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Report: Downtown areas powering job growth across the country — but not LA

Downtown Los Angeles at sunset.
Photo by Mulling it Over via Flickr Creative Commons
Downtown Los Angeles at sunset.

For the first time in decades, city centers aren't losing out to suburbs when it comes to job growth; they're powering it. It's happening in lots of cities all across the country — but not in Los Angeles.

A report by the think tank City Observatory, published this week, finds "surging" job growth in city centers. It reviewed the most recent census data available (between 2002 and 2011) and found revitalized city centers from Philadelphia and New York to Milwaukee and New Orleans.

"People were moving away from city centers for a long time," said Joe Cortright, who authored the report for City Observatory, which is based in Portland, Ore., and funded by the Knight Foundation. "From the late 1940s onward. And as people moved away from the center, so did jobs."

That's now changed in a lot of places. But not in Los Angeles.

While real estate in the city center is hot, jobs aren't coming along; at least they're not showing up in census data yet.

In 2011, only 7 percent of jobs here were in Los Angeles' city center. That's below other California cities, including Sacramento (13.6 percent), San Diego (11.5 percent), San Jose (13.2 percent) and San Francisco (26.1 percent).

Nationwide, the cities that saw their centers grow the fastest between 2007 and 2011 are Austin (where 28.8 percent of jobs are in the city center), Charlotte (19.5 percent) and New Orleans (23.3 percent).

The report defines city centers as the area within a three-mile radius of the center of the city's business district. For L.A., that means a circle of land centered around the intersection of Main and First. The report compares growth inside and outside of those city centers.

Cortright said one industry is largely responsible for Los Angeles' poor showing: manufacturing. It was hit especially hard during the recession, dropping by more than half between 2011 and 2012, from 42,000 jobs to 20,000 in L.A., according to census data.

"I don't know another city that has had as big a relative concentration of jobs in manufacturing in the center as Los Angeles," he said. And the dip in manufacturing jobs led to an overall dip in jobs in the areas around downtown L.A.

Cortright's study found that 21 of 41 U.S. cities had stronger job growth in city centers than in the region as a whole. The study compared 2002 to 2007, a period of economic expansion, with 2007 to 2011, the years of the recession and slow climb out.

More striking:  In nearly all cities in the study, downtowns became more "competitive" with the outlying areas, meaning that they didn't just see jobs grow in industries you'd expect to be downtown, like finance, but rather they saw overall growth.

But in L.A., even those industries you'd associate with the heart of the city, the jobs added weren't downtown.

Still, with downtown Los Angeles' rapid growth, Cortright said the picture has likely improved since 2011.

"Some of the effects that we would expect to see from the revitalization and movement of people back to the city center probably don't show up in our data," he said. "The economic effect happens with a bit of a lag. People move in, and that creates business opportunities. And that creates employment."

Cortright said it makes sense to cluster jobs in the city center because it gives businesses a larger pool of employees and creates a vibrant base.

"Density in cities makes them more efficient, more productive, more innovative," he said. He cited the work of Harvard economist Ed Glaeser, who found that cities spur innovation.

While the overall growth wasn't there, some sectors did do better. Downtown L.A. gained jobs in industries related to entertainment and health care, according to the study.

The accommodation and food services category, which Cortright said includes jobs related to social and cultural life, grew by 5,000 jobs. Health care grew by 11,000 jobs from 2002 to 2011.

By far the biggest employer in downtown is government. In 2011, the central area of Los Angeles had 96,581 jobs in public administration.

The study looked at the U.S. Census' Longitudinal Employer-Household Dynamics data, for which most recent year is 2011.