Is L.A. (and California) Becoming a Land of Economic Mobility for Some and Outward and Limited Mobility for Many?
Concentration of Jobs
Population growth in big cities slowed for the fifth-straight year in 2016, while population growth accelerated in the more sprawling counties that surround them. At the same time the Brookings Institution recently released a study that highlighted how, between 2004 to 2015, jobs have become denser in and around the urban core of metropolitan regions, and sprawled across their outlying suburban and exurban areas.
The knowledge economy is mainly responsible for the concentration or dispersion of jobs across 94 of America’s largest metro areas, which contain roughly two-thirds of all jobs.
Ninety percent of these jobs are now in four metros: New York, Chicago, San Francisco, and Seattle, which combined, had an average jump of 40 percent for job density. If you take out Chicago, the other three metros had a 60 percent increase. L.A.’s economy looks to be on track to follow these regions, as tech giants, like Apple, Facebook, Netflix, Google and others, continue to accumulate square footage in core locations around L.A. – Playa Vista, Hollywood, El Segundo and Downtown. At the same time L.A.’s remaining manufacturing base and its more routine service-based sectors, where wages and incomes are much lower, are spreading out into the counties surrounding L.A. County.
Migration of People
The share of Americans moving to a new location continued a steady decline in 2017, marking the fifth straight year in which the share of the population moving dropped. In 2017, the number fell to 11 percent. The level was nearly twice as high in 1985, 20 percent, but has fallen steadily for the last three decades due to an aging population and economic problems facing younger workers. Research shows that men and women, who move, have greater economic mobility than those who do not move, and the gap has widened considerably over the past 35 years.
As you will see from the data further below, L.A. is experiencing a number of things: a small influx of skilled workers, a growing population of foreign born residents, a large exodus of working and middle-class residents and a growing population of homeless residents and a large population of low-paid workers with limited residential and economic mobility.
The main culprit – Housing costs? More than 90 percent of the difference in costs between California’s coastal metropolises and the country derives from housing. Coastal California is affordable for roughly 15 percent of residents, down from 30 percent in 2000 and 30 percent in the interior, from nearly 60 percent in 2000. In the country as a whole, affordability hovers at roughly 60 percent.
California Born Residents are Leaving the State
The data shows that population growth in California has slowed due to an increasing number of CA born residents, seven million to date, who have relocated to other states, such as Arizona, Texas, Oregon and Nevada, that offer more affordable living standards. Seven million residents is 17.5 percent of the state’s overall population and a lot more than the 5 million new comers coming in from other states throughout the past decade. The largest group leaving the state – some 28 percent – is 35 to 44, the prime ages for families. Another third come from those 26 to 34 and 45 to 54, also often the age of parents.
California’s Population of Foreign Born Residents has Grown
The largest offset of this trend has been the increase in foreign-born immigration. Approximately 11 million Californians (28 percent) are foreign-born, coming mainly from Mexico, China, Taiwan, India and the Philippines. This rate is nearly double the amount of transplants from other states and that of the rest of the country. The number is even higher for L.A. County – 38 percent. More than half (52%) of California’s immigrants are naturalized US citizens, and another 34 percent have some other legal status, including green cards and visas. According to the Center for Migration Studies, only about 14 percent of immigrants in CA are undocumented.
California Continues to Attract People with a College Degree
Another offset is the net gain of 162,000 new college educated residents coming from other states throughout the past five years. That is a little more than half of what the University of California system awarded – 300,000 bachelor’s degrees – during the same time period. The CSU system awarded around 500,000.
California’s Birth-Rate Continues to Decline
California Continues to Attract People Looking for Economic Mobility, but is Starting to Push Out High-Income Earners
According to the Legislative Analyst’s Office, half of the state’s personal income tax revenue comes from those making $500,000 or more. That is a population of 150,000 residents. Conversely, households making $50,000 or less make up nearly 60 percent of tax filings but make up just 2 percent of revenue. The state income tax covers more than two-thirds of California’s general fund ($215B), which pays for schools, prisons and a range of health and social programs.
Charles Varner, the associate director of the Stanford Center on Poverty and Inequality and his fellow researchers recently found that following the passage of Proposition 30 – the 2012 ballot measure that raised the top state income tax rate to 13.3 percent and created a budget surplus of $20 + billion, the state lost an estimated 138 high-income individuals, or about 0.04 percent of the roughly 312,000 people subject to the tax increase. Prior to that, tax increases on the rich (i.e. mental health tax in 2004) – did not influence a net-loss of millionaires.
Los Angeles’ Working-Class and Middle-Class Residents are Looking to Move to Lower Cost Counties and States
Approximately 100,000 more residents moved out of L.A. County than moved in last year. One-third of this population remained in CA, with the lower-income and middle-income earners, those making less than $100,000, about 75 percent of this population, ended up in San Diego, Sacramento, Riverside and the Inland Empire. Those making more than $200,000 mainly moved to the Bay Area.
The remaining two-thirds moved out of CA and the majority of residents were mainly lower-income households that were attracted to more affordable regions in nearby states, like Las Vegas and Phoenix. The high-income households, those making between $100,000 to $200,000, migrated to the Northwest and New York.
L.A.’s Population is Aging and Staying in Place
Within a decade, one out of every five of L.A.’s, and the states’, residents will be seniors, and despite a rising cost of living, seniors are staying put. CA only lost about 20,000 seniors to other states in 2017 – less than 1 percent of the total senior population. Home ownership looks to be a strong factor in this data point. In L.A. County 13.5 percent (472,000) of all housing units are owned and occupied by someone 65 years old and older and 372,127 of those owner occupied homes were purchased more than 30 years ago.
L.A.’s Workforce Needs to Grow
In L.A. County there are about 8 million residents who are 16 years old and older, which makes them eligible to work. Approximately 5.1 million are actively participating in the labor force, while a large number of individuals – students, retirees, institutionalized individuals, stay-at-home parents and discouraged workers – remain on the sidelines. This segment of the population has greatly increased since 1991 as reflected in today’s labor force participation rate of 62 percent, which is down greatly from a high of 69 percent.
According to the Neighborhood Data for Social Change (NDSC) platform, a project of the USC Price Center for Social Innovation, as of 2014, L.A. County had a total of 4,119,592 workers. Though the percentage of workers earning more than $3,333 a month has been steadily increasing since 2002 from 27 percent of all workers to 39 percent in 2014, more than 61 percent of workers in L.A. County are earning less than $3,333 a month, and nearly 27 percent of all workers are earning less than $1,250 a month, which calculates to less than $15,000 a year. That means one in four workers are dangerously close to – or fall below – the 2018 Federal Department of Health and Human Services poverty guideline for individuals of $12,140 a year. Six-hundred thousand L.A. County residents spend 90 percent or more of all their income on housing.
Despite containing only 3 percent of the total U.S. population, L.A. County still holds nearly 10 percent of the country’s homeless population. According to homelessness counts between 2010 and 2017, the number of homeless people across L.A. County went from 38,700 to over 55,000 – an increase of 42 percent. On top of that 1.63M residents are living in poverty.
Among homeless young adults, nearly 60 percent are working or actively looking for a job. So are almost 50 percent of homeless parents with children and 40 percent of the newly homeless population. The Economic Roundtable in L.A. has been working on a model that can estimate the entire population that experiences homelessness over the course of the year based on point-in-time data. The found that on a given night, about half of the people experiencing homelessness have been homeless for over a year.
However, their model suggests that group only accounts for a fifth of the annualized population. On the other hand, it is likely that half of the annualized population was homeless for only two months or less. Part of the rising population of homeless can be attributed to the fact that around 25 to 30 percent of the 100,000 residents released from jail or prison in the city of L.A. become homeless. The passage of Proposition 47, the sweeping, controversial 2014 ballot measure that downgraded six drug and theft crimes for misdemeanors and allowed defendants to renegotiate their punishments, added people to the streets, due to a lack of swift funding for support services.
The last point. The 2019 Homeless Count reports that over 65 percent of homeless adults have lived in L.A. County for over 10 years.
Yet, at the L.A. Coalition we have done back of the napkin math and our data shows that roughly 14,000 people who are homeless and unsheltered in L.A. County became homeless in another place. Based on data from the L.A. Homeless Services Authority, over half of those individuals – roughly 7,500 – reported that they came here after they became homeless in another state. Approximately 6,000 lived in another county within the state and roughly 500 reported living in another country.
As always we welcome new ideas to solve these issues and new members to help support our work.