LAEDC CEO Bill Allen on Regional Strategies for LA’s Economic Recovery

Let’s begin with a Regional Economic Update: How is LA County’s economy fairing in its recovery from the disruption and economic turmoil caused by the ongoing COVID-19 pandemic?

Well, it continues to be a relatively slow recovery. Our forecast of not regaining all of the jobs that we lost in this region to the pandemic until at least 2022 or 2023 still looks prescient and that was a forecast we made not long after 770,000 people in LA County lost their employment to the pandemic. We've recovered only 53% of those jobs, and recovery in recent months has been uneven. There are a lot of reasons for that locally, regionally and nationally, but until we are able to accelerate that job recovery, it will be quite some time until we get back to full employment that existed prior to the pandemic. 

 And, some of those jobs will not come back due to the changing nature of consumer and business behavior. The things technology has allowed us all to do in terms of working, shopping, and learning from home has changed the nature of employment in our region and the nature of many jobs. So, the role our local educational institutions and workforce development systems play is as important as ever because there will be significant need for retraining and upskilling for those who need to get back into the labor market, which is a different labor market than it was in February of 2020.  

In response, this past week the California legislature approved a one-time $600 million allocation to the Community Economic Resiliency Fund to support the planning and implementation of regional economic strategies that promote sustainable and equitable economies going forward. What is the significance of this investment?

In my experience, for economic planning in the dynamic regions of this state, this [Community Economic Resilience Fund] is the single most important piece of legislation in my career. With the rare exception of some important investments made in the Central Valley, the state of California has never resourced its regions in the way AB 162 will allow. This Community Economic Resilience Fund will provide millions of dollars for planning across the distinct, dynamic economic regions of California. And tens of millions of dollars, potentially, to each region for the implementation of those plans is a truly unprecedented development.  

The vision for this fund started many years ago with active advocacy on the part of the LAEDC and all of our peer organizations in the California Stewardship Network through our California Economic Summit that we produce in partnership with California Forward. Assemblymember Rudy Salas developed AB 3205, the Regions Rise Grant Program, and AB 106 subsequent to that to help us realize our collective vision. They were fairly modest requests, hoping to allocate $15 million to $30 million to support planning across California's economic regions. Because of the availability of the ARPA funds from the federal government, the state is now allocating $600 million for the development of high road transition collaboratives in each region that will involve industry recovery.strategies, workforce development strategies, and sustainability strategies that are desperately needed as our state continues to recover and reinvent itself for a post pandemic economy. 

I want to note that it is not yet clear how those regions are being defined, and it's important that the relevant state agencies—GOBiz, OPR and the Labor and Workforce Agency—define the regions correctly for this investment. Here in Los Angeles County, the LAEDC and all of its economic development partners see LA County as the relevant economic region, as do the community colleges, which have organized themselves now into an LA County regional consortium; the state universities, which have organized themselves into a CSU Five to focus on the LA economic region; and all seven workforce boards that have organized using LA County as their regional planning unit. All of us agree and have expressed this view to all three of the interagency leads on the CERF program that LA County should be one of the state’s planning and implementation units for this fund.  

That is not to say we won't do sub-regional planning in key areas of LA County that need greater attention, nor to say that we will not collaborate with multi-county initiatives as we have in the past, but the most relevant economic planning unit here in our area as far as the major stakeholders are concerned is Los Angeles County. Even our labor unions have long organized themselves into the LA County Federation of Labor and been important partners in past countywide efforts. We've all organized ourselves organically through the years in a way to enhance our collaboration and have proven through our past consensus-built strategic plans that we collaborate well on the development and implementation of such regional plans. 

Comment from your experience on the critical role of California’s foundations, which decades ago supported and strengthened regional leadership capacity. 

People like the late Nick Bollman in his years with the Irvine Foundation and Becky and Jim Morgan through the Morgan Family Foundation are owed a debt of gratitude in the state. They were early visionaries to recognize the distinct differences between California's economic regions and the need for them to plan and act in unique and distinct ways that would help create stronger, more resilient, and more inclusive economies. We were involved in the original regional collaborative effort that the Irvine Foundation funded in the 1990’s, and Becky Morgan reconstituted Nick's original vision in the form of the California Stewardship Network almost 15 years ago. Through that network, we conceived and developed what is now known as the California Economic Summit, which in November will conduct its 10th annual economic summit in partnership with California Forward.  

This notion, as your question suggests, of California’s distinctive dynamic regions collaborating with business, government, education, labor, and all the stakeholders interested in more robust, inclusive and resilient economies, really has grown out of Nick and Becky's vision and the work of the institutions that they supported over the last 25 years. 

  Has Nick and Becky’s now decades-old leadership in strategically investing in regional economies been embraced and sustained by the current leadership of California’s civic & philanthropic institutions?  

 Here in our region, as in many of the regions, it has become not only accepted but understood as necessary. And it is seen not only in the work that is done by our organization—our strategic plans for economic development have full participation from business, labor, government, education and other partners—but other efforts like the Committee for Greater LA, which our philanthropic community put together to address challenges faced by traditionally disadvantaged and marginalized communities in Los Angeles, have recognized the need for this sort of collaborative planning. And most recently the LA Digital Equity Action League (LA DEAL) is employing the same inclusive planning and execution process to eliminate the digital divide across the LA County region with significant support from business, education, government, philanthropy and community based organizations. 

Now that there will be funding available, there are a lot of interested parties willing to roll up their sleeves and develop what I think will be our most sophisticated planning efforts ever because they will be provided with resources to gather the data to serve as a foundation for truly evidence-based planning.  

Elaborate, as LAEDC’s CEO, on the growing industry clusters that hold particular promise for metro Los Angeles’ sustainable and equitable recovery.  

I believe the LA area has a greater abundance of resources with which to grow than any region in the country today, and it's incumbent upon us to leverage them correctly.  

Starting with our legacy industries, the aerospace and defense industry now is innovating in remarkable ways as we work to commercialize space. The number of new companies, new capital, new technologies, and new jobs being created is unprecedented. Companies like SpaceX, Rocket Lab USA, Relativity Space, Slingshot Aerospace, Virgin Orbit, and so many others here in LA County are leading the way on commercialization of space. 

 In our legacy entertainment industry, the digitization of content creation, distribution, and ultimate exhibition is transforming the nature of that industry. What is being produced here is returning to record levels, not only in traditional live action but in animation, gaming, and eSports; it's incredible what's happening in digital media here in Los Angeles. Streaming services like Netflix, Hulu, Disney Plus, HBO Max, and Apple TV Plus are hiring at a rapid pace and funding unprecedented levels of production slates. 

There are more yet still emerging industries in this region. The life sciences, which has traditionally been seen as a San Diego or Bay Area enterprise is now being revealed to be significantly larger than it previously had been realized here in LA County (with more than 2,800 firms directly employing more than 93,000 here) and is continuing to grow significantly as well. In transportation, we've had 20+ auto design studios here for a very long time, and the people behind those have played significant roles in the development of new enterprises around alternative energy vehicles, and autonomous vehicles.  

So, there’s space commercialization, digital media, life sciences, e-mobility and autonomous vehicles, and then let's talk about venture capital in Los Angeles.  

Ten years ago, we didn't have a fraction of what we have today at any level. According to the National Venture Capital Association, despite the pandemic, VC activity in LA grew 39% year over year in 2020 to $19.3 billion. At seed capital levels, at series A or B levels, even at more mature Series C and D levels, the amount of capital that is being raised and invested here is remarkable and is making a difference in the growth of our technology companies and our innovation ecosystem.  

Efforts like Pledge LA bringing together those venture capitalists and entrepreneurs to look at how they can create greater equity and opportunity in the innovation ecosystem here for people of color is also serving to strengthen the relational infrastructure here in the region. It is another reason that has brought all of these early-stage investors and entrepreneurs together, and I think it's accelerating the pace of innovation and capital investment here in the LA area that will bear significant fruit in the formation of companies, the scaling and growth of companies, and the creation of new jobs in the years to come. 

Are you equally bullish on foreign direct investment in Southern California’s economy and its significance going forward into the decade?  

International investment has been key to our growth in recent decades. Japan is the single largest source of foreign investment into our region and is responsible for more than 80,000 well-paying jobs across LA County and Southern California. They are followed by the United Kingdom, France, Canada, Switzerland, Germany, Australia and China—it is really extraordinary what has been invested here over the last 20 or 30 years and the kinds of companies that have come here; the kind of facilities that have been built here; and the kind of economic opportunities that have been made possible here by various sophisticated players from around the world recognizing the value of Los Angeles as a launchpad for their North American ambitions.  

And that investment continues. It was slowed considerably during the administration of President Trump, and it has continued to be slow because of COVID restricting travel, but it has not stopped the ongoing conversations between foreign investors all around the globe and representatives of Los Angeles, including our World Trade Center Los Angeles, which will host its 6th annual Select LA conference for foreign investors on October 21.  

Bill, your eloquence on this subject is in direct contrast to Southern California’s “paper of record”—the LA Times; its coverage of business has shrunk almost to practically nothing on many days. Given the dynamism of the Southern California/Los Angeles economy, what explains the LA Times neglect?  

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It is unfortunate that coverage of this vibrant economy in Los Angeles has diminished over the years. The one place where it has not, frankly, is the LA Business Journal and its sister publication, the San Fernando Valley Business Journal. They have really become the journals of record, chronicling the growth prospects of this region. Interestingly enough, there are also online resources like Dot.LA, started by Zillow founder Spencer Rascoff, which are covering the innovation ecosystem well. We need more of that because LA is often mischaracterized as an industry town dominated by the entertainment industry. And while we couldn't be more thrilled to have the creative energy of the entertainment industry centered here in Los Angeles, it is only one of many significant industry sectors driving innovation throughout our economy. 

We continue to be a manufacturing center of this nation. We're also a technology and innovation center in many of those areas that I just mentioned and our research universities are among the world’s finest. Both within the region and beyond, we need to do a better job of telling our story about all of that as it will only accelerate the attraction of talent and capital that will fuel the future growth of our innovative enterprises.  

Pivoting back to the region’s economic challenges, speak to the current labor shortage and workforce challenges in LA County and the policy strategies needed if the region is to reach its potential.   

Like the nation, Los Angeles faces several challenges with the recovery: people's hesitancy to go back to work for health concerns that are understandable or to move away from financial support that the government has provided generously to individuals and families throughout the pandemic. But beyond that, there are also factors related to people's responsibilities in the home caring for children or seniors during the pandemic. All of these are significant negative pulls on the economy—diminishing the rate of return in the labor market of many talented people in the region. But separate from that there's a mismatch in the talent development pipeline and the demand from local industries that must be addressed by our education workforce systems.  

Elaborate.

The nature of our industries and occupations are changing at a greater rate than they ever have in history before. And some say that they will never change at a slower rate again than they are today. So, that is a daunting prospect for educational institutions and for individuals to keep up with the retraining necessary. That is a huge area of emphasis for the LA EDC and our partnerships with all of the community colleges in Los Angeles County, with our five state universities, and with many other public and private institutes of higher education.  

Through our Center for a Competitive Workforce we are providing current data on each of the major industry sectors and the changing nature of those sectors and the jobs resident within those sectors, so that individuals in our community and educational institutions can prepare themselves and their students for the jobs of the future, as opposed to the jobs of the past. 

Address, Bill, the role of regional economic development corporations. The world knows much about Joint Venture Silicon Valley, and throughout California we have the Bay Area Council, the Central Valley Economic Development Corp; and of San Diego EDC & Connect's efforts to promote biotech, what is the like role of the LA Economic Development Corporation: how does it advance economic development? What support does it need to accomplish more? 

So, we are unique among some of those peer organizations you mentioned in that we combine an economic research institute with a service delivery enterprise supporting small businesses, attracting foreign investment, working with our talent development systems on the development of our regional labor market and engaging in policy and advocacy. All of those areas frankly need greater investment from the relevant stakeholders, public and private, in this region.  

This is the most populous and diverse county in America. It benefits from having people representing 140 nations of the world, but it complicates our ability to deliver the workforce necessary for the most diverse set of industries in the nation.  

We should be, at the LAEDC, helping provide the data and analysis that serve as a foundation for regional economic and workforce development efforts. We have been playing that role since we began facilitating the creation of our region’s strategic plans for economic development with more than 1,000 stakeholder partners in the region, which led dozens of our local cities to either create their first ever economic development elements in their general plans or to substantially update their economic development elements, as did the County with our help as well. 

When we created our Center for a Competitive Workforce, it led to the creation, refinement or expansion of many new career development programs in our community colleges like the California Cloud Computing Certificate Program, now offered at more than a dozen area colleges. These are the sort of roles we need to be playing to influence the institutions that can operate at scale, in creating both economic opportunity and labor market readiness to seize that opportunity.   

Bill, you are obviously a civic voice for this agenda but the LAEDC and the region are missing an economic voice of the kind it once had at LAEDC. Where is finding a successor to give voice to these economic messages in the agenda of LAEDC?

We're fortunate to have a talented economic research team in our LAEDC Institute for Applied Economics that does some of the most sophisticated analysis being done in the region on our industry clusters and labor markets, trading partners and sources of foreign direct investment, and economic impacts of key policy initiatives at the state or local level, like film and television production tax credits or local minimum wages. But it is very difficult to replace a legend like the late Jack Kyser who was with us at the LAEDC for 25 years, as the voice of the LA regional economy.  

We are continuing to look for talent within and around the region to be of support to our local media, government, and civic stakeholders, but we're confident that our team, given the volume of research they generate, are providing a lot of valuable support to decision makers in the region as we continue to grow that part of the LAEDC.  

The Planning Report recently published an interview with SCAG’s Jenna Hornstock on the new state planning grants now available to provide funding to housing supportive infrastructure. But two members of Congress in recent TPR interviews have cautioned they worry about the capacity of localities and regions to take advantage of the funds likely to flow from the infrastructure measures now before Congress. Comment on the responsibilities and on the capacity of our localities to deal with what's coming at them in the way of infrastructure opportunities?.

There is clearly an unprecedented amount of capital already flowing and soon to flow from the federal government to this state and to our region. I am quite concerned about the capacity of our local institutions to plan for and properly deploy those resources for highest and best use and longest term impact. Whether it's related to housing, education and training, or closing the digital divide, we are being showered with an abundance of resources in a very short period of time, but expecting government institutions in particular, many of which have lost staff during the pandemic, and are going through significant challenges still coping with the damage it has wrought, to be expected to pursue all these grant opportunities relatively simultaneously seems overly optimistic to me. 

The EDA (Economic Development Administration) has multiple grants of unprecedented size, the Department of Commerce has many others, as do the Departments of Transportation, Education,  Health and Human Services and Housing and Urban Development. All this money is not just flowing by formula to our region; much of it is available only through a competitive process, and it's incumbent upon all civic stakeholders to engage in and support those processes so that our region can obtain as much as possible to help us meet our unprecedented needs.  

In February we had Bruce Katz at our annual economic forecast, who was one of the co-founders of the Brooking Institution’s Metropolitan Policy Program. We asked him to talk about the work he is doing around the nation advising metropolitan regions on how to prepare for, pursue, receive, braid together, and effectively deploy these unprecedented investment opportunities. It has led to many partnerships which have developed with local government, business, labor, and others and put us in a good position to pursue some of these government funding opportunities. There are Build Back Better Regional Grants that we're working on right now around the blue and green economies, and manufacturing and life sciences, that are reflective of the partners who have come together in understanding the need to make competitive applications.  

We are among the most impacted regions. Because of the nature of our economy, the pandemic-induced restrictions on businesses had a greater economic impact on the LA area economy and its residents than almost any economy in the nation. We need the resources that are being made available, and it's incumbent upon us to make the most competitive applications, and if we're successfully awarded those resources, to put them to the highest and best use for the greatest impact here in our region. 

Lastly and to follow up, Bill, there's no elected mayor of Metropolitan Los Angeles—the county or the region. When COVID hit, the mayor of LA  chose a talented senior executive, Gene Seroka, director of the Port of LA, to oversee how to marshal resources and respond to the resource demands of COVID. Is there a like formula for the metropolis to marshal its talent and focused on this organizational capacity challenge?

It would be ideal if the County of Los Angeles would work closely with the City of Los Angeles, and other large cities, particularly Long Beach because of its port and significant economy, to pursue these opportunities collaboratively and along with institutions they have effective control over like Metro and the ports. The infrastructure bill, in particular, has components that will be very helpful to the further development of our seaports, airports, and public transit systems. 

 I think there are some ad hoc efforts around individual opportunities, but I think it would be advantageous if we could see greater collaboration. In the Spring, I co-authored a letter from the business community along with Tracy Rafter Hernandez of the LA County Federation of Business, and more than a dozen of the leading chambers and business associations in the region to this effect some months back. We sent it to Mayor Garcetti encouraging him to coordinate with other local government, education, industry and labor partners to aggressively pursue these public investments for the city and the region that would be critical to our economic recovery. There's been some progress made on that in recent months, and I'm looking forward to a briefing in the next week or two actually from his staff on the status of that work.