There are many areas in which the LA economy is proving to be undergoing an enhanced performance than it has done in many years. The Los Angeles County Economic Development Corporation (LAEDC) has just put together a report forecasting that the GDP in the area is actually on a more escalated growth spurt than the average of the entire country.
With an unemployment rate of less than 5 percent (which is still decelerating and some say could drop to as low as 4.1 percent by as soon as next year), economists believe that the next two years will see even more solid growth. Which is quite incredible when you look back to the figure of 12.5 percent in 2010. Even though some people might not be in the best-paying most stable jobs, economists are quick to point out that when unemployment jumps to such a low rate, employers will need to offer higher pay for workers.
Still, Somjita Mitra – an LAEDC economist and one of the report’s contributors – said wages are likely to continue growing “slowly but steadily as the labor market continues to tighten.” Most of the job growth is however, in the low-education/wage sector with a loss of around 111,000 manufacturing jobs since 2007 that paid “a middle class annual salary of approximately $68,000.”
And then there is the increase in housing prices which complicates matters further. Still, these statistics have to indicate a reason for optimism.
LAX has always been great for the economy of Los Angeles. But a recent report by the Los Angeles County Economic Development Corporation (LAEDC) has shown that it has created 620,610 local jobs. In addition, with its continuing capital-improvement program, each year it is anticipated that it will generate 121,640 jobs. As Mayor Eric Garcetti enthused: “LAX is powering an economic resurgence across our city, and we are investing billions to make it even stronger. The LAEDC report confirms that this generational investment in our airport is paying off with hundreds of thousands of jobs for Angelenos and billions added to our local economy.”
Generating many jobs is also good for the actual company, vis-à-vis tax credits. Indeed, last year, the Governor’s Office of Business and Economic Development awarded various companies with state tax credits for their efforts in this area. Some of these were:
- Katie May (wedding designer)
- Boom! Payments Inc. (electronic payments provider)
- Center Corp. (healthcare IT firm)
- Planet Earth Los Angeles (recycled packaging maker)
- DMF Lighting (Custom Lighting Supplier)
- Pacific Steel Group (steel reinforcement supplier)
- NerdWallet Inc. (online personal financial services)
- CreditKarma Inc. (online personal financial services)
- International Business Machines Corporation (IT services)
- CHC Consulting LLC (Engineering and Telecommunications services)
- Cerner Corporation (Healthcare IT and Revenue Management)
- Orbital ATK Inc. (Aerospace Component Manufacturing)
- Stripe Inc. (Online Payment Processing)
- TriWest Healthcare Alliance Corp (healthcare admin)
- FineLite Inc.
Activity from LAX generated $37.3 billion in labor income, $126.6 billion in business revenues state and local taxes: $6.2 billion and $8.7 billion in federal tax revenues in 2016. And as for the LAX Modernization Program (that is due to be completed by 2023), a further 121,640 jobs per year will be created.
When it comes to the job market in Los Angeles, the answer to this question is complex. There will be a continued hiring spree throughout the state of California over the next two years. But, this will be less than the hiring that went on in 2015.
In 2016 and 2017 it is anticipated that the state of California will add 650,000 jobs. According to the Los Angeles County Economic Development Corporation (LAEDC), this will reduce the unemployment rate to approximately 5 percent (it currently stands at 7 percent). This is a step in the right direction given that there was an increase in unemployment in 2015 by 3 percent.
As Chief Economist of the LAEDC, Robert Kleinhenz explained: “The California economy will continue to add jobs at a faster pace than the nation. Both will see slower job growth in 2016 than they have seen in the last couple of years.” This will translate into longer hours and people replacing part-time positions with full time ones. But as Kleinhenz pointed out, this “also translates into sort of less-outright job growth.”
Given this situation, the next step should be wage increase. The forecast for that, per capita income is an increase of 3.9 percent in 2016 and 4.9 percent in 2017; substantially greater than the 3.6 percent figure of 2015.
So who will gain from this? Apparently two main industries: healthcare (with an anticipated 29,000 jobs over the next two years), and construction (forecast for an additional 9,800 jobs during this time frame).
In addition, with the deceleration of the economy in China, California is likely to be even more attractive as Chinese investors are putting increased funds into California. Indeed, last year FDI to America increased by more than 30 percent. According to a Rhodium Group Report, California took 20 percent of that amount.
So there is a lot of foreseeable good news for both the job market and the economy in California over the next two years.