Tag: California

Gray Shadow Looms Over Home of Youth Culture

Southern California, like the rest of America and, indeed, the higher-income world, is getting older, rapidly. Even as the region’s population is growing slowly, its ranks of seniors – people age 65 and older – is exploding. Since 2000, the Los Angeles metropolitan area population has grown by 6 percent, but its senior population swelled by 31 percent.

The trend is stronger in the Inland Empire, where senior growth was almost 50 percent, the 14th-highest among the nation’s 52 largest metropolitan areas and more than three times the national average.

Figures from the Census Bureau suggest that these trends have continued since 2010. Regionwide – Ventura, Orange, San Bernardino, Riverside and Los Angeles counties – the senior population has surged 9.7 percent, more than the national rate of 8.4 percent. Overall, the senior share of the Los Angeles metropolitan-area population has increased to among the 20 largest in the nation.

These aging trends reflect in many ways the economic torpor of the region over the past decade. “We could be at the end of the period where Los Angeles thrived as a destination of choice for the working-age population, and it may simply begin to age, much like our counterparts in the Northeast,” suggests Ali Modarres, a former Cal State Los Angeles professor who now heads the urban studies center at the University of Washington, Tacoma. “Is L.A. finally out of its ‘sunbelt’ phase and entering its graying era?”

Less movement

Once, Modarres notes, this region was – like Florida and Arizona – a major lure to retirees, due largely to its ideal climate. But as the region has become more expensive and congested, this appeal has diminished considerably. As a result, our graying is likely the result not so much of senior migration into the region – since the L.A. area is the nation’s second-largest, after New York, exporter of people – but a case of people getting older in place.

In 1980, notes USC demographer Dowell Myers, half of the Los Angeles population ages 55-64 had migrated from another state. By 2010, that inbound segment had dropped to 26 percent and, by 2030, he projects, only 14 percent will be from elsewhere.

Traditionally a source of youthfulness, immigrants, too, are getting older. In Los Angeles County, the foreign-born share of the 55-64 population has risen from 30 percent in 1990 to 50 percent in 2010. By 2030, some 60 percent of this population will be foreign-born. Given the slowing rate of new immigration, Myers and others suggest that the foreign-born population will drop among the younger cohorts over the next few decades.

Geographic divide

Like everything else in this increasingly bifurcated metropolis, the geography of aging is divided into two main segments – high-income growth around the coast and lower-income, more minority-oriented sections further inland. In both groups, evidence suggests that they tend to generally stay close to home. Across the country, baby boomers, who are becoming seniors in ever-larger numbers – notes a recent Fannie Mae report – generally prefer staying in the homes they have occupied for years.

An examination of data from the 2010 census mirrors these trends. Some of the largest increases in seniors occurred in such heavily Latino and working-class areas as the Coachella Valley, where the 65-plus population soared by 14,700, or 43.2 percent; the Ontario area, where it grew by 30.3 percent; and Santa Ana-Anaheim, where this population expanded by 27.1 percent.

This pattern seems to be holding up since 2010, at least at the county level. By far the largest increase in seniors has occurred in the Inland Empire, which saw its senior population rise by 63,000 people from 2010-13. Overall, both San Bernardino (15.1 percent growth) and Riverside (13.8 percent) counties expanded their senior populations well above the regional average of 12.6 percent.

Coastal clusters

Looking at the 2010 Census, we see another fascinating pattern – the aging of beach communities, long the center of the Southern California youth culture. Indeed, the biggest increase in seniors over the past decade took place in coastal Orange County, where the senior population grew by 25,600, or a remarkable 50 percent. At the same time, the oldest parts of the Southland are also by the ocean, in Santa Monica and the Westside of Los Angeles. In 2010, roughly 14 percent of residents of this generally affluent area were seniors, versus 11 percent for the rest of the region.

Why are seniors staying in these enclaves? Well, the real question is, why not? Seniors who have stayed put, for the most part, were able to buy their homes for what today would be almost impossibly low costs, even though they were more expensive than average at the time. But, over the past three decades, as house prices have exploded across Southern California, these areas have become proportionally more unaffordable, which accounts for their declining populations of children as well as young families.

Safely ensconced with little or no mortgage debt, and with their property taxes limited by Proposition 13, many of these lucky seniors get to enjoy the fair climate and gorgeous beachfront for the rest of their active lives. Needless to say, few younger people, particularly families, will be able to join the party for quite a while.

Southland implications

Aging is a natural process, and virtually every city in the world, particularly in higher-income countries, now feels its effects. But the key issue is one of relativity. Until recently, this region’s populace was generally much younger than the national average but, since 2000, has seen its median age rise at nearly twice the national rate. Now, it could be on the way to resembling a sun-baked version of a Rust Belt community, as net outmigration continues by younger people, families and even immigrants.

There arguably are some good aspects of being in an aging region, such as lower demand for schools and, often, lower crime rates. In addition, seniors are an increasingly important source of consumer demand – according to Nielsen, Americans over age 50 by 2017 will control some 70 percent of the nation’s disposable income. Seniors, notes the Kaufmann Foundation, are also the fastest-growing entrepreneurial population, critical for future job creation.

Of course, there are dangers in taking these trends too far. Over time, young people and families are critical to creating demand for many key products, notably houses, cars and furnishings. They also are more likely to start and staff innovative companies. A declining youth population is not necessarily a good thing in a region that lives off being on, and establishing, the cutting edge of design, entertainment and technology.

There’s nothing inevitable about the region becoming a giant retirement home. The Southland can again become a magnet for migration. It’s advantages are manifest, with the beaches, mountains and incomparable weather. But the past couple of decades have demonstrated that these inducements alone are not enough to keep millions of people from moving away.

We need to start addressing the causes for persistent out-migration, and, more importantly, the relative dearth of new people. There are obvious candidates for remediation – one of the nation’s highest costs of living, particularly for housing, too many poor schools, a challenging business climate and a declining infrastructure. These are helping to drive the younger generations and enterprises – who should want to flock here – to Nevada, other mountain states, Texas and elsewhere.

This piece first appeared at the Orange County Register.

Joel Kotkin is executive editor of NewGeography.com 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.

“Senior Citizens Crossing” photo by Flickr user auntjojo.

December 9, 2014
The Other Side of the Tracks

I tend to fixate on certain places – sometimes because I love them, other times because I can’t help but stare at twisted wreckage. Lancaster, California has always been 30/70 leaning toward wreckage, although it does show signs of ongoing reinvention so I keep going back. Lancaster is highly representative of most places in suburban America. If Lancaster can successfully adapt to changing circumstances then there’s hope for the rest of the country. I’ve already written several blog posts about the place here, here, here, and here.

Recently Mayor Rex Parris has been in the news suggesting that the MetroLink commuter rail station should either be shut down or moved to the far edge of the city limits. Why? Well… Lancaster is a typical suburb. In fact it’s a far flung exurb with a self-selecting population who left the city in order to escape certain things and particular kinds of people. You know where I’m going with this right? The proverbial “wrong element” whispered by terrified white people who are nervous about their property values and crime. I have no idea what Mr. Parris himself believes one way or another, but he’s genuinely good at representing the concerns of his constituency. In this instance the electorate felt that the wrong kinds of folks were taking the train from downtown Los Angeles and showing up in Lancaster where they proceed to loiter in a disagreeable manner. These weren’t “our kind of people”. After a period of review between the mayor and various agencies it was announced that the MetroLink station would remain, although there were hints at new procedures and assurances of an unspecified nature.

Photo Credit: Google Earth

This got me thinking about the neighborhoods immediately around the train station. To the west of the tracks is an eight block commercial strip referred to as The BLVD. It was once a floundering half dead Main Street that was completely revamped by the local planning department in 2010 and has enjoyed remarkable success on multiple levels. The adjacent streets of single family homes have gotten a boost in popularity and higher property value while the rest of the Antelope Valley is still struggling unsuccessfully to recover from the 2008 crash.



But then there’s the east side of the tracks… These photos look like an Edward Hopper retrospective: bleak, empty, soulless, and unloved. No one has spent ten cents on this part of town in decades and it shows, yet it’s only a block from the beginning of The BLVD. and it’s pressed up against the back side of the train station. In another kind of town this might constitute prime real estate, or at least a place that had a little something going on. After all, the commuter train gives you direct convenient access to everything greater Los Angeles has to offer from jobs to culture. But in Lancaster it’s mostly vacant land, underutilized parking lots, semi-occupied warehouses, and marginal low value businesses. That’s not to say that people don’t live, work, attend church, and go to school in the nearby blocks. They’re just doing so without the benefit of any viable civic infrastructure.

There may be good reasons why extending The BLVD east to the other side of the tracks won’t work. Aside from any physical or political limitations Lancaster may not be able to absorb much more in the way of upscale dining and discretionary shopping. I’ve had conversations with locals who say they can’t afford a $25 Italian dinner or a $6 beer at a trendy brew pub. Maybe eight blocks of good quality brick and mortar establishments is all Lancaster can handle at the moment. I’ve also heard that developers think the local real estate market might be able to absorb another fifty urban style condo/apartments near The BLVD. But five hundred? They just don’t know since this is terra incognita for them and their traditional business model. But the east side of the tracks might be the perfect place to establish an entirely different kind of environment at a lower price point that actually works for the people who already live nearby. Yucca Ave. runs parallel to the railroad tracks rather than perpendicular like The BLVD. More importantly, it’s an area the theater and chardonnay crowd never sees and doesn’t care about so it’s a great place to do some low cost, low risk, potentially high return experimenting to see what works and what doesn’t.



The city of Lancaster spent $10.5 million on the redevelopment of The BLVD, plus some state and federal funds. Personally, I can’t see the city mustering the political will to scrape together that kind of money to transform Yucca Ave. in a similar fashion. Instead, I see the back alleys and vacant parking lots as incubators for local micro-entrepreneurs who will interact with the people who live next door and down the street. It’s less about making everything “pretty” and more about making the place vibrant and productive at a scale that works on a tight budget. Yucca is just too big and wide and needs too much major help to be saved at the moment. But the backs and sides of these commercial buildings actually have a human scale and can be connected to the smaller more domestic streets and buildings they face across the alley.



Here’s one possible model that Lancaster might try along Yucca. This is a crappy triangular parking lot in San Francisco sandwiched between a double decker freeway and a Costco. I can’t imagine a worse location for anything. But a clever entrepreneur decided to rent the parking lot, install a few port-a-potties and hand washing stations, set up some inexpensive outdoor furniture, and then charge a modest rent for parking spaces to a rotating cast of local food trucks. It’s been fantastically successful and unlike The BLVD it costs almost nothing to install. This kind of operation does best in a marginal location with no NIMBYs or brick and mortar competition. Food trucks are infinitely less expensive to buy and operate than a traditional restaurant so the bar to entry is much lower for small business people. If the bank says no to a modest loan it’s possible to get start up capital from an aunt or cousin. In fact, these are most likely to be collaborative family businesses. The food these trucks serve is radically more affordable and can represent the specific tastes of the community in a way that McDonald’s or Domino’s may not – and the profits stay local rather than being sucked out to corporate headquarters. All the city of Lancaster would need to do is keep out of the way and let small business people do their thing without an endless amount of code enforcement to gum up the works.



Here’s a different approach that might work even better since I’ve never actually seen a food truck anywhere in the Antelope Valley. My guess is that they’re illegal and/or can’t find a hospitable spot to park given the relentless and pervasive “mall security” guarding the Taco Bells and Applebees. This is the Underground Food Market in Oakland. This is a pop up market that appears quickly and then melts away in a single day. Both the vendors and the customers are told the date of the next event, but only alerted to the exact location at the last moment in order to keep code enforcement people unaware long enough to actually conduct business for an afternoon. None of these people use anything more elaborate than folding tables and barbecue equipment and it all fits in the trunk of a car or a pick up truck. Does this sort of thing violate a dozen health, safety, and zoning regulations? Yep. Has anyone ever gotten sick or died? Nope. If Lancaster could find a way to legitimize this sort of activity they might discover a ready supply of people in the neighborhood who would bring their talents to bear.



I want to get back to the idea of human scale and how the best parts of Yucca are the little spaces between and around the buildings instead of the big parking lots and super wide street frontage. Everywhere I go in the world I find some of the best streets are barely wide enough for a car to pass through – and that’s part of the magic. I could see stretching some sun shades over the top of these alleys in Lancaster and lining the blank walls with shallow market stalls. This is an economic incubator that costs pennies and could lead to bigger and more permanent local businesses. The trick is to get the entry cost for experimentation down low enough to engage people without much capital or credit. Will this sort of thing terrify suburban homeowners out in the gated communities? Yep. Will they care if it happens in the “bad” part of town that they never visit? Maybe not…



Here’s another example of a reuse of an existing space with very little actual construction. Property values are so high and vacancies are so low in places like San Francisco that every crappy building in every marginal location is being pressed into service for things that no one would have envisioned twenty years ago. Lancaster could do exactly the same thing at a much lower price point. I don’t imagine the wine and cheese crowd being interested in Yucca anytime soon, but there are all sorts of other subcultures that would love this much space to tinker with for their legitimate enterprises so long as the local authorities cut them some slack. What most of these empty warehouses in Lancaster need is fresh paint and the right people to colonize them. The trouble with lone mom and pop operations in this sort of desolate location is that without community and other active participants they tend to wither. Lancaster desperately needs a well organized group to adopt this place. Koreans, Mormons, Armenians, Hasidic Jews, Guatemalans… it needs a La Raza, a Chinatown, or a respectable gay population – any cohesive subculture that can reimagine the place and add vitality in a focussed and concentrated manner. Would it kill city officials to hang out the welcome mat instead of freaking out when “They” appear at the train station?



Here’s one last example of a seriously bad location that is starting to be transformed in a way that cost the city almost nothing. Flora Grubb was a successful business woman who rented a vacant lot in San Francisco’s Mission District back when The Mission was cheap and considered a bad neighborhood. Renting a vacant lot was one of the few affordable options back when she was younger and just starting out. She didn’t need a building or much infrastructure since she sold plants, garden supplies, and outdoor furniture. As The Mission gradually became fashionable (largely due to lots of cool people like Flora doing their thing) property values rose so high that she was asked to leave so her landlord could put up luxury condos on the site. But the landlord was a clever guy. He had another vacant lot in a different miserable part of town half a block from the sewage treatment plant. He arranged for Flora to set up shop there. She had enough of a loyal following by then that people were willing to follow her to the new location. Her current shop is an open air industrial shed and a former parking lot. The landlord owns other nearby properties and is leveraging Flora’s activities to boost those values. Flora is the catalyst for the transformation of an entire block.

Don’t get me wrong. I’m not saying Lancaster needs to become a mini San Francisco. That isn’t going to happen. But there are cost-effective techniques for jumpstarting a revival that Lancaster might consider in one of its least loved neighborhoods.

John Sanphillippo lives in San Francisco and blogs about urbanism, adaptation, and resilience at granolashotgun.com. He’s a member of the Congress for New Urbanism, films videos for faircompanies.com, and is a regular contributor to Strongtowns.org. He earns his living by buying, renovating, and renting undervalued properties in places that have good long term prospects. He is a graduate of Rutgers University.

November 22, 2014
The Reluctant Suburbanite, Or Why San Francisco Doesn’t Always Work

This week I’m helping a friend move house after watching her grapple with some unappealing options for the last couple of years. In the end she’s leaving San Francisco and moving to the suburbs forty-seven miles to the south. She absolutely hates the suburbs, but given all the possibilities it really is the right thing to do under the circumstances. Here’s a little background. She attended Berkeley University in the 1990′s as a foreign exchange student and fell in love with the Bay Area. She went back home, worked very hard, jumped through a million bureaucratic hoops, and eventually became a naturalized citizen. She’s lived here in San Francisco for the last fifteen years. Eight years ago she bought an apartment next door and we became good friends.



Over the years she went from being a starving student to having a good paying job in the tech sector. Her work was initially downtown which was an effortless ten minute commute by BART (the local rail system). But a few years back she landed a job with one of the big companies in Silicon Valley. She had absolutely no desire to schlep that far to work so one of the terms of her employment was she would work from home most of the time and appear in person at the office once in a blue moon when absolutely necessary. That arrangement worked really well in the beginning. But then the nature of her position changed, she was promoted, she got a raise, and she found herself at the office more and more often. She bought a car and endured the long miserable commute with bumper to bumper traffic that took two hours each way and left her in a foul mood. She took the so-called “Google” bus (all the tech companies have private shuttle buses but they’re all generically referred to as the “Google” bus) but there were problems with that too. The company bus takes just as long as driving. While she was able to be more productive as a WiFi enabled passenger she was still spending an extra four hours a day schlepping back and forth. This was in addition to some very long hours at the office that sometimes involved spending the night solving complex urgent problems or synchronizing with coworkers in India or Singapore. Her life essentially became her job and her commute with little room for anything else. She wasn’t happy and she wasn’t even able to enjoy the things that she loved about living in San Francisco.

There’s another aspect of the situation here in San Francisco that motivated her to leave. On three separate occasions in the last year she was approached by strangers as she got on or off the company bus. One guy spit on her, another called her a (well, I won’t use the actual word here, but it’s a crude reference to a female body part) and another guy lectured her about how all the newly arrived tech people were destroying the city. She began to feel distinctly unwelcome in her own neighborhood – and by people who may not even have lived here as long as she has. The irony of the situation is that because she plans to eventually return to San Francisco she needs to keep her apartment. She can’t sell it because she may never be able to afford to buy a new place here. But she can’t rent it either because local regulations make it extraordinarily difficult to remove tenants once they get settled in. In effect she wouldn’t be able to move back into her own home without a significant amount of sturm and drang and a big financial and legal battle. She’d love to rent the place for a few years so the rental income would cover her mortgage, but instead she’s leaving her apartment empty and paying both the city and suburban mortgages. It’s the only logical thing to do under the circumstances. The ordinances that are designed to protect renters are working to take units off the market since no sane person wants to be a landlord in the city.

You might ask why she doesn’t just quit her job. She did consider it. But she does a very specific kind of thing and doesn’t want to give up her position and the challenges that only a particular kind of company can provide. If she wants to continue in her career she’s most likely going to have to work for one of the other big companies in the southern suburbs. The job wasn’t the problem. The commute was. Now I can picture some of you out there rolling your eyes about this woman and her “problems”. Poor baby. But her dilemma is very similar to a lot of people who need to stay in a job for all sorts of reasons. For example, I know teachers and cops who are so over their jobs, but they’ve been plugging away for an eternity and they just need to hang in there for a few more years in order to collect a full pension. I know other people who lost their jobs and are now forced to do work elsewhere in order to make ends meet. People have their reasons and it’s hard to argue when you start poking at the particulars.



So here’s what her new place is like. The house is a 1947 tract home with a patch of front lawn and a wee little back yard. She’s got two bedrooms and two baths. It’s cute and she and I agree that it’s very comfortable and has everything most people would want or need in a home. And at $645,000 it’s significantly bigger and less expensive than her one bedroom apartment in the city which is estimated at around $850,000. (She didn’t pay anything like that eight years ago, but prices have skyrocketed lately.) The really important thing about this house is its location a mile from her office. She could ride a bicycle to work if she wanted to, although she will almost certainly drive or take the light rail. It’s physically possible to ride a bike, but it isn’t necessarily safe or pleasant given the wide roads and high speed of the cars and trucks whizzing by. In fact, once you step off the front lawn there really isn’t anything in her neighborhood that’s even remotely worth walking to or as pleasant as what she’s leaving behind in San Francisco. The only place to buy milk and eggs was the corner gas station. But here’s where it gets interesting…



I asked her where she’d eat since the only places in evidence were drive-thru fast food joints and low end chain restaurants in strip malls. She explained that her company (like all the companies in Silicon Valley) provides a variety of high quality heavily subsidized restaurants within the corporate campus. In fact she invited me to explore the place and we had lunch together a couple of times. Once I registered, went through security, and entered the complex there was an entire self-contained world to explore. These places employ tens of thousands of people from all over the world. At lunch there was excellent dim sum, samosas, saag paneer, dolmas, kibbeh, long salad bars, boreks, beef steaks and potatoes – all locally sourced, organic, seasonal, and beautifully prepared by professional chefs. Kosher? Sure. Halal? No problem. Vegetarian? Of course. Special menu for Diwali? You bet. It was all very good and ridiculously inexpensive. Breakfast, lunch, dinner, late night healthy snacks… they have it covered. We dined indoors, but most people drifted out to one of the many al fresco areas. As we walked from building to building I noticed well populated lounges for relaxation and socializing, Starbucks, volleyball courts, pool tables. There’s a farmers market in the parking lot. There’s a dry cleaners. A masseuse or manicurist can be summoned if need be. These companies have essentially taken over the functions of a town and provided them internally for their employees. Partly they do these things to keep their workers happy. Partly it keeps people at work longer than they might otherwise be willing to stay. But on a fundamental level these companies must know that their location in soul crushing sprawl is so lifeless and unsatisfying that they need to compensate by recreating all the aspects of a real town inside the landscaped berms of low rise office parks. And what about the people who live in the area but don’t work for one of these companies and don’t have security clearance to enjoy the buffet and foreign cinema night?

I understand why she’s moving, but I wouldn’t want to live there myself.

John Sanphillippo lives in San Francisco and blogs about urbanism, adaptation, and resilience at granolashotgun.com. He’s a member of the Congress for New Urbanism, films videos for faircompanies.com, and is a regular contributor to Strongtowns.org. He earns his living by buying, renovating, and renting undervalued properties in places that have good long term prospects. He is a graduate of Rutgers University.

November 15, 2014
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.

Poverty

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 Latino, groups 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 NewGeography.com 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.

November 10, 2014
Affordable Cities are the New Sweet Spots

I’ve lived in San Francisco long enough (I’m getting old) that I’ve seen several waves of bright young people arrive, burn out, then move away. For some they were looking for adventure, found it, and then carried on with normal life elsewhere. But for most it was simply a matter of the numbers not adding up. Working a dead end low wage job while sharing a two bedroom apartment with seven room mates is only romantic for so long. I’m fairly inquisitive so I’ve kept up with many of these folks to see how they manage after they leave. I travel a lot and pop in to visit on occasion. The big surprise is that they aren’t moving to the suburbs the way previous generations did when they were done with their youthful excursions in the city.

Instead, they’re seeking out smaller less expensive cities with the same basic characteristics as the pricey places that squeezed them out. I’m very fond of one young couple in particular who spent time in Los Angeles, Baltimore, and Portland before finally settling down and buying a house in Cincinnati. Why Cincinnati? It’s a great town at a fantastic price. They bought a charming four bedroom century old home in an historic neighborhood a couple of miles from downtown for $50,000. Their mortgage is $300 a month. Okay, with tax and insurance it’s more like $500. And it wasn’t a fixer-upper in a slum. It’s a genuinely lovely place with amazing neighbors.

Who needs New Urbanism or Smart Growth when so many amazing old neighborhoods are just sitting out there in under-appreciated and radically undervalued cities all across North America? The Rust Belt has long since hit bottom and has already adjusted to every indignity that the Twentieth Century could throw at it: deindustrialization, race riots, white flight to the suburbs, population shifts to the Sun Belt… Now that the unpleasantness has run its course what’s left are magnificent towns ripe for reinvention. Personally I believe many of the boom towns of the last fifty or sixty years have peaked and are about to enter the kinds of steep decline we currently associate with Detroit – except the dried up stucco and Sheetrock ruins of Phoenix and Las Vegas won’t age as well as the handsome brick buildings of the Midwest.

Don’t get me wrong. Cincinnati isn’t San Francisco. It isn’t Brooklyn either, although they do have an elegant bridge by the same engineer. If you want to be a Master of the Universe in international finance, or the next super genius computer whiz, or a millionaire movie star you probably need to be in a bigger place. But most of us just want ordinary comfortable rewarding lives surrounded by good people. The big question is pretty simple. Do you want that life to involve a $500,000 mortgage on a bungalow in a coastal city, or a $50,000 place in the Midwest. Will you earn less money in Ohio? Probably. But since your overhead is one tenth the California or New York price you really don’t need the big salary or the stress that comes with it. It’s like moving to the suburbs except you get to live in a great vibrant city instead of a crappy tract house on a cul-de-sac an hour from civilization.

John Sanphillippo lives in San Francisco and blogs about urbanism, adaptation, and resilience at granolashotgun.com. He’s a member of the Congress for New Urbanism, films videos for faircompanies.com, and is a regular contributor to Strongtowns.org. He earns his living by buying, renovating, and renting undervalued properties in places that have good long term prospects. He is a graduate of Rutgers University.

October 25, 2014
California Bad to its Bones

Any serious student of California knows that the state’s emergence in the past century reflected a triumph of engineering. From the water systems, the dredged harbors, the power stations and the freeway system, California overcame geographical limits of water, power and its often-unmanageable coastline to create a beacon of growth and opportunity.

That was then, but certainly not the case today. Indeed, since the halcyon postwar days of infrastructure-building under Gov. Pat Brown, roughly one-in-five dollars of state spending went to building roads, bridges, water systems and the like. Today, this investment amounts to less than 5 percent.

As a result, California, once the exemplar of modernity, has among the worst road conditions in the nation, a tenuous, but still extraordinarily expensive, energy grid, as well as an increasingly uncompetitive port structure. Thinking itself a youthful magnet for building entrepreneurs of all kinds – creators of new communities, manufacturing and logistics industries – California is increasingly viewed by other places, both in the country and abroad, as an ideal place to hunt for skilled people, expanding industries and investment capital.

Why has this happened? To some extent, the shift away from infrastructure has a generational twist, reflected, for example, in the differences between Pat Brown and his son, Jerry, who, upon first taking office, in 1975, as recalled by a longtime adviser, Tom Quinn, expressed distaste for his father’s “build, build, build” thing.

This reaction was not totally illogical. Anyone who has lived here for decades naturally recoils from some of the consequences wrought by large-scale construction upon formerly bucolic areas, turning some of them into unsightly, often dysfunctional, messes.

Under any circumstances, Pat Brown-level infrastructure building is probably beyond the financial means of the state. At the same time, California’s modest population growth – in contrast with the huge increases of the Pat Brown era – means arguably less demand for new building projects.

Right now, the only dynamic growth sector of the state economy – social media and software – relies far less on traditional infrastructure than do older industries. Unwilling to pay California’s high costs for energy, water and other things, these tech firms tend to place their industrial projects, as well as their computer servers, in lower-cost regions, often states that tend to be more pro-active in their infrastructure investments.

Yet just because California can’t finance a second huge building program, there’s little question that new and effective investment in roads, pipelines, bridges and ports is desperately needed. Much of this work may be in retrofitting older infrastructure. The recent flooding on and around the UCLA campus from a broken Los Angeles city water main and frequent smaller water main breaks in Southern California are just one indicator that we no longer keep up even with very basic public needs. As the California League of Cities recently observed, the state’s “infrastructure is rapidly deteriorating. Quite simply, California is crumbling.”

The League of Cities suggested the state needs to spend some $500 billion over 20 years to maintain its economic competitiveness. But right now there’s little reason to think the current administration and bureaucracy is capable of spending money wisely. The recently completed $6.5 billion eastern span of the San Francisco Bay Bridge, built largely of steel imported from China, is widely suspected of being poorly constructed, and, according to one engineering expert, may need repairs well before its time. There appears to have been systematic “disregard for welding procedure,” with cracks already appearing on the bridge.

The fact that the state allowed such shoddy work, at taxpayer expense, should be a warning that other state projects might be facing similar issues. Indeed, one can already see, as professor and author Walter Russell Mead has suggested, a similar pattern of disappointment even in the initial phases of Gov. Jerry Brown’s high-speed rail project, with rising cost estimates as well as diminished projections of the train’s speed.

Ultimately, this boils down to a question of priorities. A state that can’t correctly maintain its existing pipelines and bridges is probably not a good candidate for bold new infrastructure adventures. This is not merely a conservative view, but one held by many liberals. Lt. Gov. Gavin Newsom has suggested that the money poured into high-speed rail may be better spent on “other, more-pressing infrastructure needs.”

Similar criticism has come from progressive journalist Kevin Drum of Mother Jones magazine,who called projections for the bullet train’s ridership and cost – now pegged at close to $100 billion, almost twice the original projection – “jaw-droppingly shameless,” an appropriate characterization based upon the method and documentation. He suggests that a “high school sophomore who turned in work like this would get an F.” Spending for Gov. Brown’s signature project grows exponentially, even as basic needs are ignored.

This spending on the nice, as opposed to the necessary, extends down to the local level, where infrastructure already often comes in second to ever-expanding public worker pensions. Los Angeles Mayor Garcetti is totally committed to spending more on expensive mass transit and housing densification, which itself strains infrastructure built for much lower density.

And, this priority persists even though we have particularly tepid population growth in Los Angeles and have seen very little increase the past 30 years in the percentage of people taking public transit to work. The insistence on building expensive light rail, instead of far-less-expensive bus-based systems, effectively chokes off funds for improving the day-to-day lives of most Angelenos.

Although there’s little hope we can go back to the era of massive building during the Pat Brown years, we could certainly get a lot smarter about how we can rebuild the state and return to sustained, widespread growth. The water crisis, which has plagued the state repeatedly over generations, would have been less severe had we built more storage facilities during the wet years, notes economist Bill Watkins, and improved our ability to move water across the state. Yet, as Sacramento Bee columnist Dan Waltershas pointed out, the environmentalists who suggest California may experience long-term drought conditions due to climate change have also opposed such practical steps to cope with the problem.

Much of this reflects the economic unreality of California politics. We neglect roads, bridges, ports and economic energy projects because, in many ways, these are not a priority of the green lobby, which prefers less growth, more density and a shift from cars to transit. So, instead, we get money spent on high-speed rail and ultracostly, environmentally damaging solar panel farms or inefficient wind turbines erected in the middle of the desert.

These energy costs hit hardest the state’s interior and heavily Hispanic working class but this doesn’t seem to much bother the state political leaders, who come overwhelmingly from the affluent parts of the Bay Area and coastal Southern California.

So in the name of trying to appear “visionary,” as Brown, Garcetti and their minions portray themselves, in the real world, our state falls ever further behind competitors, many of whom are rapidly improving their infrastructure – everything from roads and ports to parks.

We collectively may no longer be the vibrant young adult of the Pat Brown years a half-century ago, but there’s no reason for us to enter advancing middle age with politically induced decrepitude. It’s a disservice to the people who endure high taxes and relentless regulation with little benefit to their day-to-day lives.

This piece first appeared at the Orange County Register.

Joel Kotkin is executive editor of NewGeography.com 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.

Photo by Thomas Pintaric (Own work) [GFDL or CC-BY-SA-3.0], via Wikimedia Commons

October 13, 2014
Southern California Becoming Less Family-Friendly

The British Talmudic scholar Abraham Cohen noted that, throughout history, children were thought of as “a precious loan from God to be guarded with loving and fateful care.” Yet, increasingly and, particularly, here in Southern California, we are rejecting this loan, and abandoning our role as parents.

This, of course, is a process seen around the high-income world, and even in some developing countries. But, here in America, some regions are moving in this post-familial direction faster than others, and, sadly, Southern California, for the most part, is leading the trend.

Historically, Southern California, as a lure first for domestic migrants and, later, for foreign immigrants, has been an incubator of families. As recently as 2000, the proportion of population ages 5-14 in Los Angeles and Orange counties stood at 16 percent, the sixth-highest level among the nation’s 52 largest metropolitan areas. Thirteen years later, that proportion had dropped to 12.8 percent, ranking 33rd. The area experienced a 20 percent drop in its share of youngsters, the largest decline among U.S. metro areas.

Of course, not everywhere in Southern California has experienced such a precipitous shift. The Inland Empire, which stands apart in census data, remains a relative bastion of familialism, with 15.3 percent of the population between ages 5-14. Yet even the Inland Empire is slipping somewhat, from having the highest percentage of children to a ranking of fourth, and experiencing a 17 percent decline in children’s share of the population, the fourth-largest percentage drop in the nation.

If we try to focus even more closely, the patterns of decline, and the few bright spots, become more clear. Using 2010 U.S. Census data for specific regions (more up-to-date numbers are not yet available at the local level), it’s clear where much of this loss is concentrated.

The most precipitous declines have been in the inner city, notably Central Los Angeles, which experienced a net loss of 87,000 youngsters from 2000-10. Although their rate of loss was not as severe as in the core, other, once family-rich parts of the region – the San Fernando and San Gabriel valleys, Santa Ana/Anaheim, Long Beach and Whittier-Southeast Los Angeles County – all posted double-digit percentage drops in children.

Only a few areas of Southern California experienced growth in the number of children. Much of the growth was in the vast, outer suburbs and exurbs – places such as the Victor Valley, San Bernardino, Perris-Temecula, Santa Clarita-Antelope Valley and Riverside-Moreno Valley, as well as decidedly more upscale Irvine-South Orange County.

In a sense, these numbers tell several stories. To be sure, high housing prices seem to have a direct impact on family formation, pushing people further out to the periphery or, in some cases, out of the region entirely. Overall, according to recent analysis of census data, high-cost areas tend to repel families; almost all the most expensive areas in the country, such as the Bay Area, New York and Boston, have all experienced strong drops in numbers of children.

This has resulted, as demographer Ali Modarres has demonstrated, in a gradual emptying out of families from the poor, but still expensive, inner core of Los Angeles. These areas tend to be heavily immigrant, and once were seen as the generators of a new generation of Angelenos. Now, however, as Modarres suggests, these areas are also “getting old,” with grandparents remaining but the new generation headed to other locales within or beyond the region. This process, he notes, has been accelerated by a decline in immigration to the region, particularly among Latinos, who long settled in these areas.

Housing prices are not the only determinant. Prices are even higher in the Bay Area, which has seen a falling number of children, but not as severe as in Los Angeles.

One likely explanation is the Southland’s relatively weak economy, which continues to create jobs sluggishly, and an unemployment rate, particularly in Los Angeles County, well above the state and national averages. High prices repel families, but this is particularly true in a region generating relatively little economic opportunity.

There are other factors, particularly for middle-class families, who tend to have more choice where to locate. One seems to be education. For example, Irvine-South Orange County does well in this regard, but its housing costs are beyond the budgets of most other than upper-middle-income households, which tend to be Asian or non-Hispanic white. Irvine has a national reputation for excellent schools, a major lure to families who wish to avoid the expense of private education.

For some in Southern California, particularly those pushing high-density and rental housing, these shifts may be considered a boon. After all, households with children, even more than most people, tend to prefer single-family homes and tend to embrace the notion of ownership. Single people are more likely to choose – by preference or because of cost – rental properties. The vision of Southern California as primarily dominated by high-density rentals correlates with requirements of state law and plans of the Southern California Association of Governments.

At the same time, the economic languor of this region may make many of these bold designs untenable. People without decent – or any – employment do not make ideal tenants any more than they constitute potential homeowners. Given the high costs of high-density construction, this suggests that many units will be rentable only by aging former homeowners or by several families sharing a unit.

Sadly, the decline in homeownership and the single-family housing market may contribute long term to the region’s continued relative economic eclipse. Single-family home construction is among the most reliable contributors to local economic growth and job creation. In contrast, each multifamily unit constructed contributes 60 percent less to the GDP.

More important still, the loss of families presages a future that we can already see in many European and east Asian countries. There is the development of an aging, inner core, made up largely of retirees, both poor and affluent, sprinkled among areas dominated by young, mostly childless, people. Over time, this leads to a less-dynamic region, as the workforce and consumer base shrinks, and politics shift emphasis from economic growth to redistribution. Meanwhile, many of the poor and working-class families are forced out toward the furthest periphery, often far from employment and relatives.

Can this process be reversed? Certainly a stronger economy, with more middle-wage jobs, might encourage people to have families, and give them the incentive, as well as the wherewithal, to buy a house. It would provide parents, and potential parents, with the notion that they can create a new generation with reasonable economic prospects.

The other key factor is a radical reordering of our education systems. It is clear from the data that areas with good schools, such as Irvine, continue to attract families, even at very high housing price points. If middle-class families feel they can access a decent public education in the older, settled areas, such as the San Fernando Valley, L.A.’s Westside or North Orange County, they might be more willing to put down roots in these places, which would help create the greater stability generally associated with families, especially homeowners.

Sadly, political leadership in most of Southern California and Sacramento seems blissfully unaware of these trends, or the potential danger to the area’s economic, as well as its demographic, vitality. Perhaps a region dominated by aging populations, and fewer families, by nature tends to look backward and neglect the kind of infrastructure investment, including in education, that families and business require.

A resurgent hipster economy may not require much economic growth, or changes in the political system, but the region’s families need a thorough reversal in course if this region hopes to retain its appeal as an incubator of future generations.

This piece originally appeared at The Orange County Register.

Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures 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.

Baby photo by Bigstock.

September 15, 2014
California Drought: How To Share An Emergency

California has big troubles. It hasn’t rained for two years. Our reservoirs are almost depleted. Our aquifers are being overdrawn. Forecasts for next winter’s rain, which were optimistic not long ago, have become increasingly pessimistic.

Of course, everybody knows California is in a drought. So, California is doing things. We have education programs. We have shaming apps and neighbors reporting on neighbors. We have fines for water wasters. We have Water Cops. We have the Lawn Dude.

Still, Californians underestimate the drought’s total cost.

The drought’s environmental costs are especially underappreciated. It is an environmental disaster. When water gets tight, fish, birds, and other wildlife suffer. We see increasing numbers of confrontations between snakes and predators, like mountain lions and bears, and people. Animals l ose most of these confrontations. In some areas, we are losing entire riparian and wetland ecosystems.

Ocean water is intruding into coastal groundwater basins. Nitrate and sulfate levels in drinking water are rising, and in some areas exceed levels permitted by public health standards.

Even the land is changing. Persistent aquifer overdrafts are causing land to sink. Infrastructure and buildings, breaking under the strain of sinking land, will need to be rebuilt or repaired. All these factors increase the costs of the drought. Worse, once an aquifer is collapsed, it can never be restored. Our storage capacity is permanently reduced. Persistent aquifer overdrafts may even increase the frequency of earthquakes.

Over-drafting of aquifers needs to stop. Riparian and wetland habitats need to be maintained. The price that water users pay should reflect all costs.

California’s current response is increasing the drought’s costs. Education programs are expensive. So are water cops and the systems to prosecute and punish profligate water users. And yet, water usage has not significantly decreased.

Some costs are immeasurable. A society with water cops driving around looking for people watering their lawns, where neighbors shame each other on social media or report neighbors to authorities, starts to look oppressive. The mutual trust necessary for an efficient and well-ordered society starts to erode.

The damage could be far less. Nixon made the OPEC oil shocks worse by capping prices and using coercive government tools to reduce demand. This is exactly what California is doing with water. Demand exceeds supply. The price to users is too low.

It would be simpler to let water prices rise to a market-clearing price. This would quickly reduce aquifer overdrafts, while leaving sufficient water to support ecosystems and the species they support. It would also mean that most Californians would see prices increase a lot.

This proposal tends to drive people crazy, yet we allocate few resources the way we allocate water.

Consider that life-giving resource, coffee. Between January and April of 2014, coffee bean prices increased 72 percent on global markets. The United States retail price rose about 33 percent. The price increases reflected a drought in Brazil. Coffee consumers did not need to have detailed information about South American weather patterns. The price provided all they needed to know.

Consider gasoline, too. In a market where powerful cartels manipulate global supplies, the price of gasoline conveys detailed signals about the state of global supply. Whether a large refinery in California is temporarily shuttered, or political unrest roils a Middle East oil producer, consumers can stay abreast of changing conditions by observing price changes at the pump.

Why not with water?

Many people object on fairness grounds, arguing that water is a necessity, and market prices would deny that necessity to poor people. Others object on legal grounds, arguing that our water prices are a complex result of history, legal precedent, and sometimes contradictory laws. Still others object to leaving some water for animals and plants while people suffer.

The fairness argument is easy to dismiss. The price that matters is the price of the last gallon sold. We could easily give everyone some minimum allocation of water for free (or nearly-free) and then charge a market-clearing price for everything beyond that.

Voilà! Problem solved. No oppressive government measures.

This system is employed in Tucson, Arizona. There, steep block pricing has allowed the city to allocate scarce water to vitally important uses. One need only compare an image of Tucson homes to one of Phoenix homes to see the strategy’s effectiveness. In Phoenix, where flat-rate pricing is used, you occasionally see residential landscaping a Seattle home owner would envy. In Tucson, it’s all cactus and rock gardens.

The argument against leaving water for plants and animals relies on the concept that people are more important than other living things. We don’t need to debate that. It’s only important in a situation where human life is at stake, and California’s water situation is not a threat to mankind. Twenty-first century America is fabulously wealthy. Leaving some water for the critters may cost us, but we can pay it and still have a standard of living that most of mankind throughout history would have envied.

The legal objection is also easy to challenge. Fortunately for all of us, California’s water laws weren’t brought down from Mount Sinai by Moses, and, like the Commandments, they are routinely violated. Most of California’s water law, with the exception of transfer and resale legislation, is pretty good. The problem is that it isn’t being enforced.

Assertion of the existing laws can improve the situation. Only 23 of California’s approximately 400 groundwater basins have undergone “adjudication”. Generally, adjudicated basins are models of efficient allocation. Water prices in these jurisdictions are connected to supply and demand and are also, predictably, significantly higher than in non-adjudicated basins.

There are two important issues with California’s water laws that need to be addressed. One relates to owners of agricultural land; they are entitled to “reasonable and beneficial use” of water under the land. This is called an “overlying right.” Unfortunately, they’re not allowed to sell or transfer the water to other users. This needs to change.

Another is that the California Environmental Quality Act, the Endangered Species Act, and the State Water Resources Control Board prevent the building of the infrastructure that’s required to move water. About 75 percent of California’s supply of water originates north of Sacramento, while 75 percent of California’s demand for water originates south of Sacramento. Water needs to move, and the California State Water Project is insufficient to allow local and regional transfers. Northern Colorado and parts of Oregon provide examples of regions that effectively transfer water between users.

Asserting California’s existing water laws and changing inefficient parts of those laws are revolutionary ideas, and a first-order political challenge. To do so would require leadership and courage, two characteristics that are almost non-existent in American political leadership. It’s worth the effort. It would fundamentally improve California’s future.

Unfortunately, it could take five to ten years, a time frame not conducive to managing today’s emergency. Californians need to understand that we have a crisis, and we need to act now.

Matthew Fienup teaches graduate econometrics and works for the Center for Economic Research and Forecasting at California Lutheran University, where he specializes in applied econometric analysis and the economics of land use. He is currently working on his PhD at the Bren School of Environmental Science and Management at the University of California Santa Barbara. He holds a Masters Degree in Economics from UCSB. Bill Watkins is a professor at California Lutheran University and runs the Center for Economic Research and Forecasting, which can be found at clucerf.org

Flickr photo by M. Dolly, California Garden: “Hacking out the lawn and replacing it with drought tolerant and native plants… Best decision ever! Shown here: Abutilon palmeri – Indian Mallow, and Salvia mellifera – Black Sage.”

August 13, 2014
Don’t be so Dense About Housing

Southern California faces a crisis of confidence. A region that once imagined itself as a new model of urbanity – what the early 20th century minister and writer Dana Bartlett called “the better city” – is increasingly being told that, to succeed, it must abandon its old model and become something more akin to dense Eastern cities, or to Portland or San Francisco.

This has touched off a “density craze,” in which developers and regulators work overtime to create a future dramatically different from the region’s past. This kind of social engineering appeals to many pundits, planners and developers, but may scare the dickens out of many residents. They may also be concerned that the political class, rather than investing in improving our neighborhoods, seems determined to use our dollars to subsidize densification and support vanity projects, like a new Downtown Los Angeles football stadium. At same time, policymakers seek to all but ban suburban building, a misguided and extraordinarily costly extension of their climate-change agenda.

This effort works against the region’s basic DNA. Our Downtown, for all its promotion, is not a dominant business or cultural center. It accounts for barely 1/10th the share of regional employment that Manhattan – at more than 20 percent – provides for its region and less than one-sixth the share of regional jobs accounted for by San Francisco, less than one-third that of much-maligned, spread-out Houston.

Some people contend that, by investing heavily in mass transit, we can re-engineer our region towards a more-19th century model, which Los Angeles, as a 20th century city, never had. Some, like economics and political blogger Matt Yglesias, suggest Los Angeles’ $8 billion-plus investment in rail is making it the “the next great transit city.”

Well, after 30 years of relentless spending on subways and light rail, the share of transit commuters in the region (comprising Los Angeles and Orange counties, the Inland Empire and Ventura County) is about where it was in 1980 – roughly 5 percent – compared with greater New York’s 27 percent or Chicago’s 11 percent.

Village people

Transit has limited effect in Southern California because this region functions best as a network of “villages,” some more urban than others, connected primarily by freeways and an enviable arterial street system. Inside our villages, we can find the human scale and comfort that can be so elusive in a megacity. This arrangement allows many Southern Californians to live in a quiet neighborhood that also is within one of the world’s most diverse – and important – cities.

These villages span all the vast diversity of Southern California. Some areas, like Downtown Los Angeles, increasingly appeal to young professionals who seek a version of dense urban living. They share a universe with cohorts found in many older cities: young hipsters, a small sample of empty nesters and a sizable population of homeless who live on the edges of the gentrification zone.

But Downtown hardly provides a template for the rest of the region. Mostly we live in lower-density villages, many of which – in the San Gabriel Valley, East Los Angeles, Santa Ana, Westminster and L.A.’s Leimart Park, for example – reflect largely ethnic cultures with deeply established roots.

Even newer areas, like Irvine – which still ranks among America’s fastest-growing cities – are now majority Asian and Latino. Irvine’s appeal is largely the much- dissed suburban virtues of clean streets, good parks and excellent schools.

Some areas are almost insanely eclectic. My neighborhood in the San Fernando Valley – sometimes referred to as Valley Village or Valley Glen – includes many people in the film and television business, but is increasingly dominated by Orthodox Jews, Armenians and Israelis. In summer, barely clad acting folk pass Orthodox haredim dressed in impossibly warm black suits and hats.

Walk one direction from my house, and you run into Armenian businesses, including alavash bakery and several kabob restaurants. Walk the other direction, and you enter akashrut world, with signs in both English and Hebrew; you even can get panhandled by an odd Jewish beggar, something you encounter in Israel and parts of Brooklyn but not too often in California.

Outdoor living

What holds these neighborhoods together is a desire for a particular quality of life, usually associated with the single-family home. These, along with modestly sized garden apartments, long have been the primary choice of Southern Californians. Such housing facilitates enjoying this region’s arguably greatest asset: its weather. Residents value a place for backyard barbecues, swimming pools, small soccer pitches for the kids and an element of seclusion.

Unable to afford the pricier L.A. or O.C. neighborhoods, many Southern Californians, to the consternation of the urban planners and some developers, head for a newer village on the regional periphery. Indeed, more than 99 percent of the region’s growth has taken place far from central L.A. For every yuppie who moves Downtown, or into now-fashionable closer-in neighborhoods, a hundred or more move out to Rancho Cucamonga, Valencia, Mission Viejo or scores of other outlying communities.

This article first appeared in the Orange County Register.

Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. 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.

July 29, 2014
The California Economy: A Strength Vs Weakness Breakdown

Part two of a two-part report. Read part 1.

The problem with analyzing California’s economy — or with assessing its vigor — is that there is not one California economy. Instead, we have a group of regions that will see completely different economic outcomes. Then, those outcomes will be averaged, and that average of regional outcomes is California’s economy. It is possible, even likely, that no region will see the average outcome, just as we rarely see average rainfall in California.

California’s Silicon Valley region continues to be a source of innovation, economic vigor, and wealth creation. But the Silicon Valley, named because silicon is the primary component of computer chips, no longer produces any chips. The demands for venture capital are also changing, with the demand for cash falling because new products often take the form of apps instead of something that is manufactured. This type of investing doesn’t need the infrastructure that the Silicon Valley provides. Increasingly, other communities such as Boston, Northern Virginia, and Houston are becoming centers of technological innovation.

Workers recognize the changes. They may not know the reasons, but they know the impacts, and they are voting with their feet. Domestic migration — migration between states, — is a good measure of how workers see opportunity. California’s domestic migration, in a dramatic reversal of a 150-year trend, has now been negative for over 20 consecutive years. That is, for over 20 years more people have left California for other states than have come to California from other states. Workers simply haven’t seen opportunity in California. How can this be? Why would people be leaving when jobs are being created in the Silicon Valley?

The Silicon Valley jobs are rather specific. They require higher skill sets than most workers possess. One consequence is that the Silicon Valley’s prosperity hasn’t helped California’s other workers much. We are left with a situation where California’s tech firms search worldwide for workers, while California workers search for work.

It didn’t have to be this way. High housing prices and environmental regulations, a result of state policies, have driven away the jobs that could be performed by typical California workers. Those jobs are now in Oregon, Texas, or China.

A short distance away, in California’s Great Central Valley, there is poverty as persistent, deep, and widespread as anyplace in the United States. A recent report shows that California has three of the 20 fastest growing US cities in terms of jobs. It has four in the bottom 20.

For a while, at least, the differences between California’s fastest growing regions and its slowest (or declining) areas will grow. In general, coastal areas will see more rapid economic growth than inland ones. Even within these broad regions, there will great heterogeneity. Bakersfield, boosted by a booming oil sector, will see stronger growth than Stockton. San Jose, with its thriving tech sector, will see far more growth than Santa Barbara or Monterey. Furthermore, the best performer among California’s inland cities will probably see faster growth than the slowest growing coastal city.

On average, California’s economic growth will be far below its potential. In most of the state it will be disappointingly low to dismal, as California’s economy is held back by well-meaning but seriously flawed regulations. At the same time, a few super-performing cities may see spectacular growth, at least for a few years.

Eventually, even California’s most vibrant economies will slow, gradually strangled by the lack of affordable housing and of an infrastructure necessary to move people from affordable housing to their jobs. People are willing to drive very long distances daily in pursuit of the twin goals of income security and the American dream of a home in the suburbs. The traffic on Highway 14 between Palmdale and Los Angeles reminds us of this twice every working day. But, they need roads, and affordable housing within commuting distance.

Different growth rates and different levels of economic vitality will exacerbate the vast gulf that exists between California’s wealthiest communities and its poorest. Inequality will increase as California’s fabulously wealthy become ever wealthier, and California’s poor suffer in surprising silence, living on whatever aid we give them, denied the hope and the basic dignity that comes from a job.

Domestic outmigration will increase, but the people who leave won’t be California’s poorest. Instead, young middle-class people will lead the exodus, as they move to wherever opportunity is more abundant. This, of course, will further increase California’s inequality and decrease its economic vitality.

We will also see an increase in consumption communities. Already, many of California’s coastal communities are reflexively averse to any new activity that actually creates value, opting instead to become ever more exclusive playgrounds for the very rich. These communities will see rising home prices as they restrict new units, and will see rising demand, a result of ever greater concentrations of wealth worldwide and the unmatched amenities available in Coastal California.

By contrast, some inland areas will see declining home values and eventually declining populations, as the lack of opportunity drives potential home buyers to places like Phoenix and Houston.

For many of us, this is a depressing forecast, and it is fair to ask whether or not it is inevitable. It isn’t. Few things are. At a statewide level, I hope that representatives of California’s large and growing minority communities demand policies that support the opportunity that previous generations of Californians enjoyed. Absent such demands, California’s policies are unlikely to change.

At a local level, cities would do well to eliminate all policies that contribute to economic stagnation. When a business is making locational decisions, it reviews lists of positive and negatives for the candidate communities. No place has only positives, and few places have only negatives. California cities are endowed with one huge positive: California is a wonderful place to live. That’s not enough, though. A city would do well to minimize the list of negatives.

For businesses, an aggressive minimum wage is a negative, as it raises costs. Uncertainty and delay in a city’s response to an economic proposal increases the risk and costs of proposals. It’s a negative. So is unaffordable housing, as it increases wage demands and makes it harder for businesses to recruit top talent. The best way for a city to encourage the supply of affordable housing is to allow new-home development.

Finally, areas of economic blight increase crime, raise city costs, reduce city revenues, and are unattractive to businesses considering moving to or expanding in an area. Cities need to be flexible in responses to proposals for these areas. Our work at CERF convinces us that we will need less commercial space in the future. Therefore, almost any proposal for dealing with these areas is preferable to inflexible adherence to existing zoning or plans.

California cities are constrained by California policy. That doesn’t mean that California cities are without tools for economic development. Almost any California city — no matter which region it is in — is a better place to live than almost any city in, say, Texas. If that can be leveraged by minimized costs, flexibility, and creativity in adapting to the needs of job-creating businesses, a California city, even today, can assist businesses creating opportunity for its citizens

This is the second part of a two-part report. Bill Watkins is a professor at California Lutheran University and runs the Center for Economic Research and Forecasting, which can be found at clucerf.org

Flickr photo by Aude Lising: The Central California Coast, viewed from the Pacific Coast Highway — one of California’s unmatched amenities.

July 11, 2014