In addition to the quarterly economic forecasts for the U.S. and California, the September 2019 UCLA Anderson Forecast conference focused on the importance of increasing L.A.’s technology job market and attracting tech companies to Southern California. The question looms whether the burgeoning tech economy boosts the rest of the local economy, including low-wage, low-skilled workers.
Economist William Yu confirmed the strong correlation between the boom in tech jobs and the increase in total jobs. In Los Angeles, he said, as many as 400,000 low-skilled jobs were created between 2010 and 2018 in the wake of increased tech hiring. However, he added, people in those jobs shouldn’t count on dramatic increases in wages — and perhaps should expect wages to decline. Median income among low-skilled workers is $25,000 locally, compared to the median $92,000 for white-collar tech employees.
“Are we not taking advantage of all the talent we have because of distances?”
So, does the rising tide of tech lift all the boats? Ultimately, yes, said Yu. To be sure, high-wage earners buy local homes, hire local lawyers, eat in local restaurants. But with no positive effect on the lower-income wages, he recommends local investment in education and workforce development for a more inclusive future, as well as to attract and retain global talent.
Anderson’s Easton Center for Technology Management convened a panel devoted to the question of local sustainability amid a fast-growing tech sector. Easton faculty director Terry Kramer, who said the most prominent trend in tech is the astonishing extent to which high-speed mobile connectivity will affect everything from autonomous vehicles to medical diagnoses, asked the panelists to examine the question of value creation and value destruction in the Los Angeles tech ecosystem.
Guests included Maria Salinas, the president and CEO of the Los Angeles Area Chamber of Commerce; Marcos Gonzalez, managing partner at VC firm Vamos Ventures; and Allen Narcisse, Lyft’s SoCal regional director. They echoed Yu’s concern that even amid a thriving tech economy, many will be left behind financially. Salinas said, “L.A. suffers tremendous inequality in wealth,” which the chamber keeps top of mind. She said public-private partnerships must include the voices and needs of all stakeholders, not just those of the businesses the chamber champions.
Gonzalez, a native Angeleno, is most excited about the developing potential of AI, VR and AR. He said the content industry will drive value in L.A. and globally. But, echoing Salinas’ concern about inclusiveness, he noted the uneven distribution of where in the city tech businesses are emerging: “We could be doing more work to have a city that’s not like the Bay Area,” he said. Leadership and policymakers should be encouraging investment in tech companies all over the city, not just the majority-white Silicon Beach. Talent, he said, needs to be able to afford to commute to or live in the location of the companies where they work. “Are we not taking advantage of all the talent we have because of distances?” he asked.
Narcisse, whose professional background includes some years at the Los Angeles Times and in global strategy at Paramount, described Lyft as solution-agnostic. “It doesn’t have to be a car,” he said, stressing concern about keeping in a “green mode,” like using a scooter for short distances and investing in helping drivers to operate more sustainably by providing them with EV and hybrid rental options. Just six years old, Lyft is open to any markets. The company partners with existing city infrastructure and is interested in whatever the fastest, cheapest, most sustainable solution is to bridging that transit and employment divide Gonzalez observed.
With the escalating shift from hardware to software and the rise of machine learning comes the question of obsolete jobs. Gonzalez, who advocates an “integrator” versus “colonizer” approach, said he thinks the transition will be faster than some can keep pace: “Middle-aged people will be living longer, they cannot flip burgers for a living. It’s a huge area of urgency.” Salinas cited Governor Gavin Newsom’s Future of Work Commission, which is designed to anticipate a changing workforce and try to protect it.
Salinas sees great hope in the “smart cities” technology she witnessed when touring Asia as part of trade mission with Mayor Eric Garcetti. Seoul and Tokyo are engineering traffic based on real-time data. As Kramer noted, value lies in data’s predictive ability, which will lead to new inventions, the dramatic expansion of connected devices, the launch of cost-effective startups and much more.