GROWING THE MIDDLE: SECURING THE FUTURE LOS ANGELES 02.21.18 MANUEL PASTOR @Prof_MPastor THE WIDENING GAP 1
THE WIDENING GAP INEQUALITY: HOW CALIFORNIA RANKS Household* Gini Coefficient, 1969 Mississippi Arkansas Louisiana D.C. Alabama Florida Oklahoma Tennessee Kentucky South Dakota New Mexico Texas Missouri West Virginia Georgia South Carolina Virginia North Carolina North Dakota Kansas New York Nebraska Arizona Iowa Montana California Minnesota Rhode Island Alaska Colorado Idaho Oregon Illinois Wyoming Maryland Massachusetts Delaware New Jersey Pennsylvania Hawaii Vermont Connecticut Washington Ohio Wisconsin Nevada Maine Michigan Utah Indiana New Hampshire Source: US Census 2
INEQUALITY: HOW CALIFORNIA RANKS Household Gini Coefficient, 1989 D.C. Louisiana Mississippi New York Alabama Texas Kentucky Tennessee Florida Arkansas West Virginia New Mexico Georgia Oklahoma California Illinois Arizona Missouri Pennsylvania Connecticut New Jersey North Carolina Michigan Massachusetts South Carolina Kansas Ohio Colorado Virginia Oregon Montana Idaho Rhode Island Nevada Minnesota Washington Maine Nebraska Iowa Delaware Indiana Maryland North Dakota Hawaii Wisconsin Alaska Wyoming Utah South Dakota New Hampshire Vermont Source: US Census INEQUALITY: HOW CALIFORNIA RANKS Household Gini Coefficient, 2014 District of Columbia New York Connecticut Louisiana California Massachusetts Florida Rhode Island Texas Tennessee Georgia New Mexico Illinois Mississippi Alabama New Jersey North Carolina Arkansas Kentucky South Carolina Pennsylvania Arizona North Dakota Oklahoma Virginia Ohio Missouri Oregon Michigan Kansas Maine Colorado West Virginia Montana Washington Idaho Minnesota Delaware Maryland South Dakota Indiana Iowa Nevada New Hampshire Vermont Wisconsin Nebraska Hawaii Utah Wyoming Alaska Source: US Census 3
CALIFORNIA: ONE PERCENT RUNS AWAY Source: California Budget and Policy Center CALIFORNIA: LABOR MARKET SHIFTS 4
CALIFORNIA: STRUCTURAL SHIFTS California Employment in Key Sectors of the Economy, 1990 2016 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Durable Goods Construction High Tech Services Nondurable Goods Computer & Electronic Manufacturing Temporary Employment CALIFORNIA: RACE MATTERS 5
DRILLING TO LOS ANGELES Cumulative Job Growth Since 1979 75% 64% 50% 42% 25% 0% 1979 1984 1989 1994 1999 2004 2009 2014 DRILLING TO LOS ANGLES Growth in Jobs and Earnings by Industry Wage Level, Los Angeles County, 1990 to 2012 Low-wage Middle-wage High-wage 38% 15% 12% 6% -1% Jobs Earnings per worker -27% 6
DRILLING TO LOS ANGELES Real Earned Income Growth for Full-Time Wage and Salary Workers Ages 25-64, 1979 to 2014 Los Angeles County California United States 26% 15% 13% 17% 4% 6% 10th Percentile 20th Percentile 50th Percentile 80th Percentile 90th Percentile -4% -7% -11% -10% -11% -19% -19% -25% -23% Source: Integrated Public Use Microdata Series. Universe includes civilian noninstitutionalfull time wage and salary workers ages 25 through 64. Note: Data for 2014 represent a 2010 through 2014 average. LOS ANGELES SLIPPING OVER TIME $100,000 $90,000 $80,000 $70,000 Real Median Household Income in Various California Regions, 1985 2015 (inflation adjusted to $2015) 1985 89 2011 15 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 Fresno Bakersfield Los Angeles Orange Inland Empire San Diego SF/Bay Area San Jose 7
THE OLYMPICS WE DON T WANT TO WIN Bridgeport-Stamford-Norwalk, CT: #1 (0.54) Gini coefficients (inequality levels) for 2014 for 150 largest metro areas Los Angeles County: #7 (0.50) Ogden-Clearfield, UT: #150 (0.40) Note: Data represent a 2010 through 2014 average. Universe includes all households (no group quarters). WORKING HARD, FALLING BEHIND Working poverty rates for 2014 for 150 largest metro areas Brownsville-Harlingen, TX: #1 (14%) Los Angeles County has the 9 th highest working poverty rate Los Angeles County: #9 (7%) Boston-Cambridge-Quincy, MA-NH: #150 (2%) Note: Data represent a 2010 through 2014 average. 8
PERSISTENT RACIAL GAPS Percent of Families Living Below 150 Percent of the Federal Poverty Line by Race/Ethnicity Los Angeles County 1990 2010 2014 36% 38% 29% 30% 26% 18% 18% 20% 8% 11% White Black Latino Asian/Pacific Islander All REPRODUCING RACIAL GAPS Educational Requirement for New Jobs in California and Educational Attainment (of Adults 25 64) by Race/Ethnicity Los Angeles County 2010 2014 11% 21% 22% 5% 31% 41% 5% 4% 10% 18% 51% 8% 36% 9% 31% 25% 22% 8% 25% 16% 21% 35% 25% 19% 41% 14% 18% 5% 10% 11% New Jobs* White Black Latino API All BA or higher AA degree Some college HS Diploma Less than HS 9
REPRODUCING RACIAL GAPS ANOTHER LABOR MARKET CHALLENGE 2,000,000 Prison Population, California versus the rest of the US, 1978 2014 200,000 1,800,000 180,000 Prison Population, Rest of US 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 2000 2014 Rest of US 160,000 140,000 120,000 100,000 80,000 60,000 40,000 200,000 20,000 0 0 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 California Prison Population, California 10
AN UNCERTAIN ECONOMY Work is increasingly precarious temporary, part-time, changing Work is increasingly creative innovative, talent-driven, teamed Work is increasingly caring not in treatment of workers but in the object of their efforts And we will need to reconsider links between: Work and income Work and meaning Work and security AND THE RENT IS TOO DAMN HIGH... Share of Households that are Rent Burdened, 2014: Largest 150 Metros Ranked Miami-Fort Lauderdale-Miami Beach, FL: #1 (63%) Los Angeles County: #7 (59%) Des Moines, IA: #150 (42%) Los Angeles County ranks near the top for rent-burdened households compared with other regions Note: Data represent a 2010 through 2014 average. Universe includes renter-occupied households with cash rent (excludes group quarters). 11
THINKING NEW: EQUITY AND GROWTH Conventional wisdom in economics says there is a trade-off between equity and efficiency. But, new evidence shows that regions that work toward equity have stronger and more resilient economic growth. Source: http://storage.cloversites.com/northriverside baptistchurch/site_images/sub_page70_picture0.jpg USC PERE November 2013 24 EVIDENCE: EQUITY AND GROWTH Even the Federal Reserve Bank of Cleveland found that that racial inclusion and income equality matter for growth. Image Sources: http://static.guim.co.uk/sys-images/guardian/pix/pictures/2009/2/24/1235500211963/ben-bernanke-chairman-of--003.jpg; http://blog.usni.org/wp-content/uploads/2010/11/fed-logo_trans.png; http://www.benjamindrickey.com/gallery/gallery_federal_reserve.jpg 12
EVIDENCE: EQUITY AND GROWTH We have developed these ideas further in... Using model from IMF, we look at what predicts length of employment growth for 200 metros, 1980-2010 inequality & social distance are key dragging factors on sustained growth. Initial Gini Coefficient 55 50 45 40 35 30 Relationship between Initial Gini Coefficient and Length of Growth Spell in 184 American Metropolitan Areas, 1991 2011 0 10 20 30 40 50 60 70 80 Length of Growth Spell EVIDENCE: EQUITY AND GROWTH We have developed these ideas further in... We also did 11 case studies and found that: Knowing together creates a higher possibility of growing together. Conflict is an important part and not antithetical to collaboration. 13
AND WHY SO IMPORTANT NOW? http://d3j5vwomefv46c.cloudfront.net/photos/large/847889448.gif?1397145494&maxx=740&maxy=704 IMPLICATIONS FOR POLICY Drive the top: Support the driving sectors of the economy, especially creative industries, advanced manufacturing, and logistics Grow the middle: Support workforce development with a focus on community colleges and re-entry efforts Lift the bottom: Support business through minimum wage increases, strengthen immigrant integration, build housing and stabilize rents 14
IMPLICATIONS FOR LEADERSHIP Build empathy & civic will, stressing that equity is fundamental not an add-on Develop equity indicator projects internally & externally to gauge progress & accountability Expect challenges on the way the moral arc may bend toward justice but someone has to pull hard FOR MORE... @Prof_MPastor 15