Originally posted at Fox & Hounds Daily.
By Joel Fox.
A Los Angeles city resident reading the newly released Los Angeles 2020 Commission report would be forgiven for immediately packing his or her bags and getting out of town. The independent commission of 13 members created by City Council president Herb Wesson issued a scathing report calling California’s biggest metropolis a city in decline.
No solutions are in the report … that is forthcoming in a second document from the commission.
But the commissioners did indicate the way out of a downward spiral — creating jobs.
Titled “A Time for Truth,” the report is blunt about the city’s future if there is no course correction and inspired leadership. “Los Angeles is sinking into a future in which it no longer can provide the public services to which our people’s taxes entitle them and where the promises made to public employees about a decent and secure retirement simply cannot be kept. City revenues are in long-term stagnation and expenses are climbing.”
The report lists 16 bullet points of city problems including failing schools; public sector pension and health care costs; a diminishing middle class, fewer job opportunities and, oh yes, choking traffic. The report contained only four positive bullet points (diversity of the population; municipally owned seaport, airport and utility; local world class universities; and the Los Angeles brand for lifestyle, innovation and opportunity.)
The narrative hit hard on the theme of a diminished jobs market.
Job items cited by the commission:
- Our roughly 10% unemployment rate is the highest for any major city in the U.S. — San Francisco, Houston and Dallas are less than 7%.
- Ten percent fewer people are employed in Los Angeles than two decades ago. Over the same period, national employment has increased 20%.
- Los Angeles is the only one of the seven largest U.S. cities where the number of jobs has actually declined since 1990. Los Angeles County ranks last in California in creating jobs.
- From 1980 to 2010, LA added one million new residents but lost more than 165,000 jobs, according to Bill Allen, CEO of Los Angeles Economic Development Corporation.
- Weak job growth cannot be solely attributed to the Great Recession. Since 1990, through at least three business cycles, LA has consistently underperformed against other major cities and the nation in creating new jobs.
- The number of Fortune 500 companies with headquarters in Los Angeles has declined from 12 in 1980 to the present 4. In contrast, New York has increased its total to 43.
The report stated that the city’s job growth is in relatively low wage fields such as education services, healthcare and hospitality.
It also cited problems with the city’s premier industry – entertainment. “Jobs in the entertainment industry continue to move elsewhere. Steven Nissen, Senior Vice President of NBC Universal, notes, “11 of the 12 action films projected to gross more than $100 million (in 2013) shot somewhere other than Southern California.” He further notes, “Ten years ago, this statistic was very different, with seven of the nine summer action films that topped $100 million in U.S. sales in 2003 made largely in Los Angeles.””
Small business does not fare well in the city, either. The report records that “LA’s permitting process remains daunting for small business owners who must navigate byzantine rules and overlapping City departments while juggling the demands of running their enterprises.”
Regulations and other hurdles for small business earned the city a D rating from the Kauffman Foundation on small business friendliness.
The report is a wake up call to city leaders to craft policies that would help create jobs in L.A. A plan for job creation and thriving businesses appears to be the answer for L.A.’s salvation.
We’ll see what solutions the commission puts forth in its next report. For now you can find “A Time for Truth” here.