By Rob Lapsley.
A new study “Economic Tale of Two Regions: Los Angeles vs. Bay Area” uses data compiled by the Center for Jobs & the Economy to show that jobs created in the past 24 years have been at opposite ends of the wage spectrum—either low-wage or high-wage—leading to a diminishing middle class and the creation of a two-tier economy and growing lower-wage class in California.
Using two of the state’s key geographic jobs centers, Los Angeles County and the Bay Area, this new report shows a steady decline in middle-class wage jobs since 1990 and a substantial increase in lower wage jobs. The report also highlights that the economies in these two regions are being driven by contrasting industry structures: Silicon Valley and its related information industries that have been subject to far less direct regulation and which pay the high salaries employees need to cope with high housing prices, growing energy costs and other costs of living versus Los Angeles’ more traditional industry mix that is more directly impacted by the state’s ever-growing regulatory, tax and energy costs.
The Bay Area accounts for more than 60 percent of the state’s net employment gains since 2007, but job growth has been led by higher wage jobs of the expanding new industries and the lower wage primarily population-serving service jobs related to that growth. By contrast, Los Angeles presents a trend largely of jobs stagnation under which middle class wage jobs have been steadily replaced by lower wage service jobs.
This report clearly reinforces what many economists and some policy makers have been saying – that jobs recovered are not the same as jobs that were lost. Because we are not growing middle class jobs we are now faced with a two tier economy where lower wage earners have far fewer economic opportunities to move up the wage ladder to support their families.
Realistically, given the high costs of living in California, the debate aound a $15 an hour minimum wage is not the solution to this problem. We need to increase middle class jobs. Policymakers have to modernize our laws in a way that will attract investment that creates middle class job opportunities.
Below are some key findings from the study.
View full study here.