Overall, L.A. has lost 3.1 percent of its employment base since 1990, according to report this month by UCLA’s Anderson School of Management.
photo
U-T Graphic: Employment growth— Aaron Atencio
For perspective, Las Vegas posted 123 percent job growth over the same period. Even San Diego, which suffers from many of the same job-killing policies as L.A., grew jobs by 33 percent.
In relative terms, the Los Angeles job market has experienced nothing short of an economic collapse, particularly when you consider that its population expanded by 13 percent to more than 10 million people over the 23 years in question.
Some usual suspects were behind such dismal performance, according to William Yu, the UCLA economist who wrote the report.
Leading the list is high-cost housing and horrible traffic congestion, which raised employer costs and chased away skilled workers. Next comes a generally unfriendly business climate. L.A. County received a “D” in the 2013 Thumbtack Small Business Friendliness Survey, a grade that reflects a high level of taxes, regulations, licensing, zoning and other burdens.
To state the obvious, government policy has been the chief culprit in creating all these economic drags.
High commuting costs flow from underinvestment in roads and transit over decades. And supply shortages, caused by zoning restrictions, have been far more responsible for pushing up housing prices than a surge in demand, the UCLA report found.
Yet a chief cause of L.A.’s woes — or perhaps a result — was its dwindling supply of “human capital.” Put simply, bright people have been leaving or reluctant to move into Los Angeles, and the city’s education system has failed to make up the difference.
Yu pointed to San Diego’s superior performance to illustrate the economic power of human capital.
San Diego County’s business climate gets an “F” grade, even worse than the “D” for Los Angeles. Housing is about as unaffordable, and traffic congestion is arguably as bad.
And yet San Diego posted much stronger job growth. So did San Francisco, which received a “C” grade for business friendliness.
Lifted by technology clusters, research institutes and universities, San Diego and San Francisco have been able to resist the onerous gravity of state and local government policy.
But there’s little cause to celebrate. Both cities were outperformed by Phoenix, Seattle, Sacramento and even Riverside, not to mention every big city in Texas.
To be clear, it matters when companies leave California. It just doesn’t matter very much.
A 2005 study by the Public Policy Institute of California found that from 1993 to 2002 the net job losses from relocation were tiny; never higher than 0.1 percent of the state’s total jobs.
Today about 6 percent of all business moves go across state borders; most moves are within the state.
This means that growing jobs requires the much harder work of fixing structural problems rather than snatching a few headquarters.
Texas is thriving economically because of its sharply lower burden on employers from taxes, regulation and housing costs.
So far, California’s state and local leaders show little willingness to change. “We’ve got a few problems, we have lots of little burdens and regulations and taxes, but smart people figure out how to make it” in California, said Gov. Jerry Brown, after news broke Monday of Toyota’s departure.
The irony is that state leaders are perfectly capable of bold action. For example, California has spent tens of billions since 2006 in an effort to reduce climate change.
