The Breakdown

Explaining Southern California's economy

Los Angeles job growth falling behind other cities, study says

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90947 full

The Los Angeles economy continues to recover from the Great Recession, but not nearly fast enough to keep up with other major cities, according to the latest forecast released Thursday from UCLA’s Anderson School of Management.

Both California and U.S. payrolls have now surpassed their pre-recession peaks, but not L.A. payrolls. About 4,191,000 people are employed in the county, which is 0.9 percent below the peak; 1,585,000 people are employed in the city, which is 2.3 percent off the peak. 

In fact, the study finds that more people were employed all the way back in 1990 than are now, even though almost half a million more people live here.

Since the recession, the city has been adding jobs at a similar clip as California, but L.A. has a lot of catching up to do because it lost so many more jobs during the recession.

“Los Angeles still has a long ways to go,” said William Yu, an economist at UCLA who worked on the study. "There's nothing to celebrate about."

He says the much bigger, long-term problem is that the city is becoming increasingly split between those able to afford L.A.'s high cost of living and those struggling to get by. 

“Investing in education and human capital is the long-term solution,” said Yu.

Yu says he worries Mayor Eric Garcetti's proposal to raise the minimum wage to $13.25 an hour by 2017 would hurt job growth. He says the effect could be more dramatic than the $15 wage going into effect in Seattle and that $15 rate that's on the November ballot in San Francisco, because those cities have higher median incomes.

Yu estimates that L.A.'s minimum wage increase would affect 27 percent of workers here versus 16 percent in Seattle and San Francisco.

"No other city has done things like this," he said. "It comes with a huge risk."

As for California as a whole, the Anderson Forecast says the state will benefit from a more robust national economy but suffer from a weaker global economy.

“The California economy is moving forward in an expansion from the depths of the Great Recession," writes UCLA Anderson Senior Economist Jerry Nickelsburg. "But, even though the number of jobs is now higher than any time in the past, the state remains below its potential in output and employment. That we are entering the sixth year of expansion illustrates just how painfully plodding this recovery process has been."

Here are some notes of interest from the Anderson Forecast about the U.S. economy:

  • There's good news for the country as a whole: Anderson forecasts GDP will rise 3 percent over the next two years while unemployment will fall to 5.3 percent by the end of 2016.
  • Inflation will rise 2 percent or higher over the next two years because of people having to spend more on rent and healthcare.
  • Reversing a trend of defense cutbacks, Anderson predicts an increase of $24 billion per year in defense spending by 2016 because of the rise of ISIS and Russian troops in Ukraine.
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