The number of jobs in L.A.’s formal economy has stagnated since 1990, while the population has grown 15 percent. One of the consequences is that L.A. had a poverty rate of 16.6 percent in 2015, compared to the national average of 14.7 percent.
Creating jobs is different than redistributing existing jobs, as when one restaurant closes and another opens, or providing more equitable access to existing jobs – an important objective, but different than job growth. It requires an increase in the amount of money spent on wages in the regional economy.
The regional payroll will grow if we increase exports, or bring more people to L.A. for specialized services such as health care, education, or tourist experiences, or if local residents spend more money for local goods and services.
Two weeks ago at the Economic Sustainability Roundtable, we discussed lessons from three past (failed) job creation initiatives in Los Angeles. These initiatives were in the 1990s, when we still dared to dream large about building a stronger economy. The first initiative was the economic adjustment strategy to offset the collapse of aerospace. The second initiative attempted to use a $50 million R & D project to build an advance technology transit bus to jumpstart local fuel cell manufacturing. The third initiative was the blue ribbon corporate initiative to Rebuild L.A. after the 1992 civil unrest.
Each initiative demonstrated significant strengths but fell short of its vision. For example, Rebuild L.A. set out to create 94,000 jobs in South Los Angeles, but ultimately delivered only about 5 percent of the planned business investments.
These outcomes show how hard it is to nudge the local economy in the direction of growth. On the other hand is it any harder than solving poverty-driven problems such as homelessness, disconnected foster youth, and community re-entry of justice-involved individuals? All of these problems have jobs as part of the solution.
It’s time to make job growth a front-burner issue and think about how local government can use its modest tools judiciously and prudently to nudge the economy in the direction of growth.