This document discusses challenges facing Los Angeles and proposes solutions to improve its economic prospects. It notes that LA has experienced significant job and population losses in recent decades due to overregulation and high taxes that have driven out businesses. However, the author argues that LA still has strong fundamentals like a growing, diverse population and entrepreneurial immigrant communities that could support economic growth if basic reforms are implemented. The key is focusing on job creation, middle-class neighborhoods, and rebuilding infrastructure to create opportunities for upward mobility rather than just appealing to the wealthy.
1. Can Los Angeles be saved?
Presentation to the 12th Annual SoCalBio Conference by
Joel Kotkin, Distinguished Presidential Fellow in Urban
Futures, Chapman University
Los Angeles November 4, 2010
2. “Japan is replacing America as the world’s
strongest economic power. It is in everyone’s
interest that the transition goes smoothly.”
- Expert Testimony to Congress, 1986
Photo: urbangarden
4. North America has
good fundamentals
• U.S. has healthier long-
term demographics
than most competitors
• U.S. only advanced
country with large,
growing population
• We still have a
significant resource,
energy, land and water
base
• But will LA be part of
an American
resurgence?
5. The Great Recession in California
• Too Much Regulation and Taxation driving out
productive industry, leaving only the very high
and low end
• Lack of Balanced Approach that seeks to
accommodate economic, social and
environmental concerns
• California now home to four of the nation’s
ten largest concentrations of poor people
8. Where Are We Headed?
• The big issue nationally
and in California is jobs
• California: a consistent
under-performer
• Migration goes to
areas that are
affordable and have
jobs
• Can LA be the center
of an American
Multiracial
Superpower
• Back to Basics Key to
Success
9. Projected Jobs Deficit
22.8 Million
Jobs
19.8 Million
Jobs
U.S. Chamber of Commerce,
University of Kentucky Study
New America Foundation Repor
10. Broader Measure of Unemployment
Source: Bureau of Labor Statistic
New America Foundation Chart
Includes
marginally
attached,
discouraged,
and involuntary
part time
workers
21. Declustering: The New Demography
• Nationwide people heading to
smaller towns and cities
• Shift to opportunity regions
• Social trends strongly pro-
suburban
• US Population growth will
increase interest “flyover
country”
25. Cost of Tax System on Small Business
and Entrepreneurship
#1. District of Columbia
#2. New Jersey
#3. Minnesota
#4. California
#5. New York
#6. Maine
#7. Iowa
#8. Vermont
#9. Oregon
#10. Massachusetts
Source: Business Tax Index 2010, Small Business and Entrepreneurship Council
26. Where’s the Hope?
• Growing role of immigrant entrepreneurship
• Pattern of multi-polar job regions can be built
on in an intelligent manner
• Restoring traditions of infrastructure spending
and attention to growth, particularly in
industry, trade, science and information
27. The Foreign-Born Population is at an All Time High
Source: U.S. Census Bureau, 2000 - Center for Immigration Studies,
2007
Largest 7-Year
Immigrant Influx in U.S.
History
27
Immigration Is Driving American Demography
Foreign-Born Population (in Millions)
Percent of Total Population
28. The Millennial Generation is the Most Diverse in American History
Percent of U.S. Population That Is African American, Hispanic, Asian Pacific Islander, American
Indian, and Other; By Age – December 2006
Current Population Survey, U.S. Census Bureau, Dec. 2006
Echo Boomers
Generation X
Baby Boomers
Pre-Baby Boomers
29. A Majority of Immigrants Now Reside In The Suburbs
U.S. Census Bureau, 2007 American Community Survey
30. California is Home To....
12% of U.S.
Population
30% of 1990s
Immigration
34% of Hispanic
Population
40% of Asian
Population
Source: Bill Frey, demographer, US Census
31. Ethnic Purchasing Power Continues To Soar
Source: Selig Center for Economic Growth, Terry College of Business, University of Georgia (2008)
Spending Power by Ethnic Groups (in Billions) 1990, 2000, 2008, with 2013 projections
$318.1
$211.9
$116.5
$590.2
$489.5
$268.9
$913.1
$951.0
$509.1
$1,239.5
$1,386.2
$752.3
Black
Hispanic
Asian
1990 2000 2008 2013
32. Gross Product Comparisons, 2003 (in Billions) World
rank1
2
3
(6)
4
5
6
7
United States
Japan
Germany
United Kingdom
France
U.S. Ethnic
Italy
China
$10,882
$4,326
$1,795
$2,401
$1,748
$1,685
$1,466
$1,410
Source: World Bank Indicators database, World Bank, September 2004 and Selig Center for Economic Growth, University of Georgia “The
Multicultural Economy 2003”
If the U.S. ethnic purchasing power was represented separately, it would
be the 6th largest national economy in the world
34. Brin, Google Yang, Yahoo Grove, Intel Kholsa & Bechtolsheim,
Sun Microsystems
Immigrants and the Economy
Between 1990 and
2005 immigrants
started one quarter
of all venture-
backed companies
Even in Corporate
America:
Fourteen of the 2007
Fortune 100 CEOs
were immigrants
36. 95%
45%
Ages 18 - 29 Over age 64
Approve of interracial dating...
A More Tolerant Population
Gallup Poll
37. 81.6
57.3
81.0
Millennials (Age 12 - 30) Gen X (Age 31 - 44) Boomers (Age 45 - 64)
Population in Millions
Millennials rival Boomers
U.S. Census Population Projections, 2008
38. 40
41
42
43
44
45
46
47
2000 2005 2010 2015 2020 2025
Millions
U.S. Population Age 30-39
U.S. Census Population Projections, 2008
Millennials Entering Middle Age
40. The Archipelago of Villages:
Towards “Smart Sprawl”
• Housing near jobs
• Emphasis on families
• Strong role for village shopping streets and markets
• Provision of open space around the village core and
housing estates-
• Solving the problem of “sprawl” within the Sprawl
41. Southern California: A Vision of a
“Los Angeles will retain the flowers and orchards and lawns, the invigorating
free air from the ocean, the bright sunshine and the elbow room. It will not be
congested like the older cities, for the transportation lines built in advance of
the demands, have made it possible to get far out in the midst of orchards and
fields for homemaking.”
Editor of the Los Angeles Express in 1905
New (Sub)Urban Paradise
42.
43. The Key to a Smart Regional Strategy
This above all: to
thine own self be
true
William Shakespeare
44. Rethinking the Future:
Back to Basics
• Regional economies
need to produce real
wealth or become
irrelevant
• The key remains
creating jobs and strong
middle class
neighborhoods
with high degree of
livability
• Culture comes after
commerce not the
other way around
45. Arts and Culture:
Cause or Result?
• Great Cultural Centers generally rest
upon commercial success
• Venice, Florence, Amsterdam,
London, New York, Los Angeles all
became cultural centers after
developing an expanding economy
and strong middle class
• Patrons of arts, not the public, key to
development of cultural institutions
from Macenas to the Medici,
Carnegie and the Rockefellers of the
20th Century to today’s multi-
billionaires
46. Beyond elitism: Jane
Jacobs on the proper
role of an urban
economy
“A metropolitan economy, if it is
working well, is constantly
transforming many poor people
into middle class people
...greenhorns into competent
citizens... Cities don’t lure the
middle class, they create it”
47. The Biggest Challenge: The Issue of Class
• Growth of poorly educated
newcomers and youngsters
poses a unique problem,
particularly with the end of
the property boom
• High drop-out rates in high
schools can guarantee the
rise of an underclass
• Economic development
needs to focus on upward
mobility — not “luring” the
middle class, but creating
one”
50. California’s Wealthiest Taxpayers Nearly
Doubled Their Share of Adjusted Gross
Income
Share of Income
(Top 1% of Taxpayers)
1993 13.8 %
2007 25.2 %
Source: California Budget Project / Franchise Tax Board
52. California Back to Basics
• In 1960 20 percent of state
Budget went to infrastructure
• Today roughly 5percent
• California schools, roads, ports,
water and power once pre-
eminent, now fading
• Government needs to encourage
business, not ignore or harass
• Solution: A return to basics
oriented government
The Good Brown: Pat Brown
53. Education Is a Key Part of the
Upward Mobility Engine
Education attained
Median weekly
earnings in
2005
Unemployment rate
in 2005
(Dollars) (Percent)
Some high-school, no
diploma 409 7.6
High-school graduate 583 4.7
Some college, no degree 653 4.2
Associate degree 699 3.3
Bachelor's degree 937 2.6
Master's degree 1,129 2.1
Professional degree 1,370 1.1
Doctoral degree $1,421 1.6
Source: Bureau of Labor Statistics, U.S. Department of Labor
54. America and LA Need A Better Plan for
Investing In People
Higher
Education:
$22 billion in
federal funds for
50 million jobs
Workforce
Training:
$3.5 billion in
federal funds for
70 million jobs
Source: National Skills Coalition
55. Looking Ahead:
North America and
Southern
California in 2050
• Employ infrastructure to support a dispersed, flexible workforce
• Understand and accommodate middle/working class aspirations
• Focus on “greening” suburbs and how people prefer to live
• Immigrants are our future --- positive or negative?
• We need to get back to basics to revive LA’s entrepreneurial economy
56. JOELKOTKIN.COM
A vivid snapshot of America in
2050 focusing on the evolution of
the more intimate units of
American society—families,
towns, neighborhoods, industries.
It is upon the success or failure of
these communities that the
American future rests.
