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LOS ANGELES Saturday, May 23rd 2015 4:52


  • WHO WE ARE-Women did it again. The annual Memorial Day tradition of placing flowers on graves of fallen soldiers was begun by women in the South after the Civil War. Who knew? Who now remembers that it was originally Decoration Day? Or that it is a day to decorate the graves of soldiers who fought for a better future. Memorial Day is a great deal…
  • 453 Days Later...

    Tom Rubin
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  • What LA Educators Should Learn From Bell Gardens High School’s Shocking Turnaround

    Jay Mathews
    VOICES FROM THE SQUARE-Bell Gardens High School in east Los Angeles County was a sorry mess when science teacher Liz Lowe arrived in 1989. It was overflowing with trailer classrooms and graffiti. More than 3,000 students crowded into school buildings surrounding a concrete quadrangle with patches of grass and some trees. Expectations were low. Not…
  • The Clean Sweep Election Finally Happened

    Bob Gelfand
    GELFAND’S WORLD- A few years ago, a group calling itself Clean Sweep argued that the voters of Los Angeles should defeat all the incumbents and replace them with fresh blood. On Tuesday, the results came close. There are two distinct lessons, one of which is quite ominous for elected officials. This election demonstrated the end of voter patience…
  • What Did Tuesday’s LAUSD Election Results Prove?

    Paul Hatfield
    PERSPECTIVE-Did the LAUSD election results signal a change for charter schools? Perhaps. Possibly. Maybe. You can make a decent case that Ref Rodriguez’s victory in District 5 points to strong support for charters. It was a battle between two well-funded candidates with diametrically opposed views on the issue. The effectiveness and fairness of…
  • (Train)ing Ourselves to Confront Modern Mass Transit

    Ken Alpern
    GETTING THERE FROM HERE-It's great to learn that Metro has an excellent new CEO with the hiring of Phillip A. Washington who comes to us from Denver. Following in the footsteps of his predecessors, Roger Snoble and Art Leahy, Mr. Washington has a first-rate reputation to maintain--but his first job will be to pass Measure R-2. Measure R-2 (perhaps…
  • City Controller’s Grandstanding DWP Audit is the Real Waste of Ratepayer Dollars

    Dennis Zine
    JUST THE FACTS-City Controller Ron Galperin’s Grandstanding DWP Audit results were finally released. Unfortunately, the conclusion and political spin that came afterwards from the controller was misleading. Here are the FACTS: The DWP’s Joint Training Institute and Joint Safety Institute are administered by DWP managers and representatives of the…
  • A Place Where ‘Special Interest’ is NOT a Dirty Word

    Denyse Selesnick
    MY TURN-We need to have a new word to differentiate the villainous “Special Interest” that everyone is always complaining about and the “Special Interest” that almost all of politicians and civic and social activists have adopted as a cause. It is impossible to have passion about multiple issues. I know I have mentioned this before, but it seems…
  • Alert! America’s Small Businesses are Being Screwed by Big Business

    Robert Reich
    THE ECONOMY-Can it be that America’s small businesses are finally waking up to the fact they’re being screwed by big businesses? For years, small-business groups such as the National Federation of Independent Businesses have lined up behind big businesses lobbies. (Photo: small businesses in Studio City) They’ve contributed to the same Republican…


  • Can Strawberries Help Fight Cancer?

    Christian Cristiano
    WELLNESS-There have been a number of studies over the years that could show evidence of strawberries fighting off cancer. Tong Chen lead a study…
  • Study: The Best Way to Quit Smoking … Bet On It

    Francie Diep
    WELLNESS-Oftentimes, money speaks louder than words. Apparently, that aphorism applies to cigarettes too. A new study finds that money incentives…
  • Exercise Can Help Anxiety … Here’s How

    Christian Cristiano
    WELLNESS-Statistics show that over 3 million American adults suffer from anxiety and there is no evidence that number will be declining any time…

Memorial Day 2015- Freedom Isn’t Free

J. Cole raps on the Letterman show: “Be Free’

The Star Spangled Banner … like you’ve never heard it before









Facebook’s IPO Testifies to Silicon Valley’s Power but Does Little for Other Californians

WALL STREET - The  $104 billion Facebook IPO testifies to the still considerable innovative power of Silicon Valley, but the hoopla over the new wave of billionaires won’t change the basic reality of the state’s secular economic decline.
This contradicts the accepted narrative in Sacramento. Over five years of below-par economic performance, the state’s political, media, and business leadership has counted on the Golden State’s creative genius to fund the way out of its dismal budgetary morass and an unemployment rate that’s the third highest in the nation.

David Crane, Governor Schwarzenegger’s top economic adviser, for example, once told me that California could easily afford to give up blue-collar jobs in warehousing, manufacturing, or even business services because the state’s vaunted “creative economy” would find ways to replace the lost employment and income. California would always come out ahead, he said, because it represented “ground zero for creative destruction.”

Schwarzenegger’s successor, Jerry Brown, and his economic team have been singing the same song, hoping, among other things, that the Facebook offering, and other internet IPOs, might bring in enough money to stave off the state’s massive, growing deficit, now estimated at more than $16 billion. Yet even as the new IPO wave has risen, California’s fiscal situation has worsened while state tax collections around the nation have begun to rise.

Of course, Facebook’s public offering will help, but only so much. According to the legislative analyst’s office, the Facebook gusher should put an additional $1.5 billion into the state coffers this year, roughly one tenth of the state deficit, with perhaps another billion in the following few years. This constitutes a nice win, but barely enough to sustain the state even over the short—not to mention the long—run.

The problem lies in large part in the nature of the economy epitomized by Facebook. Being based in cyberspace and driven entirely by software, such companies employ almost exclusively well-educated workers from the upper middle and upper classes. In the past “a booming tech economy created all kinds of jobs,” notes Russell Hancock, president and CEO of Joint Venture Silicon Valley, a key industry research group. “Now we only create these rarefied jobs.”

As Hancock suggests, this contrasts with previous California booms. Back in the ’80s or even the ’90s, California’s tech booms were felt broadly in Orange and other Southern California counties and appeared to be moving inland to places like Sacramento. Anchored by its then dominant aerospace industry, Los Angeles remained a tech power on its own while enjoying employment from a burgeoning fashion industry, the nation’s dominant port and, of course, Hollywood.

In contrast, today’s job surge has been largely concentrated in a swath from San Francisco down to Sunnyvale. These firms create the kind of outrageous fortunes celebrated in the media, but their overall employment impact has not been enough to keep California even at parity with the rest of the country.

Over the past decade, the state has created virtually no new STEM jobs (science, technology, engineering and math-related employment), while the U.S. experienced a 5.4 percent increase. Arch rival Texas enjoyed a STEM job gusher of 13.6 percent. More important still, mid-skill jobs grew only 2 percent, one third the rate nationally and roughly one fifth the expansion in the Lone Star State.

Even the Bay Area itself has enjoyed less than stellar growth. Indeed, even now overall unemployment in the Valley remains at 9.3 percent, below the state average of more than 11 percent but higher than the national average. The Valley now boasts 12 percent fewer STEM jobs than in 2001; manufacturing, professional, and financial jobs also have shown losses. Overall, according to research by Pepperdine University economist Mike Shires, the region at the end of last year had 170,000 fewer overall than just a decade ago.

Today’s Valley boom is also very limited geographically as well, with most of the prosperity concentrated in the Peninsula area, particularly around places like Mountain View (headquarters of Google), Menlo Park (headquarters of Facebook) and in pockets of San Francisco. Meanwhile, San Jose, which fancies itself “the capital of Silicon Valley,” faces the prospect of municipal bankruptcy, [[]]  a fate increasingly common among cities across the state.

The magnetic pull of the current tech boom is even weaker across the bay in the Oakland area, where unemployment scales to 14.7 percent. According to the recent rankings of job growth Shires and I did for Forbes, Oakland ranked 63rd out of the nation’s 65 largest metropolitan areas, placing between Cleveland and Detroit.

Outside of San Diego, which has continued to gain jobs, the echoes of the tech “boom” are even fainter elsewhere in the state. Sacramento placed 60th in the job creation study, just behind Los Angeles, by far the largest region in the state. Former high-flier Riverside-San Bernardino ranked 50th, while the once booming “OC,” Orange County, could do no better than a mediocre 47th.

These economies have also become technological laggards. According to a study on tech job creation by my colleague Mark Schill, greater Los Angeles, Sacramento, and Riverside-San Bernardino, three large regions, now rank  in the bottom third in tech growth. The Los Angeles area, once the global center of the aerospace industry, now has a lower percentage of jobs in tech-related fields than the national average.

Beyond the big coastal cities, in places few reporters and fewer venture capitalists travel to, things are often worse. Fresno, Modesto, and Merced have among the weakest employment numbers in the nation. They may be partying in Palo Alto, but things are becoming increasingly Steinbeckian just 50 miles inland.

This is happening even as there has been an ominous decline in the overall quality of California’s talent pool. For residents over age 65, the state ranks 2nd in percentage of people with an AA degree or higher, but among workers 25 to 34 it falls to 30th. Even worse, according to National Assessment of Educational Progress, California eighth graders now rank 47th in science-related skills, ahead only of Mississippi, Alabama, and the District of Columbia.

None of this seriously affects the new wave of Valley firms. A Google, Apple or Facebook can cream the top not only of the California workforce, but the most gifted drawn from around the world. The old Valley depended on engineers and technicians cranked out in unheralded places like San Jose State and the junior colleges; the new Valley simply mines Stanford, CalTech, Harvard and MIT for its most critical raw material.

This reflects the contradiction inherent in California’s emerging economy.  High-end, massively financed tech firms like Facebook can endure the Golden State’s weak general education, insanely tough regulations, high energy costs, and rising tax rates. Silicon Valley software firms generally tend to support, or certainly don’t oppose, the draconian energy, land use, and other state regulations widely opposed by other, less ethereal industries.

The main reason: costs cannot be so well sustained outside the favored zones. This explains why people are not flocking in large numbers to California anymore. Last year, according to IRS data, California ranked 50th ahead of only Michigan--for rate of in-migration. So as the most gifted young nerds cluster around Palo Alto, middle-class families leave; between 2000 and 2009, 1.5 million more domestic migrants left the state than came. Even the Bay Area--the epicenter of the boom—has been losing 50,000 domestic migrants a year, due to unsustainably high housing prices and a narrower range of employment options for all but the best educated.

Many of these people–and companies—are moving to places that are far less attractive in terms of climate or culture, such as Utah, Texas, or even Oklahoma. The migrants may miss the beach or the temperate climate but reap huge benefits from lower home prices, lower taxes, and much better business environments.

Of course, any state would welcome the windfall that is coming from Facebook and other phenomena. But the celebration over IPOs and rich payouts obscures the greater danger that threatens the future of the Golden State. The current boom demonstrates that Californians can no longer count on the prosperity of a few as the harbinger of better things for the rest of us. Instead Californians now inhabit, as a recent Public Policy Institute of California study suggests, a society that is increasingly class divided, far more so than the national average.

Ultimately, one should not expect Facebook, or any company, to solve these vast problems. To expect this tech wave to reverse California’s decline is nothing short of delusional.

(Joel Kotkin is executive editor of and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010. This column was posted most recently at

Tags: Joel Kotkin, economy, business, Wall Street, IPO, Facebook, Facebook IPO, Silicon Valley, California, Jerry Brown, tech companies, budget crisis

Vol 10 Issue 41
Pub: May 22, 2012