Southern California’s Hidden Economic Engine

The media here and across the nation are fond of depicting Southern California as a region staggering from a series of natural and man-made disasters. One result is that few people who live here are aware that most of the elements for a renaissance are already in place. And few elements are more important than the region’s intellectual capital, especially as the new information age unfolds.

Southern California has 175 accredited colleges and universities attended by more than a million students. Generation after generation of professionals, scientists, teachers, artists, public officials and business leaders have been educated here. This “hidden industry” has attracted billions and billions of research dollars, and millions of the world’s best and brightest, to the area. Their intellectual contributions have sustained industries as diverse as aerospace, biotechnology, communications and medicine.

Despite these successes, higher education must be strengthened to enable it to better position itself for the social and economic challenges ahead. This will require a partnership among government, business and higher education. Such cooperation will expand our technological base, create jobs and enhance existing industries.

How important is higher education to our economy?

A quick survey reveals that Southland universities and colleges annually generate about $30 billion in regional economic activity and directly support more than 120,000 full-time jobs. Interestingly, tourism, which is widely touted as an economic pillar in the region, also generates about $30 billion annually, directly supporting more than 250,000 full-time jobs.

Indeed, the city of Los Angeles’ largest private employer is a university. Not a defense firm, not a movie studio, but the University of Southern California.

USC generates nearly $400 million annually in tuition income, and most of it comes from outside Los Angeles. The university attracts more outside money than any other private corporation.

Unlike other major private employers, USC won’t be sold, merged or moved to Phoenix. And neither will Caltech, UCLA and UC San Diego, which, together with USC, bring in about $700 million annually in federal funding for basic research and other programs.

These four institutions are members of the Assn. of American Universities, the 56 key institutions that conduct most of the nation’s basic research and produce most of the nation’s researchers. Southern California’s AAU institutions attract tuition dollars from thousands of students from other states and nations. Many of these students stay in Southern California after graduation, the most beneficial form of immigration imaginable. And the Asian business and government leaders trained here will, in coming years, increase the economic and technological ties between Asia and Southern California.

The universities also attract large sums of philanthropic money. UCLA and USC now raise about $100 million annually in private gifts and pledges. And the largest private investment in Los Angeles since the riots has been Walter Annenberg’s $120-million gift to USC, which will strengthen the region’s competitive advantage in communications.

It is long past time to recognize that colleges and universities are magnificent economic engines and centers for social, technological and cultural development. Toward that end, Project California is bringing government and business together with universities to make the state a global leader in transportation and telecommunications technologies. And at the Southern California Earthquake Center, six universities have joined with USC to develop the means to understand and predict earthquakes.

While Hollywood, Disneyland and beaches will always be keys parts of its image, it will be universities and colleges that will keep Southern California a forward-thinking region.