San Francisco Chronicle - (Sunday)
Joe Mathews: Major housing wealth eroding state’s vitality
California faces a peculiar peril: Our state is becoming too rich for its own good.
Just look at Orange County. The dangers of too much wealth has not been a big topic this fall as the 3.2 million-person county hosts a national political war over control of Congress. But it should be.
By the statistics, Orange County looks as flawless as the supremely toned bodies on the beach at Corona del Mar. It has a gross domestic product greater than Portugal’s; unemployment is just 3 percent; and the median income approaches $90,000 — $25,000 higher than the state figure.
But the county’s economic beauty is only skin-deep. Beneath the surface lies an economic heart that is beating too slowly.
Housing wealth is central to the problem. Orange County, like California itself, should be a place where everyone wants to live. But it’s so expensive that, for most of the past two decades, more people have left for other parts of the United States than have moved in. Orange County also has good schools with low dropout rates. But with the high cost of living and declining births, school enrollments and the number of children have fallen.
Result: Orange County is in danger of getting dumber. Some regional analysts have warned of a “brain drain,” as the county’s Millennial population shrinks and even local university graduates with technology degrees leave.
The problem is not a lack of jobs. National political reporters lazily describe Orange County as suburban, but it profiles like an urban job center. And its labor market is impossibly tight, with employers complaining about the extreme difficulties of hiring skilled workers. The UCLA Anderson Forecast found earlier this year that, for the first time on record, Orange County has more jobs than it has people to fill them.
The nature of those jobs contributes to the problem. The number of higherpaying professional services jobs like lawyers and accountants is flat, while low-wage job categories like tourism and food preparation are booming. And many of those lower-wage workers, unable to afford living in Orange County, commute in from cheaper Riverside and Los Angeles counties.
All that puts pressure on Orange County’s underdeveloped transportation infrastructure. And lack of connection contributes to an economic divide. Jerry Nickelsburg, director of the Anderson Forecast, says that Orange County is not one economy but two. One is the low-paying leisure and hospitality economy dominated by Disney on the north side of the county. The other involves finance, aerospace, and some tech around Irvine and Newport.
That north county economy has been getting national attention, with political and union organizing to raise the wages of people who work in and around the Disney complex. But Orange County’s richer southern precincts are aging into irrelevance. Those communities often can’t find construction workers for building projects, especially those serving senior citizens.
Such trends foretell a more divided future for one of California’s most beautiful places. How can the poorer north county get the resources it requires when county politics and economy are dominated by the richer south? And what kind of representation is possible when more of the people who do the work in Orange County don’t live there?
A recession could further darken the picture, especially if it cuts hard into the professional services sector. Automation in retail, a major industry for a county with fantastic malls like Fashion Island and South Coast Plaza, looms as a threat. Even tourism has shown vulnerability, with hotel occupancy rates and John Wayne Airport passenger numbers leveling off. (Perhaps Disney’s new “Star Wars”-themed land, opening next summer, will spark new growth and a more futuristic outlook.)
A more fundamental problem is the county’s lack of dynamism. Between aging and diminished immigration, the rate at which Orange County creates new businesses has been declining. Since those same trends exist across the state, California could become less vital, too.
So while it’s interesting that so many young activists from across the country have come to Orange County for campaign season, it would be much better if they could stick around, and start new families and new enterprises.