California's Southern Discomfort


We know this was a harsh recession, followed by, at best, a tepid recovery for the vast majority of Americans. But some people and some regions have surged somewhat ahead, while others have stagnated or worse.

Greater Los Angeles fails to make the grade. In per capita growth of gross domestic product since 2010, according to analyst Aaron Renn, our region ranks a very mediocre 38th out of 52 metro areas, with a measly 1.5 percent, well below the national average of 3.8 percent. It places behind up-and-comers among the Texas cities, Oklahoma City and some tech-oriented clusters – Silicon Valley ranked second, after Houston. These places have growth rates roughly twice those of the Southland.

When we wanted to drill down to the more local level, and analyze what is happening by county, we needed to go to the Census Bureau, as opposed to the Bureau of Economic Analysis, where we could glean what is happening in our communities. Our analysis is based on those figures, and neither of us hopes the Southern California region continues to stagnate or decline.


One of the saddest results of the Great Recession and the weak recovery has been the expansion of poverty across the country. The poverty rate among the country’s 52 largest metropolitan areas, according to the most recent census numbers, grew from 14.9 percent in 1999 to 15.8 percent in 2013, a 7 percent rise. At least one-quarter of that rise has taken place since the recovery began.

Southland politicians, like those in much of California, often decry income inequality and poverty, but they have not been very effective in combatting it. The region has had higher-than-average poverty for well over a decade, and things have not gotten better recently. Since 2009, the Los Angeles region, which includes Orange County, has seen its poverty rate grow by 1.8 percent, 80 percent higher than the national norm. The area ranked 47th out of 52 in terms of increased poverty. Riverside-San Bernardino saw a similar jump, 1.7 percent, in poverty.

The scale of the poverty problem in the Southland is much greater than many imagine. When we broke down the figures, Los Angeles County remained the area with the highest concentration of poverty. L.A. saw a slight reduction in poverty from 1999-2010, but has moved in the other direction more recently. From 2010-13, poverty in L.A. County rose from 17.5 percent to 18.9 percent, an 8 percent increase. Poverty now afflicts a considerably larger portion of the population of Los Angeles than it did in 1999.

But if Los Angeles County endures the largest pocket of poverty, there’s not much for the surrounding counties to shout about. San Bernardino and Riverside counties have each seen rapid 20 percent increases in their poverty rates since 1999; in fact, San Bernardino’s 19.1 percent poverty rate is slightly higher than that of Los Angeles County.

Orange County fares better, but the curse of poverty is spreading even here. Although its 13.5 percent poverty rate lies below the national average, the ranks of the O.C. poor have jumped 30 percent relative to the entire population since 1999. The expansion of poverty as a share of the population has grown by more than 10 percent since 2010.

Low Income Growth and High Housing Prices: A Bad Combination

As befits a region with relatively low GDP growth, incomes in Southern California have stagnated. Median household incomes have dropped in every county in the region, including Ventura and Orange, whose residents boast median household incomes above $70,000, well above the $50,000 range found in Los Angeles, San Bernardino and Riverside. Since 2010, the biggest income drops have happened in the Inland Empire, where real incomes have fallen by nearly 7 percent. Los Angeles also has experienced a drop, with real incomes down 3 percent since 2010.

For the most part, the more-affluent suburban counties have done better, consistent with the two-speed U.S. economy. Orange and Ventura enjoy median household incomes a full $20,000 above those of Los Angeles County and the Inland Empire. This is after the smaller 2.1 percent reduction (2010-13) in Orange County real incomes. Real incomes have recovered, albeit slightly, only in Ventura. The biggest hit has been concentrated in those parts of Southern California – Los Angeles County and the Inland Empire – historically most dependent on blue-collar professions in manufacturing, logistics and construction. These are, for the most part, also the most heavily Latino and African American areas of the region.

So, why can’t the Southland replicate the economic boom in the San Francisco Bay Area? Simply put, the Los Angeles region is not the Bay Area, or Seattle. The share of Los Angeles’ jobs that are tied to manufacturing and logistics is twice that of the San Francisco area. Our population is far less well-educated, particularly in the Inland Empire and much of Los Angeles County, and is also far more heavily African American and Latinogroups that have fared particularly poorly. Nationwide, Latino poverty rates, notes a recent Pew study, stand at 28 percent, the highest for any ethnic group.

Alongside the stagnant economy, growing Latino poverty – which is really the key challenge for Southern California – also reflects a high cost of living. This is most profound in terms of housing costs. Overall, the Southland counties – most notably Los Angeles and Orange – suffer among the highest housing cost burdens, relative to income, than virtually anywhere in the country.

This can be seen by looking at what parts of the country have the highest percentages of people paying more than 50 percent of pretax income for housing. According to the Center for Housing Policy and National Housing Conference, 39 percent of working households in the Los Angeles metropolitan area spend more than half their incomes on housing, a somewhat higher rate than in the pricier San Francisco and New York areas and much higher than the national rate of 24 percent of households spending more than half of income on housing, itself far from tolerable.

New Policy Imperatives

Our current mix of state and local policies are neither reviving the regional economy nor reducing poverty. One key reason is that the current political environment – fostered and perpetuated by greens, urban land interests and organized public workers – places little priority on promoting the growth of the tangible economy that tends to employ blue-collar workers. High energy costs, largely due to the state’s Draconian commitment to renewable fuels, are a direct threat to any kind of industrial growth, while highly restrictive housing policies slow any hope of meeting the needs of renters and prospective homeowners.

Of course, one could point out that the Bay Area, the one large region in California experiencing above-average income growth, labors under the same progressive policy regime. But the Bay Area, particularly San Francisco, is already largely deindustrialized and its population far more attractive to digitally based companies. It boasts a far larger pool of venture capital, and a unique network to support tech.

A Google or an Apple can easily move its energy-hungry arrays of computer servers to less-expensive states, along with its device manufacturing. The more grass-roots based, small-business-oriented Southland economy is far less able to adapt to regulatory strictures from Sacramento.

Southern California leaders clearly need to understand that the region is not winning under the current policy environment in the state. Steps to re-energize our basic industries and restart new housing, particularly single-family housing desired by most young families, need to be taken. Other steps, from reforming the schools and rebuilding basic infrastructure to modernizing higher education, also are imperative. At risk is not just a comfortable way of life, but also the legacy of opportunity that has been so critical to this region from its earliest days, a legacy now at extreme risk.

This piece first appeared at the Orange County Register.

Joel Kotkin is executive editor of and Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University, and a member of the editorial board of the Orange County Register. His newest book, The New Class Conflict is now available at Amazon and Telos Press. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is co-author of the "Demographia International Housing Affordability Survey" and author of "Demographia World Urban Areas" and "War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life." He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He was appointed to the Amtrak Reform Council to fill the unexpired term of Governor Christine Todd Whitman and has served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

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The Answer

I think the no-brainer answer to the cause of this blight is democrats. CA is largely under democrat control, therefore they set polices in the state. They are historically anti-business when it is businesses who create jobs. CA has had many major businesses leave the state because of the democrat's confiscatory tax structures. And that's not even touching on the government induced influx of illegal aliens in the state. They need to vote the democrats out in order to reap the benefit of reasonable, coherent policies which will encourage (1) business growth and (2) enforcement of immigration laws already on the books.

Southern California economics

There are several factors in the stagnation of our economy. At one time San Bernardino was an "All American City", and then we lost a Kaiser Steel mill, a major Santa Fe railroad facility, and a large Air Force base. We lose upwardly mobile business people because they tend to get transferred to other parts of the country because we do not have the higher level jobs here. We have a high immigrant population, many of whom aspire to small businesses--which are disproportionately affected by high permit and regulatory costs. We have a high percentage of the population on assistance of some kind; housing costs are somewhat lower than in the Los Angeles area and we hear stories of welfare agencies in LA who recommend clients move to San Bernardino. Public safety is a local issue. Local officials keep looking for the "magic bullet" but seemed to have missed the mark. We need real, workable productive businesses, but ...??

traffic problems restrict southern california

Geography student

Building more housing of any type in southern California is a desirable goal but this article doesn't mention the problem of traffic congestion. A huge problem in southern California is the congestion and traffic. This is not a problem that can be solved easily as it is not possible to build any more significant freeways in southern California, and rail transport is much to expensive to have any effect. This is going to continually limit the development of southern California just as it restricts development of many other metropolitan areas.

At least areas like Houston are not restricted geographically and can build more road capacity.

As for education the emphasis should be put on what the market demands. There is an overemphasis on college education when there is a shortage of skilled trades such a machinist. Education systems should emphasis skills that are in shorter supply.

This relates to Bertaud's "correct role for planning"

There is a hugely unhelpful myth extant all over the world, to the effect that Los Angeles represents an automobile-mad city that tried to keep building highways to stay ahead of congestion, and failed - hence illustrating "induced traffic".

Few people understand that LA highway building always lagged growth and ran into NIMBY opposition and was halted long before capacity was even adequate.

The real lesson LA illustrates, is something that Alain Bertaud is very strong about - the correct role for planning, is to set aside rights of way and land designations LONG ahead of growth, to provide for whatever growth MIGHT occur in any direction. Bertaud points to Manhattan's road network being designated in 1813 - decades ahead of actual need for most of it.

The source of our congestion problems is largely that we try and expand capacity long after an area is "built out" and we need to pay exorbitant sums for land already in use, and demolish buildings, and overcome intense NIMBY opposition.

African American and Latino groups

Instead of writing that these two groups have fared particularly poorly wouldn't it be less misleading to write that they always fare poorly relative to the average? That way we can distinguish between what is new and what is old. In particular, in the Los Angeles area, the tremendous increase in the Latino share of the population over the past several decades explains the situation much better than any shorter-term policy decisions that have or haven't been made.

Now maybe I am wrong about this. I can certainly imagine new education policies that might make a difference, namely, more vocational education, but only in conjunction with a reversal of our policies on trade and immigration to increase the demand for and reduce the supply of labor (a "labor-price equalization tax" on low-wage imports from countries like China on the one hand, an end of massive low-skilled immigration from poor countries in Latin America on the othr). If we truly care about the life-prospects our less fortunate fellow citizens in the decades ahead -- including half the white population, let me be clear, which might conceivably include some of our children and grandchildren -- then this is the way to go, probably the only way.

The truth will out. It is only a matter of time. The sooner the better. Get further out front on this Joel, at least with your friends.