Kotkin Presentation La Future

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Access a provocative presentation by renowned author and futurist Joel Kotkin about restoring the economic competitiveness of Los Angeles and California. This presentation was made during the 12th Annual SoCalBio Conference held on November 4, 2010 at the J W Marriott of L.A. Live. See: http://www.socalbio.org/SoCalBio_2010/Kotkin_Presentation.pdf

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Kotkin Presentation La Future

  1. 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. 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
  3. 3. Europe’s Decline as Asia Grows
  4. 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. 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
  6. 6. Is This Southern California’s Future?
  7. 7. Or is this?
  8. 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. 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. 10. Broader Measure of Unemployment Source: Bureau of Labor Statistic New America Foundation Chart Includes marginally attached, discouraged, and involuntary part time workers
  11. 11. 12.0% 11.2% 4.2% 1.3% -1.0% -1.5% -1.9% -4.2% -5.6% -7.5% Houston Washington, DC Dallas Miami Atlanta New York Philadelphia Boston Los Angeles Chicago 2000 - 2010 Employment Growth in 10 Largest Metropolitan Areas Q2 2000-Q2 2010 US Bureau of Labor Statistics Current Employment Statistics
  12. 12. High Tech Shifts 31% 24% 23% 23% 20% 19% 18% 16% 16% 16% 15% North Dakota Wyoming Nevada Utah Virginia Alaska Hawaii New Mexico Texas Washington South… Growth in Science, Technology, Engineering, and Mathematics Jobs, 2002-2009
  13. 13. 16% 15% 15% 14% 14% 13% 12% 12% 12% 12% 11% 10% 10% 10% 10% 9% 8% 8% 8% 8% 8% Utah Nevada Wyoming Hawaii Texas North Dakota Alaska Arizona New Mexico Washington Idaho Florida Maryland Montana Oklahoma Georgia Colorado District of Columbia New Hampshire South Dakota Virginia Middle Class Job Growth, 2002-2009
  14. 14. 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 11.0 12.0 1939 1942 1945 1948 1951 1954 1957 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 Share of United States Non-Farm Jobs California
  15. 15. 90.0 95.0 100.0 105.0 110.0 115.0 120.0 125.0 130.0 1948 1954 1960 1966 1972 1978 1984 1990 1996 2002 2008 California's Share of U.S. Per-capita Personal Income
  16. 16. 0 100 200 300 400 500 600 700 800 thousands of jobs Job Gains/Losses: 1990 to 2000
  17. 17. -600 -500 -400 -300 -200 -100 0 100 200 300 400 thousands of jobs Job Gains/Losses: 2000 to 2010
  18. 18. -250 -200 -150 -100 -50 0 50 100 150 LosAngeles NewYork Chicago Boston WashingtonD.C. Philadelphia Houston Atlanta Detroit Dallas Thousands of U.S. Jobs Lost U.S.Manufacturing Job Losses Due to Region from1990 to Now
  19. 19. 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 Jan-90 Dec-90 Nov-91 Oct-92 Sep-93 Aug-94 Jul-95 Jun-96 May-97 Apr-98 Mar-99 Feb-00 Jan-01 Dec-01 Nov-02 Oct-03 Sep-04 Aug-05 Jul-06 Jun-07 May-08 Apr-09 Mar-10 Jan 1990 to July 2010 Seasonally Adjusted Unemployment Rates Los Angeles NewYork Chicago Boston
  20. 20. -5.0 -4.0 -3.0 -2.0 -1.0 0.0 1.0 2.0 3.0 Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Percent above the U.S. Jan 2007 to July 2010 Seasonally Adjusted Unemployment Rate Gaps Los Angeles WashingtonD.C. Philadelphia Houston
  21. 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”
  22. 22. -151 -215 -389 -434 -384 -256 -151 -92 -81 -63 -46 -120 -97 -160 -249 -313 -265 -143 -99 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 Domestic Migration Center for Economic ResearchandForecasting California- (thousands of persons)
  23. 23. 15.9 14.2 9.5 5.9 5.0 1.4 -0.8 -1.0 -2.1 -2.3 -4.8 -5.8 -5.8 -6.5 -9.0 -9.2 -11.4 -11.7 Phoenix Riverside Atlanta Dallas Houston Seattle Minneapolis Cincinnati Philadelphia Washington, DC San Diego Boston Miami Chicago Detroit San Francisco New York Los Angeles Net Domestic Migration Rate Annual Average, 2001-2009 Praxis Strategy Group analysis of U.S. Census Population Estimates
  24. 24. 16% 15% 15% 14% 14% 13% 12% 12% 12% 12% 11% 10% 10% 10% 10% 9% 8% 8% 8% 8% 8% Utah Nevada Wyoming Hawaii Texas North Dakota Alaska Arizona New Mexico Washington Idaho Florida Maryland Montana Oklahoma Georgia Colorado District of Columbia New Hampshire South Dakota Virginia Middle Class Job Growth, 2002-2009
  25. 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. 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. 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. 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. 29. A Majority of Immigrants Now Reside In The Suburbs U.S. Census Bureau, 2007 American Community Survey
  30. 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. 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. 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
  33. 33. 8.0% 10.4% 8.5% 8.3% 5.8% 5.7% 6.9% 4.8% Total Los Angeles Co Orange Co Riverside Self Employment Rate, 2006 Foreign Born Native Born
  34. 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
  35. 35. 71.6% 11.6% 11.4% 5.3% 50.1% 23.7% 13.4% 12.8% White non-hispanic Hispanic Black Asian and other Share of Labor Force by Race/Ethnicity 2000 2050 Shifting Ethnicity of Labor U.S. Bureau of Labor Statistics
  36. 36. 95% 45% Ages 18 - 29 Over age 64 Approve of interracial dating... A More Tolerant Population Gallup Poll
  37. 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. 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
  39. 39. Redefining Sustainability Social Environmental Economic
  40. 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. 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. 42. The Key to a Smart Regional Strategy This above all: to thine own self be true William Shakespeare
  43. 43. 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
  44. 44. 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
  45. 45. 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”
  46. 46. 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”
  47. 47. 10.0 11.0 12.0 13.0 14.0 15.0 16.0 17.0 18.0 19.0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 Poverty Rates United States California
  48. 48. -8.0 -6.0 -4.0 -2.0 0.0 2.0 4.0 6.0 8.0 10.0 12.0 Less than $35,000 $35,000 to $74,999 $75,000 and up Changein percent shareof Groupsfrom 1999 to 2007 Change in Income Groups 1999 to 2007 California Texas
  49. 49. 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
  50. 50. 0.0 5.0 10.0 15.0 20.0 25.0 U.S. Census Bureau CA Capital Outlay Share of Total Expenditures
  51. 51. 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
  52. 52. 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
  53. 53. 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
  54. 54. 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
  55. 55. 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.
  56. 56. Questions and Comment

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