Measuring Economic Growth, by Degrees

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In this information age, brains are supposed to be the most valued economic currency. For California, where the regulatory environment is more difficult for companies and people who make things, this is even more the case. Generally speaking, those areas that have the heaviest concentration of educated people generally do better than those who don’t.

Nothing more illustrates this trend than the supremacy of the Bay Area over Southern California in the past five years. Since the 2007-09 recession, the Bay Area has recovered all of its jobs, as has San Diego, but Los Angeles-Orange and the Inland Empire, although improving, lag behind.

Overall, the San Jose and San Francisco areas boast shares of college graduates at around 45 percent, compared with a 34 percent average for the 52 largest U.S. metropolitan areas. The San Diego area clocks in at 34.6. In comparison, the Los Angeles-Orange County area has roughly 31 percent college graduates while the San Bernardino-Riverside area has the lowest share of four-year degrees – 20 percent – of any large region in the country – this is worse even than backwaters like Memphis, Tenn., and Birmingham, Ala.

Dividing this region by counties shows Orange County well in the lead, with 37.6 percent college-educated, well above Los Angeles County’s 30 percent.

Recent Trends

To see where these metrics are headed, Mark Schill, an analyst with the Praxis Strategy Group (, was asked to identify the share growth of bachelor’s degrees in the country’s largest metropolitan areas during 2000-13. The share of the adult population with college educations rose by 6.8 percent in San Jose and 6.4 points in the San Francisco-Oakland region. Some regions did better, including Boston, Pittsburgh, Grand Rapids, Mich., Baltimore, New York and St. Louis. All these were considerably above the national average increase of 5.2 percent.

In contrast, most areas of Southern California have shown more meager growth in their educated workforces. Los Angeles, overall, enjoyed a very average increase of 5.2 percent. San Diego, despite its high-tech reputation, notched a 5 point jump while the Inland Empire increased by 3.8 points, one of the lowest performances in the country. The biggest gainer in the Southland was Orange County, where the share of educated workers grew by a healthy 6.3 percent.

Whither young, educated workers?

The picture, particularly for the Inland Empire, is not totally bleak. In a recent survey conducted by Cleveland State University, there have been some promising developments in the growth of younger educated workers. This key cohort, notes researcher Richey Piiparinen, appears to follow a very different path than do older educated workers, with many seeking out careers in less-expensive locales.

Indeed, looking at educated growth among 25-34-year-olds from 2010-13 finds that the most rapid expansion is taking place in unlikely places, such as the areas around Nashville, Tenn., Orlando, Fla., and Cleveland, all which experienced increases of roughly 20 percent or more. This is better than twice the growth rate in such noted “brain centers” as San Jose and San Francisco, which were around 10 percent, and New York at 9 percent. The Los Angeles-Orange County area saw a similar increase.

The reasons for these surprising, and somewhat encouraging results, particularly for the Inland Empire, may vary. One thing, of course, is the low base from which the area starts. After all, until the past decade, the employment profile of the Inland Empire favored manufacturing, logistics and construction, all fields not dependent on large contingents of highly educated workers.

Another critical factor may well be price, as we saw in our surprising findings on millennials. Simply put, many of the areas attractive in the past to educated workers have become extraordinarily expensive – as demonstrated by San Francisco-based writer Johnny Sanphillippo – while some more affordable locales have become “sweet spots” for younger educated people, particularly as millennials enter their family formation years.

County, city breakdowns

The Southland, of course, is a vast region, and even every county contains hosts of cities that are very different from each other. In terms of counties, the biggest gains – albeit from a smaller base – took place in the Inland Empire, notably Riverside, which saw a 93 percent jump in its educated population since 2000. Orange County saw a 37.6 percent gain, ahead of Los Angeles’ roughly 36 percent gain.

More intriguing, and revealing, is the distribution of college degrees by city areas. Here, the supremacy of a few areas is very clear. In three Southland communities, more than 60 percent of the adult populations have college degrees: Santa Monica, Newport Beach and Irvine. Yorba Linda, Pasadena and Redondo Beach all boast rates close to, or above, 50 percent.

Obviously, these towns are something of outliers in the region. Los Angeles, by far the region’s largest city, has roughly 31 percent of its adults with college degrees. Many communities do far worse, most of all, Compton, where less than 6 percent have four-year degrees. Hesperia, Southgate, Lynwood and Victorville have educated percentages under 10 percent.

Adjacent communities sometimes have radically different rates of education. Santa Ana, for example, abuts Irvine, but has an educated population of barely 12 percent. And while some areas have shown meager growth in their share of educated residents, several areas have seen double-digit percentage increases, including Burbank, Yorba Linda, Rancho Cucamonga and Santa Monica.


As the Southland economy evolves, it makes sense to look at those areas most likely to have more of the educated workers that high-end industries need. These increasingly are clustered in a few places, such as Irvine, Newport Beach, Rancho Cucamonga and Costa Mesa, that are both suburban in form but tend to have better schools than much of the region. These areas also tend to have lower-than-average unemployment rates. Educated people tend to migrate, for the most part, to areas where others of their ilk are concentrated, and often where their children have the best chance at a decent education.

These statistics and trends suggest that our leaders, in education and politics, need to focus on reality. It is dubious that many communities throughout the Southland will develop large shares of educated people in the immediate future. Indeed, given the quality of public education throughout most of the region, it seems almost inevitable that much of the region will lag in terms of skills well into the next decade.

This means that local leaders cannot expect to duplicate in the near future the success of places like Boston, the Bay Area, or even Pittsburgh. Instead, there needs to be a two-pronged attempt to address this issue. One is to boost preparatory and higher education throughout the region, which will allow for Southern California to better compete at the highest-end of employment.

But the other strategy, not to be discounted, is a full-scale commitment to skills training for those unlikely to earn bachelor’s degrees. This also means taking measures allowing the industries that would employ such workers – largely manufacturing, logistics, medical and business services – to flourish, so this training will have rewards. The Southland’s already large educated population is one key to its future, but finding a decent work environment for those without a four-year degree merits equal, if not greater, emphasis.

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.

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Land price distortions create de facto Warsaw Ghettoes

I regard this as a classic consequence of distorted regional urban land markets that magnify the land-rent-curve "pricing out" effect on households according to "ability to pay for location".

In a normal undistorted urban land market (a median multiple of 3 is the best evidence of this) there are numerous trade-offs open to households of different income levels, and this results in income-related sorting effects that are weakly correlated with location. There tends to be relatively efficient locations that are affordable due to having older, depreciated actual houses. And higher density housing, especially older stuff in streetcar suburbs, tends to be extremely affordable.

But when you have median multiples of 7 - 10 over a longer and longer term, the higher and spikier the urban land rent curve is, and the more extreme spatial sorting "by income level" you get. The lowest income, least creative people are priced out to and concentrated in the worst locations, period; as if there are de facto gated communities and de facto Warsaw Ghettoes. Land prices are the de facto walls and barbed wire.

Greater London is an exemplar of this that precedes California by a few decades, due to the 1947 Town and Country Planning Act.

Riverside County compared to the Coast

I am sorry to read this about Riverside - San Bernardino. The area is definitely way behind the coastal counties in terms of economic growth, number of high tech firms, unemployment rates, median annual income, and college graduates.

Much of the problem in the eastern half of these counties, in terms of economic growth, is the excessive focus on tourism. In Joshua Tree, Palm Springs, and the Coachella Valley, economic development is almost exclusively in construction, and also the tourism and hospitality industries. There has been very little effort to bring "high tech" jobs to the desert, as you would find in the coastal counties - Orange, San Diego, L.A., and Ventura counties.

The other problem is what William Fulton defines as "cocoon citizenship," for communities in the greater L.A. area. In Riverside County, cities don't want anything to do with each other. If you vacation in Palm Springs, keep driving down highway 111 to all of the visitor centers and chambers of commerce (Cathedral City, Rancho Mirage, Palm Desert, La Quinta, Indio, etc. - in the Coachella Valley).

You'll find that each one of these small towns (most are under 50,000 persons) has their own brochures, for businesses exclusively in their own towns. Generally speaking, business owners in one town don't drive to other chambers to drop off their brochures.

So, if you spend a few nights in artsy Palm Springs with its historic buildings, and happen to visit the Chamber of Commerce next to the Hyatt hotel, you'll never even know that another artsy community exists just 20 miles down highway 111 - called La Quinta.

If the business owners joined multiple chambers, their profits would increase well above the cost of multiple memberships. But the typical southern California attitude of "cocoon citizenship," prevents this. Residents only identify themselves as citizens of their city, and not the county or metropolitan L.A. region as a whole.

Similarly, you'll also find that these chambers never have brochures for other areas of Riverside County, and not even for the other desert tourist areas, such as Yucca Valley, Joshua Tree, and 29 Palms.

You'll also note that radio stations from Los Angeles don't reach many areas of Riverside and San Bernardino County. While radio signals can only travel so far, in most other parts of the country, local stations would have booster FM stations, so that the entire area can hear the news. But nobody in eastern Riverside or eastern San Bernardino Counties is leasing FM stations to Newsradio 1070 KNX and Talk 640 KFI. Ironically, the Business News Station in Phoenix, 1510 KFNN, leases time on AM 1200 in Palm Springs, but that's from another state!

But this radio station issue is indicative of a greater problem. The eastern parts of Riverside and San Bernardino County want absolutely nothing to do with Los Angeles, even though they are part of the L.A. Metro Area. People move to Banning, Desert Hot Springs, Yucca Valley, Palm Springs, Palm Desert, and La Quinta, because they want to retire "far away from Los Angeles," or, are interested in the art and entertainment venues in the area. But they also tend to be "introverts," and really have no interest in anything that goes on - "back home."

However, the majority of recent college graduates, in their 20's, want to be connected to the vibrant cities on the coast. They are well-informed, have no "resentment" to L.A., do not want to "retire," and they want connections to other people from Los Angeles and Orange Counties. And, they don't like the Republican, semi-rural atmosphere of most of Riverside and San Bernardino Counties - just about everything from Redlands eastward, on I-10, including the periphery of Palm Springs.

So they won't move to Riverside and San Bernardino Counties, due to the politics, isolation, and scarcity of both good paying jobs and other college graduates. Instead, they'll keep driving east on the I-10, to Scottsdale, where over 60% have a bachelors or higher, adjacent to Tempe and Arizona State University, with 75,000 students.

Another problem is that Riverside County also has very few exceptional and visionary leaders, who care about everyone in Riverside County. Nobody knows who really is in charge. Nobody seems to care about local politics. People don't know who their mayors and councilors are. People don't know where their chamber of commerce is located. People don't vote, and the "incumbents club" usually stays in office.

Yet everyone knows a few people, most notably, Riverside County Board of Supervisor member Marion Ashley. He helped develop the nationally recognized "Riverside County Integrative Project." (RCIP) This project accommodates the infrastructure for growth in Riverside County, by financing open space and new freeways.

Since transportation is key to economic growth, and even the migration of college graduates for household formation in the affordable inland suburbs (versus expensive coastal counties), and quick access between Riverside County and the coast, then Riverside County desperately needs more leaders like Marion Ashley, with visionary ideas such as the Riverside County Integrative Project.

Marion Ashley -

Mid-County Parkway under the RCIP -

Riverside County, especially eastern Riverside County (The Coachella Valley, and also the cities of Banning, Beaumont, and Calimesa) will not attract college graduates, until they bring more high paying jobs to the region. This won't happen until additional strong visionary leaders emerge, at both the city and county level, such as Marion Ashley.
-Tom Lane