Wednesday, April 09, 2014

The Future of Middle Class Jobs in Los Angeles

The UCLA Anderson Forecast's report about the dismal conditions in the City of Los Angeles' labor market is of interest to the Wall Street Journal.     As the new Mayor reads this article, what will he think?   What he won't want to acknowledge is that a combination of pro-labor union regulations and land use regulations combine to create a stagnant local labor market.   Because LA is so wonderful,  land prices are very high here. Any business that needs land as an input in production is going to find it to be very costly to do business here.  Labor protection only compounds this issue.  The key to revitalizing Los Angeles is to go vertical and to allow parcel after parcel to be rezoned for much higher densities.  While the Mayor is a very smart guy, he can't anticipate what hipsters and idea thinkers will choose to rent the new space in these new buildings.  Drive along the Wilshire corridor in West LA and into Santa Monica and you will see an enormous waste of space. There is building after building of 2 story and 3 story buildings.  If zoning was not a binding constraint, would a 25 story building be there? Who would be in the building? What new trades and vitality would take place in a 15 million person compact LA where people walk and use the subway?

As the vibrant food trucks in LA show, when you liberate the free market from red tape --- funky new things happen. Yes, there are winners from preserving the status quo but sluggish organizations such as LADWP are not the future.