Los Angeles County:

Tech Jobs to Drive Region Into 2021 as Economy Barely Dodges Recession

Technology employment will remain a driving (yet socially unequal) force in the greater Los Angeles region’s economy, job and salary markets as the national economy is poised to barely dodge a recession and continue growing slowly into late 2021.

That’s according to the most recent forecast published by the UCLA Anderson Forecast’s “Autumn 2019 Economic Update” conference in late September. The keynote speakers’ opinions spotlight intriguing viewpoints, trends and projections so your credit union can plan appropriately.

Los Angeles County
Los Angeles County is poised to experience its own economic slowdown — but not quite a recession — as the state and national economies continue slowing. U.S. economic growth will probably stall in the second half of 2020 as the effects of the 2017 U.S. congressional tax cuts abate and trade tensions exact their toll on corporate and business investment. “Real” Gross Domestic Product (GDP) will probably come in at 2.1 percent in 2019; 1.2 percent in 2020; and climb back to 2.1 percent in 2021. Consumers and businesses probably won’t experience a recession in 2020, but local and national economic growth will hover around what feels like a near-recession pace for a couple of quarters that year.

Los Angeles County’s current unemployment rate (4.3 percent) will rise between early 2020 and late 2020. It will float higher in tandem with California’s rising unemployment rate (currently 4.2 percent), which will hit 5.1 percent by autumn of 2020. This is still in the “average” range by historical standards — and for 2020 and 2021, California’s unemployment rate will average 4.6 percent (not a low as today but still historically on the lower side). The national economy’s projected slowdown will put a noticeable damper on the immense amount of current job openings, just as more individuals are entering the labor force (adults who are willing and able to work) for the first time — or older individuals re-entering.

Los Angeles County’s total annual employment growth will remain steady into late 2021, but at a noticeably slower pace compared to the past few years. “Total” employment growth equals a yearly net-positive in company payroll jobs combined with freelancers, entrepreneurs, independent consultants, and some small business owners. Additionally, the pace of yearly median worker wage and “real” personal income growth will both continue at moderate paces over the next two years — nothing spectacular; however, they are not forecasted to slow down. “The continued growth in real personal income in 2020 is reflective of the changing mix of employment in California and tight labor markets in high-wage occupations,” the forecast report states.

The Los Angeles region has the third-highest technology workforce in the nation, only outranked by New York and Washington, D.C. "Technology" is a broad definition and includes several types of occupations, but this local mega-region has more tech jobs than the San Francisco City-proper region (although the entire Bay Area still has more tech jobs than Los Angeles). The Los Angeles region's tech job base has risen from 230,000 in 2010 to 280,000 in 2018 (compared to San Francisco's 200,000 and San Jose's 190,000 by 2018).

However, when it comes to Los Angeles regional worker wages in technology jobs, the area doesn't even rank in the top 10 for salaries. This comparison is for metropolitan areas with more than 50,000 tech jobs. San Jose (No. 1) and San Francisco (No. 5) are prime suspects. Next in line are Seattle, WA (No. 2); Washington, D.C. (No. 3); Austin, TX (No. 4); Detroit, MI (No.6); Raleigh, NC (No. 7); Denver, CO (No. 8); Boston, MA (No. 9); and Baltimore, MD (No. 10).

As more high-tech jobs are established in the Los Angeles region, there’s a direct correlation (or “spillover effect”) of low-income positions in other industries being created (retail, food/beverage, leisure/hospitality and other services). This correlation is the highest in Los Angeles County above all other metropolitan areas across the nation (the second is New York). However, a high correlation between high-wage tech occupations and low-wage jobs in the surrounding area does not mean a high correlation in absolute median wages or annual median wage growth. Data shows there is a very loose, if any, correlation in this area within the Los Angeles region, revealing that the wage gap between many low-skilled workers versus high-skilled tech occupants has grown immensely wider over time.

The technology industry and its jobs remain a huge driver of the local Los Angeles economy for the foreseeable future. “High human capital metros and regions are more likely to become tech clusters,” the forecast report states. “A region with high human capital and tech jobs tends to attract and recruit talent from outside the region. That said, to build a city with shared prosperity full of high-paid jobs in the 21st Century, the region should invest in its local education and meanwhile create an environment (high quality of living) to appeal and attract talent from the rest of the country and the world.”

Los Angeles County will be affected by the following broader growth (or contraction) trends happening across California from 2019 – 2021: (economic measurements to rise slowly or steadily) taxable sales, new-home building permits, "real" personal income, non-farm total jobs, the labor force (adults who are able and willing to work), median home prices in certain areas, education and health services employment, information technology employment, local/state government employment, and professional/business services employment. Economic measurements to remain flatlined in yearly growth include: construction employment, financial services employment, consumer price inflation (CPI), and the combined net natural-birth increase/net immigration. Economic measurements where annual growth will continue dropping include: new-car registrations, population growth, manufacturing employment, trade employment, and federal government employment.

Issues to cautiously watch in the U.S. economy and financial markets include: the escalating trade war with China; the weakening of business investment in equipment and structures; the negatively sloped yield-curve (U.S. bond market); the slowdown in employment growth; the inability of housing activity to “launch”; and the stagnant stock market.

Click here to email Paul Feinberg and purchase the entire Autumn 2019 Los Angeles County Economic Outlook report published by the UCLA Anderson Forecast on comprehensive trends in the local economy.

Local County-Level Perspectives
The California Department of Transportation (Caltrans) will soon release its updated 2019 – 2050 demographic forecast for all counties in California regarding local jobs, wages, home prices, population, personal income, taxable sales, net migration, wildfire issues, public policy implications, legal cannabis, industries, workforce, and more.

For forecasting purposes, the shorter-term economic projections for 2019 – 2024 within this annual county-wide report by Caltrans do not factor in an economic recession into its local scenarios. They are only highlights stemming from a baseline projection (view the report above for more information).

More L.A. County Trends
Click here for Beacon Economics' latest autumn 2019 "Regional Outlook" for Los Angeles County, including trends in the labor market, housing market, and other areas.

Demographic Profile and Projections: Southern California*

  • *(Combined counties of Los Angeles, Orange, San Bernardino and Riverside)
  • Total population: 18.3 million (and will hit 19 million by 2025).
  • Working-age individuals (15 - 64 years old): 68 percent of total population in 2015 (and will fall to 64 percent by 2025).
  • Labor force (at least 16 years old who are working/looking for a job): 8.9 million out of 14.3 million adult population.
  • Labor force participation rate (adults who “want” to work): 62 percent (or 8.9 million individuals).
  • Unemployment rate: 4.3 percent (versus 4.2 in CA and 3.5 in U.S.)
  • Unemployed workers: 378,000.
  • Median household income: $69,000 as of 2018 (compared to $71,800 for CA and $60,400 for U.S.)
  • Poverty rate: 16 percent (versus 15 in CA and 13 in U.S.)
  • Education of population: 31 percent have a college degree; 29 percent some college; 21 percent high school diploma; and 19 percent no high school diploma.
  • Employment sector growth: click the following links for local future growth breakdowns (2014 – 2024) of nonfarm job projections by industry, occupation, education, and fastest-versus-largest areas of importance: Los Angeles County; Inland Empire; and Orange County.
  • * Data as of September 2019 from the California Center for Jobs and the Economy; California Employment Development Department; California Department of Finance; Federal Reserve Bank of St. Louis; U.S. Bureau of Economic Analysis; and U.S. Census Bureau

Pin It