State needs to bounce back from two recessions
In the 41 years that the California Assn. of Realtors has kept track of such things, the annual median sales price of a California home has risen, often dramatically, all but eight times. It had never fallen by more than 4.5%, measured year to year, until last year.
In 2008, it plummeted more than 38%.
A Times story last week found that homes in parts of Southern California are selling for less than they did two decades ago, a bracing slap once again at the notion of real estate as a means of getting rich quick. In many quarters, life savings and the possibility of upward momentum have vanished.
Just as in past economic downturns, the silver-lining crowd is now at work, gobbling up houses at rock-bottom prices, as if there might be a few more golden eggs left in the goose. After all, this happened before, in the early 1990s, when there was a familiar bout of home prices slumping and economy imploding. If that downturn ended in another boom cycle, why not this one too?
Because, in some very key ways, we didn’t fully recover from that downturn before this one hit.
Jack Kyser has spent most of a lifetime charting the economic eddies of Southern California, and his is now a disheartened voice. He points out a startling fact: In Los Angeles County, according to state statistics, fewer people are employed now than were when jobs hit their high-water mark in 1990.
In March of 1990, he said, almost 4.2 million county residents had jobs. As of last April, the last month for which statistics have been released, a little more than 3.9 million Angelenos were employed. In the 19 years in between, the county’s population grew by more than 1 million people, but job levels did not follow suit.
Surely, said economist Kyser, of the Los Angeles Economic Development Corp., some of those jobs have just moved underground, out of the reach of the state’s economic statisticians. But still, more than 200,000 fewer jobs?
“We do need to worry about it,” he said.
The slump of the 1990s differed from this one. Then, the dramatic downsizing of the aerospace industry, in Southern California in particular, joined with the 1992 Los Angeles riots and the 1994 Northridge earthquake to bring the economy to its knees and house prices to the basement. This time around, the death spiral has been broader, with a whole host of sectors collapsing. International trade dried up, slamming the state’s ports; the movie industry took off for places willing to pay for glitz; and the bursting of the housing bubble and the credit markets leveled what was left.
Although Kyser predicts that a slow recovery will start before the end of the year, he remains troubled by what has yet to come back from the previous downturn. In short, manufacturing jobs.
In April 1990, according to state statistics, Los Angeles County had 824,700 manufacturing jobs. Now it has fewer than half that -- 400,600.
Some of the loss has been made up in other occupations. But they tend to be much lower-paying than manufacturing jobs and are erratic in terms of benefits like healthcare and longevity for workers. For generations, manufacturing jobs offered a ticket to the middle class and with it the potential for stabilizing achievements like home ownership. Now Southern California has what Kyser calls “a broken job ladder.”
“We have a lot of low-skill, low-wage jobs and a lot of high-skill, high-wage jobs,” Kyser said. “But the middle is disappearing.”
Not everyone believes things are quite so bleak. Tom Holler, the lead organizer for One L.A., a countywide public interest organization affiliated with the Industrial Areas Foundation, said that although manufacturing jobs are down substantially, current workers are aging and their retirements will provide opportunities for others.
“There will be a demand for jobs with skills, and maybe more sophisticated skills,” he said. Moreover, he said, companies have been telling him lately that -- because of logistical difficulties -- importing parts from other countries may no longer be much cheaper than doing business here.
“Those are all trends that are out there,” he said.
Under any scenario, of course, it helps to have an organized plan of attack. Therein lies a problem.
Traditionally, much of the impetus for job creation has come from governments, in the form of grants or enterprise zones or tax breaks. But governments right now are obsessed with staving off their imminent insolvency, which hardly puts them in the mood to bet money on the future.
The L.A. Economic Development Corp., Kyser said, has been trying for months to get an assortment of agencies and institutions on board with a plan for boosting jobs. The effort continues, slowly, with the difficult task of balancing wants and needs of disparate areas.
“People forget how big and diverse L.A. is,” he said.
For the short term, he is hopeful that crisis will beget change -- both in the state’s income tax-based revenue structure, which leads to vicious funding gyrations, and in the desire to commit fully to things like mass transit and green industries that provide jobs.
“We can be so much smarter, but we’re not,” he said, adding: “There’s many opportunities. We have been too laid back for our own good.”
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