Why Are The San Francisco & Los Angeles Economies Diverging?

Back in the 1970s, Los Angeles and San Francisco were at the top of the economic game for cities in America. At the time, the Bay Area was ranked first in income while Los Angeles was fourth.

But since then, Los Angeles has fallen to 25th, while San Francisco has surged, maintaining its top spot.

So what explains the difference? UCLA professor of urban planning Michael Storper and colleagues set about to examine the reasons in the new book The Rise and Fall of Urban Economies: Lessons from San Francisco and Los Angeles.

The book reads like a whodunit, but the bottom line explanation is that business leaders in the Bay Area continued to foster a connectedness and culture of innovation, while Los Angeles business leaders remained siloed and traditional (Storper’s slide show PDF here).  Think Steve Jobs radicals mingling with financiers and traditional business leaders in the Bay Area.

The authors credit business organizations like the Bay Area Council for serving as collaborative, idea-sharing hubs for regional business leaders.  But I also wonder if the region’s transportation links and business districts played a role.  BART and the general centrality of the business districts in the Bay Area, from San Francisco’s financial district to Silicon Valley to downtown Oakland, allow professionals in the Bay Area to more easily congregate and mingle than in the more horizontally dense landscape of Los Angeles.

It’s perhaps another intangible benefit that could be achieved by Los Angeles expanding the Metro Rail network and building more offices near major transit stops.

You can see a snippet from Storper’s recent presentation at the Bay Area Council here:


Leave a Reply