Bay Area Wisely Diversified Economy

Although the current power balance in California baseball tilts toward Los Angeles, Dan Walters takes a deep dive into the causes behind the shifting economic balance in the state — away from a declining Los Angeles and toward the booming, tech-heavy Bay Area.

Despite possessing more than twice the population of the Bay Area, the five-county Los Angeles region accounts for about 33 percent of adjusted gross income (AGI). This amount, though significant, pales in comparison to the Bay Area’s earning power, which produces about a quarter of California’s AGI (only 7-8 percent less than a region with twice its population).

Walters asks: How did we reach this point?

A study headed by Michael Storper of UCLA’s Luskin School of Public Affairs attributes much of the discrepancy to Los Angeles’ over-reliance on manufacturing. When its aerospace industry faced rapid decline after the Cold War, there were few other options for these educated workers. Most of them ended up migrating elsewhere.

Meanwhile, Bay Area leaders diversified their economic interests. This allowed innovation to develop the economic powerhouse we now know as Silicon Valley.

However, Walters sees potential for change in the two regions’ political authority. In recent years, it has begun to favor the south.

Will we see a change?

Read more from Walters here: A tale of two regions: In California’s economy, North trumps South — for now


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