Social Innovation Blog: Building an Inclusive Economy in Southern California Starts with Cities

member of the 2018 Southern California Symposium Cohort

By the numbers, California enjoys a vibrant economic landscape. In 2016, the U.S. Bureau of Labor Statistics reported that California’s gross domestic product (GDP) exceeded $2.5 trillion, making it the fifth-largest economy in the world (edging out the United Kingdom). Yet, behind the state’s strong economic output hides an economy that harbors shrinking opportunities for prosperity, leaving an economic landscape with little room for mobility. Although places like Los Angeles and the Bay Area have seen growth in high-wage jobs, low-wage and low-skill jobs still make up significant proportions of both regions’ labor force. When factoring housing costs and general cost of living – perhaps a more accurate indicator for assessing the state’s economic standing – California has the highest poverty rate in the nation.1

In sharp contrast to the promise of the post-WWII California dream (e.g. the economic conditions that brought many thousands to the Golden State on the promise of affordable, high quality education and access to a single- family home), many middle and working-class residents throughout Southern California are forced into bleak economic trade-offs. Families are often forced to choose between paying rent and buying food, or paying for childcare versus healthcare. These choices leave many lacking the financial stability to stay in their communities or facing the reality of leaving the state altogether.2

How did we get here?

  • We stopped building housing — For the past 10 years the State has averaged less than 80,000 new homes annually. This dynamic has not always been the case. From 1955-1989, the State averaged more than 200,000 new homes annually, with multifamily housing accounting for more of the housing production.3
  • We diminished spending on public education amidst rising costs of higher education — University of California tuition rates have increased by 800 percent since 1990, well outpacing the rate of inflation and income growth. Over the past decade, tuition at the California State University system has increased more than 280 percent.
  • We limited access to open-space in urban communities with no funding for recreational spaces in underserved communities — According to the County Department of Parks and Recreation, Los Angeles has a median of 3.3 acres of park space per 1,000 people, well below the median of 6.8 acres per 1,000 people in other high-density U.S. cities.4 Across the county, 41 of the 262 neighborhoods have less than 1 acre of park space per 1,000 people.


Where do we go from here?

How do we create an economy that supports real choices for people throughout Southern California? How do we give cities the tools to generate additional revenue and increase investments back into local communities?

As civic leaders across Southern California measure priorities in crafting economic development approaches, it is vital that we look beyond the traditional focus on commercial development, but toward the economic needs of people across all 88 cities in Los Angeles County. Only then can we begin to assess how residents are able to make choices on where to live, work, and enjoy their communities.

Using a social innovation framework to embrace a more holistic economic development framework, our Southern California Symposium team focused on optimizing a human access element. By identifying lingering economic deficiencies throughout the local landscape, we can begin to craft a more inclusive investment strategy that better enables people to thrive in communities around the region, and continues to benefit future generations.

Whether from a partisan or practical perspective, some may be skeptical or dismissive of any city’s role in working to achieve a more equitable economic foundation. Yet, from a markets perspective, our team found that when the intended focus of innovation practices is narrowed at locally managed assets, the path toward economic resiliency begins to take shape. Through collaboration, civic leaders can enhance long-term economic access by leveraging local assets propelled by strategic financial mechanisms that drive investments back into local communities. Through the application of financing tools like value capture, pricing strategies, tax increment finance, and regional tax sharing, civic leaders in the Southern California region can begin to integrate a more robust human capital development approach into local planning efforts.

Mapping this approach onto the local strategic development landscape could resemble the following action plan:

(1) Assess local assets and define the opportunity for development:

33 Cities slide

(2) Leverage innovative finance as funding mechanism for community reinvestment:

EIFD Slide

(3) Prioritize additional revenue source to support local investment deficiencies in the built environment and or human capital:

EIFD Focused on 3 Pillars slide

Now is the time for reflection on the type of economy we hope to build for our shared future prosperity. The strength of the region’s economy, now and in the future, depends not only on providing access to education that leads to high paying jobs across industry sectors; this economic dynamic also depends on establishing effective governance practices that position leaders to leverage local assets as a means to optimizing increases in housing supplies, while prioritizing improvements throughout the region’s built environment. Prioritizing these types of measures would generally enhance quality of life for all.

1 U.S. Census Bureau