SoCal Econ Summit: We're growing, despite housing, workforce gap

A series of new economic reports paints Southern California largely as a land of opportunity, though challenged by expensive housing and a workforce gap that threatens middle-class prosperity.

The reports, released today at the Eighth Annual Southern California Economic Summit at the L.A. Hotel Downtown, show that the region is positioned to be a major player in the innovation economy, with some counties having already emerged as leaders in areas such as health technology, advanced transportation and renewable energy.

At the same time, many of the new jobs that are being created pay significantly less than those lost during the Great Recession, squeezing working class individuals and families at a time when rising housing costs show no sign of letting up.

“This is a defining time for our region, and we need to make sure we’re doing everything in our power to take advantage of the opportunities in front of us while confronting the challenges that threaten to undermine the progress we’ve made,” said Margaret Finlay, Mayor of Duarte and President of the Southern California Association of Governments (SCAG). “We need to make sure we’re attracting the right kinds of jobs and are doing all we can to position our workforce to meet the needs of businesses. And when it comes to the housing crisis, we can no longer stand by and do nothing. It is, without question, one of our most urgent challenges as a region.”

SCAG and the Southern California Leadership Council are hosting the Economic Summit, bringing together more than 400 civic and business leaders to assess the state of the region’s economy, with a focus on the challenges caused by the housing crisis.

According to the California Association of Realtors, only 31 percent of households in Greater Los Angeles can afford to buy a median-priced home. Meanwhile, more than half of all renters in Southern California are “cost-burdened,” meaning that more than 30 percent of their monthly income goes toward their rent; more than a third of all tenants spend at least half of their income on rent.

“We’re driving away the middle class, and until and unless we get this under control, our ability to move forward economically and otherwise is seriously jeopardized,” said Hasan Ikhrata, Executive Director of SCAG. “We need to find ways to encourage more housing development and, in particular, to provide more affordable housing options.”

Even with the shadow cast by the housing crisis, most of the economic reports prepared for the summit by local economists showed a generally favorable outlook for the region over the next five to 10 years. Among the highlights:

o Orange County is leading Southern California’s transformation to an innovation economy, drawing high-tech startups like a magnet and creating opportunities for entrepreneurs and an increasingly diverse workforce. The county is home to a growing number of highly concentrated and specialized industry clusters in areas such as software development, medical devices and biotechnology. These clusters, in turn, attract additional business startups, large numbers of highly educated workers from around the world and more than $1 billion a year in venture capital investment.

o Innovation and disruption will drive Los Angeles County’s economy in the foreseeable future, led by advanced transportation, biosciences and digital media. Overall employment is expected grow by 133,000 jobs in the next five years – creating a tighter labor market that should force wages up. Unfortunately, the highest number of overall openings will be found in those occupations that require a high school diploma or less, and which pay less than the county’s median annual wage of $40,260

o The Inland Empire (Riverside and San Bernardino counties) is fast approaching 300,000 jobs created since 2011 – more than double the number lost during the Great Recession. Continued strong gains in logistics, health care and construction are leading the way, and should continue to do so for several more years. High poverty levels, income disparity and relatively low educational attainment continue to pose challenges for the region.

o Significant investment in renewable energy development has helped uplift Imperial County’s economy, which has moved past pre-recession employment levels by 7,000 jobs and seen a resurgence in the middle class. Economist Michael Bracken of Development Management Group Inc. said renewable energy could bring another $6 billion to $8 billion in investment in the county in the next 10-15 years. At the same time, high poverty levels and relative low educational attainment continue to present ongoing economic challenges.

o In Ventura County, anti-growth measures are limiting economic progress and job creation, according to the Center for Economic Research & Forecasting at California State University. Education and healthcare have added 10,600 jobs, while leisure and hospitality have added 5,300. “Unfortunately, neither sector pays, on average, wages to support a Ventura County lifestyle that includes home ownership,” the report stated.