by an aqueduct of tax dollars from Washington: in some years, the net gain – via the inter-regional transfer of tax resources – was as much as $6 to $8 billion. Now the fiscal differential flows the other way: Los Angeles County – like Michigan or Ohio in the 1950s – now pays more in federal taxes than it receives in federal expenditures. Between 1983 and 1996 real per capita federal spending in Southern California fell by a whopping 14 per cent.
The decline of manufacturing jobs in the regional core (Los Angeles and Orange counties), moreover, has not been compensated for by small increases in the Inland Empire and San Diego counties. In addition, over the next few years Los Angeles may lose half of its apparel employment to China. The burden of deindustrialization, of course, is most heavily felt in Los Angeles’ new-immigrant neighborhoods, where the garment industry has been a major employer. As manufacturing employment shrinks, an already precarious low-wage workforce is further compressed into a limited spectrum of service-sector jobs in restaurants, hotels, offices, theme parks, and private homes.
This service-heavy economy, based upon a myriad of poorly-capitalized small businesses, is especially vulnerable to fluctuations in economic weather. Indeed both the rate of business formation, and the rate of business failure, remain higher than in most other metropolitan regions. This generates plenty of heartwarming stories about successful ethnic enterprise, but it also ensures an equally high rate of broken dreams and bankruptcy. Too many ethnic donut stores, nail parlors, tiendas, taco wagons, landscaping services, auto repair shops, and hairdressing studios survive only by dint of heroic feats of family self-exploitation. The employees of the micro-enterprise sector, moreover, tend to eke out survival at the barest minimum: caught in a gigantic low-wage, largely off-the-books, economic ghetto.
4. THE NEW INEQUALITY
In 1988, as I was writing City of Quartz, the Los Angeles County Board of Supervisors threatened to shutdown the ER at the California Medical Center. This was the beginning of what has become Los Angeles’ permanent health care crisis as County government has struggled unsuccessfully to maintain enough hospital beds to deal with the needs of 2.5 million uninsured residents. The County has been caught in a scissors between declining fiscal capacity (the legacy of Proposition 13 in 1978) and the refusal of so many local employers to provide health benefits to their workers. In Southcentral L.A. one in two adults lacks any form of health insurance. Less than one-third of private employers in California as a whole, and even less in Los Angeles County, pay the full cost of their workers’ health insurance premiums.
As a result, in 1995, 1999, and again in 2002, the supervisors almost closed USC-County General Hospital itself: a ‘Chernobyl-like’ meltdown of health care only narrowly avoided by desperate measures at the last minute, including an emergency parcel tax and a grudging federal bailout. Although USC-County is still open, sixteen vital community health clinics have been closed, as has the ER at scandal-plagued Martin Luther King General in Willowbrook. The working poor in Los Angeles, in consequence, have only marginally better access to health care than they might possess in Mexico City or Rio de Janeiro.
The County health crisis – still just a step away from system breakdown and catastrophe – is emblematic of the larger deficit of investment in a humane social safety net. Los Angeles, as it did in 1990, continues to house the poor in the street (an estimated 90,000 homeless in the County), and the mentally ill in jails. The so-called civic ‘recovery’ of the mid-1990s and the ensuing dotcom boom years did disappointingly little to reduce the mass of poverty in the city; indeed, according to the L.A. Coalition to End Hunger and Homelessness, the number of people living in ‘high poverty’ in Los Angeles doubled during the 1990s. Los Angeles, according to United Way, remains ‘the nation’s poverty capital’ with the largest number of poor of any metropolitan area. The City’s family poverty rate is double the national average, and an amazing 59 per cent of students in public schools qualify for free or reduced-price lunch programs. (More broadly, the L.A.—Riverside—Orange County area has the highest percentage of families in poverty and the lowest percentage of high school graduates of the nation’s fourteen largest metropolitan areas.)
Most of the poor, or at least poor parents, are in the labor force, and the persistence of such high levels of poverty through the last decade is evidence of labor markets that provide few footholds for occupational or income mobility. In part, this is the result of the educational shortfall in the labor force: an extraordinary 78 per cent of adults in Los Angeles County are not college graduates, and 1.8 million are illiterate. Adult education, in other words, is an enormous, largely unmet public need (as well as the vital precondition to reskilling and economic mobility).
Meanwhile, Los Angeles Unified School District continues its slow decline: two-fifths of current high school students do not graduate with their class. The Latino graduation rate is the worst: only 53 per cent. But wages in California over the last generation have increased only for workers with a college degree: those with high school or less have lost ground in the last decade. This may partially explain why Latino poverty in L.A. County soared from 22 to 35 per cent during the early 1990s recession, then fell back to an uncomfortable plateau of 30 per cent, where it has remained stuck ever since.
The other side of poverty and vulnerability, of course, is inequality, and the Los Angeles metropolitan area has almost Latin-American extremes of wealth and poverty. During the 1990s, real household incomes fell throughout much of Southern California, but the worst drop in the median income was in the City of Los Angeles, where it fell by 9.1 per cent. At the same time, the percentage of households in poverty increased from 18 to 22 per cent, while the percentage with an annual income of more than $100,000 increased from 9.7 to 15.7 per cent. Almost 700,000 working adults in L.A. County have incomes below the poverty line, and seven of the ten fastest-growing occupations in the city, including cashier and security guard, pay less than $25,000 per year. The Times editorialized in 2000 that L.A. and California had entered a ‘new Gilded Age’ where ‘the income gap between rich and poor is wider than at almost any time in history and magnified by the sudden wealth and lavish living of a growing elite’.
Meanwhile, the heirs of Howard Jarvis – almost thirty years on – continue to repel all assaults on the perverse edifice of Proposition 13. Land inflation remains the most destabilizing force in Southern California life, but Prop. 13, as Peter Shrag has so powerfully shown, ensures that the greater part of the real-estate windfall annually passes through the economy, on its way to buy Hummers, Laker tickets, and vacation homes, without paying a tithe to schools and the creation of the human capital on which the future of California will rest. Luxury lifestyles are subsidized, as it were, on both ends: by a seemingly infinite supply of cheap service labor, and by the tax advantages that accrue to real-estate and sumptuary consumption.
5. TERMINAL SUBURBS
Real-estate inflation is the tax that one portion of society – older, more affluent homeowners and corporate landowners in coastal areas – levies on the rest of society: especially younger, less affluent families. It is also the economic passport that allowed hundreds of thousands of largely white, affluent Southern Californians to vote with their feet and leave the region in the 1990s. The City of Los Angeles alone lost 200,000 white, non-Latino residents in the 1990s; the County, almost one-fifth of its total white population. This Anglo exodus – to a much smaller extent, also a Black out-migration – explains the ironic fate of the ‘slow-growth’ movement that in the 1980s so dominated the suburban landscape.
Fifteen years ago it was apparent that residential development had reached the last frontier of available land within an hour of the coast. Today, this final build-out is in progress from Santa Barbara to San Diego. The dirt is almost gone. In Orange County, the Los Angeles Times reported two years ago, there was room left for maybe 40,000 additional homes in Irvine and Rancho Mission Viejo east of San Juan Capistrano. Currently, Orange County has more than 3,600 residents per square mile; Los Angeles County around 2,200. Believe it or not, the Los Angeles–Anaheim—Riverside metropolitan area now has a higher density
