Joe Mathews: Ma­jor hous­ing wealth erod­ing state’s vi­tal­ity

San Francisco Chronicle - Late Edition (Sunday) - - INSIGHT - Joe Mathews writes the Con­nect­ing Cal­i­for­nia col­umn for Zócalo Pub­lic Square. To com­ment, sub­mit your let­ter to the ed­i­tor at SFChron­i­cle.com/let­ters.

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.

Ir­fan Khan / Los An­ge­les Times

For­mer Pres­i­dent Barack Obama at­tends a Septem­ber cam­paign rally Ana­heim for the state’s Demo­cratic con­gres­sional can­di­dates.

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