Road to the Summit: Perception versus reality of Los Angeles economy
Forum attendees in a workgroup at the L.A. regional economic forum discuss how to get more capital available for small businesses. (Photo Credit: John Guenther)
If there was one recurring theme from Thursday's Los Angeles Regional Economic Forum, it was that things aren't as bad as they seem. There's much more to the L.A. economy than meets the eye, and the perception of negativity doesn't quite mesh with reality.
The question for attendees at the forum, held at the University of Southern California and hosted by the LAEDC, was how the region and the state can capitalize on their strengths and be more aggressive in taking this bull of an economy by the horns.
"The state has been allowing innovation to happen organically, and if they continue to do so, we will fall behind states like Colorado who are allocating significant funding to things," said James Watson, CEO and President of California Technology Manufacturing Consulting (CMTC). "We must invest in the infrastructure of innovation. My recommendation is for the state to get in the innovation business."
The state, and the L.A. region in particular, might want to get in that business quickly. Unemployment in California is at 9.7 percent, but, in Los Angeles County, the rate is still in double figures at 10.2 percent. Perhaps most troubling of all is the 42 percent of the county that is living in poverty.
But things aren't nearly as bad as they seem, says Zack Zolan. Zolan, co-founder and managing partner of digital product design firm Wilshire Axon, stressed just how different the public perception of Los Angeles differs from the reality. According to Zolan, Los Angeles is perceived as the most unsafe city out of 34 U.S. cities in a recent poll. But the statistics say otherwise: LA is actually the second safest city from the same group. Additionally, LA was perceived as the city with the least access to public transportation out of 35 cities, but the reality is it actually has the most access.
The city has the largest port complex in the Western Hemisphere, has the most people with PhD's per capita, and graduates more engineering students that any other city in America from its universities. The engineering graduation stat represents what should be a huge strength for the region, but there's a problem.
"Fifty percent leave the day after they graduate," Zolan said. "While we're doing big innovation for Fortune 500 companies around the globe, outside of Los Angeles we are viewed as anything but an innovative city."
Part of changing the perception and reality of L.A.'s economy is better preparing its workforce, and for David Rattray of UNITE-LA, that work begins early. "Our view of workforce begins at birth," Rattray said. "I think the K-12 world is back in the game in understanding that the world has passed us up."
To illustrate the importance of early childhood education and the impact economic circumstance has on childhood development, Rattray explained how a 3-year-old's vocabulary has been shown to correlate with the economic status of his or her parents. A child of that age growing up in a home on welfare will tend to have a 500-word vocabulary, compared to a 700-word vocabulary for a child in a working class home. Kids in homes with professionals as parents will have an 1,100-word vocabulary. Rattray's point was that gaps in achievement start early, and that's hamstringing the state's ability to produce and prepare a workforce.
"What's good for kids is good for the economy," he said.
Other priorities that came out of workgroups during the forum included modernizing CEQA and increasing private financing in infrastructure projects.
Los Angeles' economy is huge, but it has the potential to be even more of an economic powerhouse than it already is. Zalon argued that the region's economy could be called the most important economy in the nation. Doug Henton, of Collaborative Economics, pointed out that L.A has the biggest manufacturing sector of all U.S. metro areas and growing sectors in entertainment, healthcare, and cleantech.
But while important, the region is one of 16 regions that held economic forums recently to hash out priorities. Those will inform the second annual California Economic Summit taking place in Los Angeles November 7-8.
California is a state with several regional economies that are complex and need area-specific policies to make them great, which can't come without a collective push for change. In the words of the Los Angeles Area Chamber of Commerce's Gary Toebben, "Help us beat the drum for reform."
Categories: Regional Forums