LA's economy is strong — but not for all workers
On many measures, the Los Angeles economy is performing better now than it ever has since the recession.
According to a new economic forecast released Wednesday by the Los Angeles County Economic Development Corporation (LAEDC), the region's GDP is growing faster than the nation's as a whole. Unemployment is below five percent and still declining. And economists project that solid overall growth will continue over the next two years.
But for many workers, the report paints a picture that isn't so rosy. Those who struggled to find work in the past may now have a job — but not necessarily a stable, well-paying one. Meanwhile, the forecast sees no end in sight for LA's skyrocketing housing costs.
The good news is that LA's unemployment rate, which peaked at 12.5 percent in 2010, plummeted to 4.6 percent in 2017. The forecast says it could go as low as 4.1 percent by 2019. According to conventional wisdom, when unemployment is this low, employers should have to offer higher pay to attract workers.
But income gains were modest in the past year. The county's per capita income rose from $48,790 in 2016 to $50,650 in 2017, a gain of a bit less than four percent.
LAEDC economist Somjita Mitra, one of the report’s authors, expects to see wages continue growing slowly but steadily as the labor market continues to tighten. But she said the jobs being created in LA have changed.
"The biggest growth has been in low-education, low-wage jobs," Mitra said. "A lot of the jobs being added, especially in administrative and support services, are temp jobs. There's a lot of flexibility for businesses, but there's a lot of insecurity on the side of the workers."
Since 2007, Los Angeles has lost 111,000 manufacturing jobs that paid a middle class annual salary of about $68,000. In the same period the region gained 86,000 food service jobs paying about $22,000, and 68,000 social assistance jobs paying an average wage of $18,000 per year.
Housing costs have been rising much faster than wages, and are forecast to continue spiraling upwards.
The county's median home price rose by eight percent in 2017, and is projected to rise another 11 percent over the next two years, reaching $624,901 by 2019. The situation hasn't been much better for renters. About a third of them are now putting more than half their income toward rent.
Mitra said the growing gap between wages and LA's housing costs could spell trouble for local businesses.
"Eventually, if their workers can't afford to live here, businesses are going to have to make a tough decision," she said. "They can only raise wages so much. They might have to relocate."