Los Angeles Loses Its Lead While San Francisco Soars Ahead

This month brings fresh news about the ongoing contest between San Francisco and Los Angeles. Sadly, Los Angeles is the loser.

Rise and Fall of Urban EconomiesThe report comes from a new book, The Rise and Fall of Urban Economies: Lessons From San Francisco and Los Angeles by Michael Storper, Thomas Kemeny, Naji P. Makarem, and Taner Osman. Storper teaches economic sociology and urban planning at UCLA, and he and his team of academics set out to solve a mystery. In 1970, Los Angeles and San Francisco had the same per capita personal income. By 2010, San Francisco’s per capita income outstripped L.A.’s by 30 percent.

In those 40 years, what caused this divergence in per capita personal income?

As Storper and his team explain, the difference persists across all job types. A programmer in San Francisco makes 30 percent more than his Los Angeles peer. A custodian in San Francisco makes 30 percent more than a custodian in L.A.


Storper and his team quickly discount the usual suspects. Immigration? No. Both regions experienced similar growth from immigrants. Expensive housing? No. The study took into account differences in housing costs.

Information technology? No. In 1970, IT held a similar place in both economies, representing about 2.7 percent of the region’s economy. But by 2010, IT in San Francisco grew four times. L.A.’s IT industry stayed the same, still about 2.7 percent of the economy.


Storper and team cite San Francisco’s “relational infrastructure” as the reason for the difference. San Francisco had/has an infrastructure that encourages collaboration among specialties as well as the sharing of ideas between specialties. Citing XEROX Palo Alto Research Center as an example, northern engineers have been more likely to collaborate with artists, environmentalists, and designers to dream of making computers that were useful and even beautiful. In southern California, engineers generally continued to work with other engineers, usually in the then thriving aerospace industry.

As part of their research, Storper and team examined the composition of boards in both regions. The southern California-based companies were served by generally homogeneous boards — for example, all bankers in a financial services company. Northern California boards were more mixed, including not only peers but also leaders from other industries. The relational infrastructure of San Francisco was more conducive to collaboration on ideas that eventually became influential, successful products.

The San Francisco zeitgeist also encouraged innovation. Storper and his team analyzed the content of civic and business communications over the 40 years of the study. From 1979 onward, the Bay area was focused on the “New Economy.” During the same time, Los Angelenos hardly mentioned the New Economy at all.

What about the creativity of Hollywood? Storper explains that the entertainment industry remained and remains closed, insular. The cross-pollination of ideas from creative innovators and technical experts is far more likely to happen in Emeryville than Culver City.

Yes, Los Angeles boosters deny many of Storper and team’s findings. They don’t seem to take into account the progress of Silicon Alley, for instance. And what about the northern-based companies (Google, Netflix, Yahoo, and so on) who also have a strong presence in the south? And is personal income the only measure of the livability or success of a region?

Despite these questions, for designers and content strategists — professionals whose work depends on cross-disciplinary collaboration — this research is alarming.

Maybe L.A.’s not cut out for the melding of technology and creativity that our products and projects need. I don’t believe that. But I do believe we have to work harder to make the technical and human connections that lead us — and our city — to success.