Kotkin: Why the Middle Class Exodus from Urban Centers?

In a recent L.A. Weekly article, you argue that today's L.A. political leaders pay lip service to the middle class, fail to nurture private entrepreneurship, and do little to retain private industries, whether high-tech or processors of specialty Latino foods. Can you elaborate on these provocative assertions?

When you talk to private sector business people-whether they are in high end services, manufacturing, or entertainment-they will tell you that other parts of Southern California are much more receptive to enterprise-to building and expanding enterprise-than the city of Los Angeles. I recently did work in the city of Ontario on a roundtable with local manufacturers-a bunch were people who had once had their primary residences in L.A. L.A. County is difficult, L.A. as a city is ultra-difficult, and there is no real sense of urgency about the private sector. Frankly, the political class of Los Angeles doesn't get this at all, except in the area of real estate development.

You also recently co-authored a report on New York City's disappearing middle class, "Reviving the City of Aspiration," Can you elaborate on the thesis of this report?

It's the report that I worked on with the Center for an Urban Future. What we were looking into is the phenomenon in New York, although it's certainly typical to other many other big cities, that despite an urban revival and a greater interest in living in cities, the conditions of an urban economy-the affordability, the tax structure-works against middle class people staying in town. We were quite surprised, for instance, to find that there are more people leaving New York net now than during the dark days of the early '90s. What we found is that people who want an urban lifestyle are finding cities unaffordable. They find the business climate very difficult. They have problems with the public schools. In many cases, you find that to pay for a private school plus the high cost of housing is just enough to make it very difficult for a middle class family to live a middle class life. We found that if you have an income of $150,000 in New York, it would be an equivalent of about $50,000 in Houston.

The report quotes an earlier report commissioned by Mayor Bloomberg in 2006, the "2006 Movers Study," which stated that "What drove people out of New York City in 1993 was basic quality of life issues-crime, safety, neighborhoods," and "What is driving people out today is basically one issue-money and the cost of living."

That's right, and there are two parts of that equation. One part is the extremely high cost of living-housing, taxes, and regulatory constraints. At the same time, it's the fact that the economy is not providing as many middle-income jobs. You end up with a bifurcated economy that is made up of high-end professionals and a large class of people working in low-paying jobs. That situation is very dangerous.

The generational part, and this is applicable to Los Angeles as well, is that people in their twenties can come to New York, have a good time, make contacts, develop their skills, and they may want to stay but they find it increasingly hard to justify staying as they get into their thirties, get married, and have children-the options for staying in New York become fewer and fewer.

In New York, manufacturing jobs account for just 3.2 percent of all private sector jobs, versus Los Angeles, which is at about 12.7 percent. Given the events of the end of 2008 and projections going forward, will there be further drops in manufacturing jobs in major cities?

There are certainly some sectors that are going to be hard hit. The garment industry is going to be hard hit; purchasing clothing is always something that people can put off until another time. We'll see what happens to what's left of the aerospace industry, but certainly the non-defense sectors are threatened. The whole manufacturing sector connected to construction is obviously in serious trouble. But there are other sectors with the potential to do okay. The ethnic foods market is not going away-people are cooking more at home; we have a huge produce industry. There are opportunities with green technology and the energy-related technologies, which are things that L.A. should be a leader in but, under the current regime, probably won't be.

Does Southern California have an equivalent study to NYC's "2006 Movers Study"?

You're asking one of the most puzzling and depressing questions. I have to give credit to my friends in New York-at least they understood that this as an issue of importance for the future of the city. I don't think there is any foundation or major institution in Southern California that has shown any concern about this issue. We have tried to look at possibilities of doing the same thing in L.A. I'm a native New Yorker but my loyalties are to Los Angeles. Unfortunately I do not see the same focus on this issue of the middle class at the political level, the business level, or the non-profit level in Los Angeles. I'm not entirely sure why that is, but there doesn't seem to be the same civic consciousness that says, "Hey, this is a problem." New York understands that Michael Bloomberg's luxury city is coming to an end. Relying on huge returns from Wall Street just isn't going to work in the future.

We don't have quite the same focus here. There doesn't seem to be the focus on the manufacturing industries. There doesn't seem to be the same concern about the loss of the entertainment industry, which is a very good provider of middle class jobs. The important thing about L.A. isn't necessarily that there are a bunch of stars and directors living here. The important thing is the camera people, editors, and the marketing people-the grunts, if you will, of the entertainment industry-who hold many of the middle class jobs and concentrate in areas like the eastern part of the San Fernando Valley. There just doesn't seem to be a focus on this.

You can have your disagreements with Mayor Riordan, but he really fought for these kinds of opportunities. On a statewide level, Governor Pete Wilson fought for these kinds of jobs. I don't know what planet Governor Schwarzenegger is on, but I don't think it is planet earth. I don't think Villaraigosa even understands the nature of the economy or any of the related issues.

Los Angeles has become, somewhat similar to New York, dominated by two things-public employee unions and developers. So what do we end up with? We end up with extremely expensive and not particularly efficient government and a bunch of over-development all over the city that we really don't need and people can't afford to buy. We should be focusing on how we create the income so that people can afford housing, whether it's condos or houses. We didn't work on the income side at all. We just said, "We'll build a bunch of fancy condos and fancy-condo-dwelling people will come and live here."

Your report noted, "The industries expected to grow the most in New York during the decade ahead almost exclusively pay low wages. Of the ten occupations that are expected to have the largest number of annual job openings in the city through 2014, only two offer average annual wages greater than $28,000." Is that apropos to Southern California and metro L.A.?

I suspect it is. New York and Los Angeles, in both good ways and bad, are becoming more like each other. On the good side, L.A. now has the kind of diversity and cultural vibrancy that New York has. It has the great restaurants and the significant arts and theater. On the other end, the same kind of economic stagnation and the bifurcation of society are also taking place. L.A. was a city that distinguished itself by being an entrepreneurial center. That energy is here but it is certainly dissipating out of the city and maybe the whole region.

What bothers me is that I don't see any urgency about this. In New York, at least one, possibly two, of the politicians running against Bloomberg is focusing on the middle class issue. Villaraigosa is running virtually unopposed despite having been, at best, a mediocre mayor. We have opportunities to create jobs, but what are we doing on the solar side? Here we had the chance to nurture an entrepreneurial industry to compete and innovate, and instead we're going to turn it, with measure B, into the Department of Motor Vehicles. It's insane.

The L.A. Weekly article in which you were featured asserted, "L.A. grew in 2007-2008 due to high birth rates among the poor and working class, mostly Latinos, and due to illegal immigration. But since 2001, on the key measure of an area's ability to attract the middle class, 901,426 more citizens have fled the county for other states than arrived from other states, and last year, they continued that flight." Why is that critical?

This is the slow seepage of the life-blood of the city. The middle class is the life of the city; it is what makes the city go. It's the civic culture. It's the political center. It's the center for the synagogues, the churches, and the mosques. It's the group of people who start new businesses and allow a city to innovate by continually creating new kinds of business, whether it's a new food market or a film production company. There is the constant churning and starting of new businesses. It provides the workforce, as we described in the New York report, so that the businesses can expand.

A city that relies on young people, who will leave eventually, poor people, and a relatively small group of very wealthy people, is not replicating the historic model of a great city. In the past, great cities have been made by the fact that they were places where people came, found opportunities, and found that life in the city made them better. Now cities are becoming post-graduate schools, where people go, and if they graduate, they move out-whether it's a Latino immigrant moving to the Inland Empire or Las Vegas or any kind of ethnic, upper-middle class person who decides to move to Oregon.

We're not creating a middle class. It was Jane Jacobs who said, "A metropolitan economy, when it is working well, doesn't lure the middle class, it creates one." L.A. was a city where people could come from somewhere else and make a better life for themselves-maybe they went from poor to working class, from working class to middle class, to upper middle class, and onward. The city used to be about that upward trajectory. I think it was Descartes who called 17th Century Amsterdam "the inventory of the possible." Los Angeles has the potential to be a similar place but if it doesn't it will never achieve the greatness that was once seemed possible.