The S.F.-L.A. economic gap grows wider with pandemic

Even before COVID-19 rocked California, there were stark economic differences between the state’s two major metropolitan regions — the San Francisco Bay Area and Los Angeles County-centered Southern California — and the pandemic will widen the gap even more.

As I described in a lengthy 2017 article for CalMatters, the two regions had been roughly comparable in economic terms 40 years earlier, but as California’s industrial economy began to decline in the 1970s, the two regions pursued very different paths.

The Bay Area opted for cutting edge digital technology, while Los Angeles County and surrounding communities bet on logistics, making the twin ports of Los Angeles and Long Beach the primary gateways for rising commerce between the U.S. and Asia and developing transportation and warehousing to serve the trade.

The latter strategy succeeded, but the jobs it created tended to be of the low-skill, low-pay variety and Southern California also absorbed a very strong surge of often ill-educated immigrants. It faced another challenge when its defense/ aerospace industry collapsed in the 1990s.

Meanwhile, the Bay Area’s wager on high-tech has paid off handsomely, creating immense amounts of wealth and rewarding technology workers with lavish salaries and fringe benefits.

Just one of many data points cited in the article: “Of the state’s 10 highest median income counties in 2014, six were in the Bay Area, topped by No. 1 Marin County, at $140,681 per joint tax return, and No. 2 San Mateo at $122,415. The only Los Angeles region counties on the list were No. 9 Orange at $83,393 and No. 10 Ventura at $82,193. Los Angeles County itself was No. 25 at $64,890, markedly below the statewide median.”

When the Public Policy Institute of California did poverty calculations for the state’s counties, using methodology that counted cost of living as well as personal income, Los Angeles was dead last with more than a quarter of its 10 million residents impoverished.

That was before COVID-19 struck. By every measure, the pandemic is far more pronounced in the Los Angeles metropolitan region than in the Bay Area. In relative terms, far more Angelenos are being infected and far more are being hospitalized and dying.

The region’s political leaders lagged the Bay Area in imposing stay-at-home orders. Even when they acted, low-wage workers in logistics and services deemed to be essential could not telecommute, so have been more likely to be exposed on the job. Housing patterns — sometimes two or three families crowded into a single home — also contribute to higher rates of infection.

For all of those reasons, the L.A. region is suffering more economic dislocation than the Bay Area and its economy will be slower to recover.

“The differences could result in significantly different economic trajectories for the two regions in the months and years to come,” the Wall Street Journal reported last week. “Northern California is poised to recover faster than the South because its fewer cases will likely allow it to loosen business restrictions earlier, said Jeff Bellisario, executive director of the Bay Area Council Economic Institute, a San Francisco think tank.”

If California emerges from recession with Los Angeles and environs in even worse economic shape vis-àvis the Bay Area, the political fallout could be significant. Southern California politicians, who dominate the Legislature, might press for state aid from taxes that would mostly hit the wealthy Bay Area. And Gov. Gavin Newsom, the former mayor of San Francisco, could be caught in the middle of an intense regional duel.