California's Economic Boom Isn't Helping L.A.'s Housing Shortage
These are strange days here in Los Angeles. Homelessness is exploding, housing continues to be out of reach for the average Angeleno, and California has more poor people than any other state. Yet the Golden State is also one of the states with the most impressive job growth, according to recently released government data. And a new report from personal finance site WalletHub on the "Best & Worst State Economies" in the nation this year ranks California second only to Washington.
California's success also bucks, so far, President Trump's politics, which include proposed trade fights with China and Mexico, huge exporters to California, and an underway crackdown on immigration, which has helped to staff kitchens, farms and tech firms.
Seventeen percent of the nation's job growth and 24 percent of its gross domestic product increase between 2012 and 2016 can be attributed to California, according to recent data parsed by Stephen Levy, director of the Center for Continuing Study of the California Economy. "Those are very striking numbers," he says.
This week's "Best & Worst State Economies" report found that the Golden State ranked fifth for startups, fifth for the percentage of high-tech jobs and second for "innovation potential," which includes high-tech jobs and research and development investment. Last year the state became "the sixth largest economy in the world, boasting a GDP that’s comparable in size to the U.K.’s and even larger than those of France and India," according to the report.
Yet by one federal standard, about one in four people in the Golden State is poor. And L.A. County's $2,600 median rent for a two-bedroom apartment far outpaces the ability of the average Angeleno (median individual income is about $28,000) to live indoors. Housing prices in the Bay Area are even worse. Thus, L.A. County this year has seen a 23 percent increase in the number of people living on the streets.
"This study's results mirror that issue," WalletHub analyst Jill Gonzalez said via email. "California ranked poorly in terms of its share of population living below the poverty level (33rd), underemployment (49th) and unemployment (35th). These lower rankings contributed to the state's rank of 26th in the economic health category."
Economist Levy says, indeed, these conditions can and do coexist in California, a place of enormous wealth and nation-leading poverty. "A strong economy can't by itself eliminate poverty or build housing," he says.
In fact, Levy says the boom is contributing to some of California's woes. For example, the increase in high-tech job openings means people are coming to the Golden State for work. But they're simply piling on in a housing market that alread doesn't have enough units. The result boosts rents and contributes to the housing crisis, Levy argues.
"This is a place where people want to be," he says. "You have Silicon Beach, Hollywood and the ports. But we haven't built enough housing. The housing costs and rent increases have been far greater here and way outpace wage gains. There are a lot of people who are burdened by the housing shortage and rising costs."
Get the ICYMI: Today's Top Stories Newsletter Our daily newsletter delivers quick clicks to keep you in the know
Catch up on the day's news and stay informed with our daily digest of the most popular news, music, food and arts stories in Los Angeles, delivered to your inbox Monday through Friday.