster, roughly twice as the pace, and ranked in the middle of U.S. metros.
Perhaps most telling for L.A. has been the trajectory of information jobs, a sector in which entertainment hub Los Angeles with 214,000 positions has long been the leader. Yet here too the region’s growth has been modest, 27th on our list, with jobs actually dropping by 3 percent last year after a decade of steady, but not spectacular, growth. Orange County did somewhat better, ranking 19th on the list with 9.7 percent growth since 2012. But sadly the Inland Empire, ranked 49th, and actually lost information jobs in that period while San Francisco and San Jose enjoyed 60 percent growth.
But arguably the biggest problem facing Southern California is seen in the decline in higher-paying blue-collar jobs, which long provided opportunity for newcomers and working-class people. With an estimated 348,000 industrial jobs, Los Angeles retains the biggest manufacturing workforce in the nation. But industrial jobs are up sharply nationwide, while L.A. has lost 6.8 percent of its manufacturing jobs over the past five years. Over the last two decades, the area has lost more than 46 percent of its manufacturing jobs — almost 300,000 positions.
The suburban periphery has done better, although last year both Orange County has suffered a slight decline in industrial jobs. Instead for blue-collar workers, the real growth has been in the generally lower-paying leisure and hospitality sector — up both over 25 percent in L.A. and 21 percent in the O.C. since 2012.
Given our high housing costs, the overall mediocre performance in the various higher-wage sectors and a shift, particularly outside the Bay Area, toward low-wage ones expand suggests a troubling picture. Housing may be the crisis de jour among regional talkers, but expanding better-paying jobs may prove an even greater imperative. Once these jobs and their workers migrate to other, lower cost-to-live markets, it is nearly impossible to lure them back.
Read the rest of the article at The Orange County Register.
Joel Kotkin is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The Human City: Urbanism for the rest of us, was published in April by Agate. He is also author of The New Class Conflict, The City: A Global History, and The Next Hundred Million: America in 2050. He is executive director of NewGeography.com and lives in Orange County, CA.