Southern California, once the center of one of the world's most vibrant business communities, has seen its economic leadership become largely rudderless. Business interests have been losing power for decades, as organized labor, ethnic politicians, green activists, intrusive planners, crony developers and local NIMBYs have slowly supplanted the leaders of major corporations and industries, whose postures have become, at best, defensive.
Increasingly, a search for inspiration about the region's future must focus, first and foremost, on immigrants. As major companies disappear, merge or shift more of their operations elsewhere, the foreign-born represent a significant asset for our grass-roots economy. With many of the region's legacy industries – from oil and gas to aerospace and entertainment – stagnating or declining, the area desperately needs new blood to avoid ending up like the older cities of the slow-growth Northeast or Midwest, albeit with much better weather.
Amid a graying and, increasingly, marginal generation of regional business leaders, there have emerged new foreign-born dynamic figures. Some great examples: South African native and Tesla founder Elon Musk, who lives in Los Angeles and runs SpaceX, headquartered in Hawthorne and with more than 2,000 employees, and John Tu and David Sun, owners of Fountain Valley's Kingston Technology, a leading independent memory-chip manufacturer founded in 1987 and now employing 4,000 people worldwide.
Our new moguls increasingly are minted abroad. Pharmaceutical entrepreneur Patrick Soon-Shiong, the son of Chinese immigrants from South Africa, is now widely considered the richest man in Los Angeles, according to the Los Angeles Business Journal. But he's not alone; five of the 13 richest people in the City of Angels are immigrants; in 1997 there was one, Australia's Rupert Murdoch.
Why are these immigrants so bright when much of our business leadership is dark grey? Part of it has to do with the nature of people who risk everything to migrate to another country. Overall they account for one out of every five U.S. business owners. They are three times as likely to start a new business than non-immigrants; in 2010 they accounted for almost one-in-three new firms, twice their share in 1995. Roughly 40 percent of the engineering-based firms started in Silicon Valley, notes the Kauffman Foundation, had at least one immigrant founder.
Whether in high-tech, pharmaceuticals or running the local coffee shop, immigrants tend both to innovate and take risks. That's because, as Kingston's John Tu explained to me, they don't have a choice. “The key thing about being an immigrant makes you flexible,” he said. “IBM, Apple and Compaq were inflexible. They told the memory customers to take it or leave it. We thought about the customer and the relationship with the employees. I guess we didn't know any better.”
Rise of the ethnoburb
Most of the growth being generated by Southern California's immigrants is taking place in suburban communities – what geographer Wei Li describes as ethnoburbs. Despite the hopes that more Southlanders can be lured into high-density, high-rise rental housing, immigrants, particularly Asians, here and elsewhere, continue to move further from the city core to areas where they can live with a degree of privacy and quiet virtually impossible in their homelands.
This can be seen in the migration numbers. As foreign-born numbers have dropped in expensive and crowded Los Angeles and Orange County, the big growth has taken place in other areas, notably in fast-growing Texas cities such as Dallas and Houston, as well as numerous low-cost, pro-business states in the Southeast. The one Southland area that has continued to see a boom in foreign-born residents – the Inland Empire – has the lowest population density and house prices in the region.
According to demographer Wendell Cox, the Inland Empire's immigrant population has swelled by more than 50 percent, or more than 300,000 people, since 2000, roughly three times the increase in actual numbers seen in Los Angeles and Orange counties. Much of this growth is taking place not in the older cities such as Riverside and San Bernardino, as might be expected, but in generally more affluent, newer suburbs such as Rancho Cucamonga, whose foreign-born population soared a remarkable 61.6 percent over the past decade. Even Moreno Valley, on the edge of the urbanization, has more foreign-born residents than does San Bernardino.
Even within the coastal counties, much of the growth in the Asian population, now the largest source of immigrants to the U.S., has been outside the densest, more-urbanized parts of the region. As the immigrant share of the population has declined in traditional immigrant strongholds such as the city of Los Angeles (down 5 percent) and Santa Ana (more than 11 percent), Cox notes, the immigrant population is shifting to more upscale suburbs. In Glendale, a major destination for both Armenian and Asian immigrants, more than 56 percent of the population is foreign-born, up 4 percent since 2000.
Other popular immigrant destinations include once-heavily white suburban communities, such as Irvine, which is now more than 38 percent foreign-born, up almost 19 percent since 2000. Fullerton, like Irvine, favored largely by Asian migrants, saw its foreign-born population increase by 21 percent since 2000, now accounting for more than one-third of the city's total.
Other places that seem to be attracting immigrants include Santa Clarita, Palmdale and Lancaster, all communities further out on the periphery of the region.
Harnessing entrepreneurial energy
If Southern California's future lies largely in the hands of newcomers and their offspring, how can we best respond to their needs? One way is by maintaining a large supply of single-family houses or townhomes. Today's immigrants, particularly Asians, favor settling in ethnoburbs more than the dense Chinatowns, Little Indias and barrios that may strike many other Americans as somehow more colorful. Now, the best place to encounter immigrant food and culture is frequently at the strip malls of Monterey Park, the Hispanicized shopping complexes like Plaza Mexico, Irvine's Diamond Jamboree Center or the amazing 626 Night Market at Santa Anita Park in Arcadia.
Of course, immigrants are less interested in providing neighbohoods with local color than in moving to places with good schools, safe streets and parks – as most middle-class families prefer. This preference runs afoul of the kind of extreme land-use regimen being imposed on the region, including the Inland Empire, planning that seeks to promote the construction of high-density housing that, to be honest, many immigrants, particularly Asians, could enjoy at home, with far more amenities.
Planners and some developers seem keen on this shift, thinking it will appeal to young childless couples and empty-nesters. What they ignore is that, without plentiful, and at least somewhat affordable, single-family houses, immigrants will continue to shift to other parts of the country, notably, the Southeast and Texas, where they can afford them.
Perhaps even more important may be the economy. Immigrants are the ultimate canaries in the coalmine – they tend to gravitate toward opportunity. When Southern California's economy was burgeoning in the 1970s and 1980s, immigrants also flocked here, buying homes and starting businesses. Few immigrant entrepreneurs reached the level of a John Tu or an Elon Musk, but many have launched small manufacturing firms that supported larger firms, engaged in international trade and started small service businesses.
Unfortunately, the business climate in Southern California increasingly makes such enterprise ever more difficult, and may lead these entrepreneurs to relocate or expand where their efforts may be more appreciated. Not helping these businesses is an L.A. political climate dominated by a crony capitalist regime – not at all friendly to plucky startups of any kind – or by a Republican Party that still seems unable to make peace with the demographic realities of our region.
The good news is, however, that these immigrants, and their kids, are still here. They have many reasons to stay, including the presence of ethnic media, churches, schools and shops not likely to be remotely as well-developed in places like Las Vegas, Phoenix, Atlanta or Nashville. But this does not mean they can be taken for granted. We need to recognize that they are our greatest asset, and, if we can appeal to their aspirations, they could help fashion a resurgence in this region.
This story originally appeared at The Orange County Register.
Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.
Photo by LHOON
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