BUSINESS : L.A.’s Latest Economic Force: Gays, Lesbians

Few communities have emerged from Southern California’s recent recession stronger, or with better prospects, than West Hollywood. Its key commercial districts--the Sunset Strip, Santa Monica Boulevard and the Pacific Design Center--are thriving. For example, the once troubled Design Center and the city’s entertainment-related offices have occupancy rates around 85%, far higher than most surrounding cities. Even the number of restaurant openings has increased at a time when closures are the rule.

West Hollywood’s economic success, most insiders agree, directly stems from its large concentration of gays and lesbians, who represent about one-third of its population. In many ways, they anchor the city’s economic growth much as the Chinese do in the San Gabriel Valley or the Jews in the Pico-Robertson district of Los Angeles.

This pattern reflects one of the last great assets of diverse urban areas such as Los Angeles. By being hospitable to traditional outgroups, cities attract hard-working, creative and entrepreneurial citizens even as other, more conventional residents leave for more monocultural climes. Nationally, 53% of gays and lesbians live in cities.

Gays, like new immigrants, offer a badly needed stimulus to an economy that has been decimated by defections of mainstream corporations and the flight of more conventional middle-class citizens. True, the impact of the gay economy is most deeply felt in the districts where they live. And, true, it is difficult, for a variety of reasons, to measure the ripple effects of gay entrepreneurship. But there is little doubt that West Hollywood’s success is not confined to its borders.

“The gay communities are thriving or starting in businesses for the same reason gay people move to places like West Hollywood, and that’s the root of it,” says West Hollywood entrepreneur Skyler Thomas. “They are coming to be with people just like themselves, to find friends whom they can feel support from.”

West Hollywood’s emergence as a gay economic center, observes longtime resident and insurance broker Tony Melia, grew, in part, from a desire among gays to avoid confrontations with the Los Angeles Police Department. As an unincorporated section of the Los Angeles County, the area was patrolled by the sheriff’s department, whose reputation is somewhat “less repressive.”

At the same time, Southern California’s traditionally tolerant social climate helped attract thousands of gays to the surrounding region. “In Hen’s Tooth, Iowa, or Pump Handle, Ill., people may not want people to know they’re gay,” Melia says. “Here, particularly in West Hollywood, you don’t have to hide. You are accepted.”

Melia contends that openness to gays now extends to other parts of Southern California. Hollywood proper, Silver Lake, Santa Monica and Laguna Beach in Orange County all boast significant clusters of gay-owned businesses.

One clear indication of the vitality of the gay economy can be seen in the region’s four gay-oriented papers--including the Blade in conservative Orange County--which have a combined readership estimated at 345,000. This ranks ahead of New York, long a major center of gay activity, and is roughly on a par with San Francisco. The Advocate, probably the most influential national gay magazine, is based in Los Angeles.

In many cases, gays and lesbians have revived neighborhoods once regarded as in decline. “We go in, we fix up the homes, fix up the neighborhoods, open the shops that are gay-friendly and (offer) clothing that we would be interested in buying, gay bookstores, restaurants,” says Harry Taylor, associate publisher of Out, a New York-based upscale gay magazine with offices in Los Angeles. The concentrations of gays and lesbians have created opportunities for entrepreneurs such as Out’s Taylor. His company, Don’t Panic, sells T-shirts and other apparel to stores in gay-oriented communities in New York, San Francisco, Provincetown and Miami. Similarly, Melia’s insurance practice brings to West Hollywood business from throughout the Western United States.

By becoming a magnet for gay consumers, West Hollywood and similar communities draw valuable business, both gay and straight. Many visitors to West Hollywood, says the city’s mayor, Abbe Land, come from outside the immediate area, often from larger, dispersed gay populations, on weekends and holidays. Land credits these visitors for helping her city continue its rapid expansion as a tourist attraction. Between 1991-93, not exactly a high point for Southern California’s visitor industry, West Hollywood’s hotel revenues grew by a remarkable 205%. Other travel and tourist-related sectors, such as fast-food restaurants and specialty shops, also experienced considerable expansion.

One remarkable characteristic of the gay economy, which is also found in more conventional ethnic-based economies, is a high propensity to buy from each other. In the past few years, there has been an explosion of gay-oriented guidebooks and directories that channel information from gay-oriented companies to gay consumers. Orange County’s Community Yellow Pages, which started in 1982 with only 300 ads and 500 listings, has grown to more than 1,000 ads and 2,000 listings.

But the economic impact of gay entrepreneurship is not restricted to such enclaves. Nationwide, advertising-industry surveys estimate the consumption power of gays and lesbians in the United States as high as $500 billion. With an average annual income of $51,000, according to Overlooked Opinions, a Chicago-based marketing firm, gays represent among the most affluent consumer niches in the nation.

Gay spending power is most evident in such discretionary consumer markets as fashion, entertainment and tourism. Liquor companies, travel firms, high-end stereo outlets and clothiers all target gay consumers. Among the largest advertisers in gay media are Calvin Klein, Saab, Mercedes Benz and Tanqueray Gin.

Perhaps more critically, the gay community plays a prominent role in developing industries--entertainment, fashion, music and design--that increasingly define the competitive advantage of urban areas. Cities cannot hope to compete on a purely cost-driven basis with less complex, less developed and more monocultural communities in the suburbs, much less places like Utah or North Carolina.

Instead, cities must look to cultivate high-wage, “knowledge value” industries, which demand the skillful interaction of creative, artistic and technological expertise. To attract such talent, they cannot exclusively look to traditional mainstream population, who, for the most part, disdain the values of urban life for the supposedly superior “quality of life” in smaller towns and edge cities.

In many ways, this phenomenon recalls urbanization at the outset of the modern era, when the great emerging cities of Northern Europe, notably Amsterdam and later London, welcomed populations that were held in contempt in the hinterlands. By playing host to such groups as Jews and Huguenots, these cities gained enormous human and capital assets that fueled their global expansion.

Today, urban regions such as Southern California can similarly improve their economic prospects by attracting talented people who, whether for personal, ethnic or cultural reasons, find the often jarring diversity of cities a blessing rather than a curse. Put another way, the future of cities is not in monocultural America.

In this respect, more than any other, Los Angeles’ gay community, with its large population of creative and entrepreneurial people, can help the region rediscover the advantages of urbanity and rebuild the bases of its next economy.*