An economic view of South Central Los Angeles

Cities, Vol. 15, No. 3, pp. 193–208, 1998 1998 Elsevier Science Ltd. All rights reservedPergamon

Printed in Great Britain0264-2751/98 $19.00+ 0.00

PII: S0264-2751(98)00007-9

An economic view of South CentralLos Angeles

Tom LarsonDepartment of Economics and Statistics, California State University, Los Angeles, CA 90032, USA

While South Central is widely depicted as one more inner-city in economic collapse, this essayprovides a look at life in South Central that suggests a community on the economic rise withresurgent community associations and churches helping to bring back businesses to neglectedneighborhoods. Instead of growing poverty and hopelessness, data reveal neighborhoods areexperiencing moderate poverty rates amid growing investment. Instead of job flight, thereare numerous jobs for both skilled and unskilled workers. 1998 Elsevier Science Ltd. Allrights reserved

Keywords:Urban development, urban redevelopment, inner-cities, urban economics and public policy, minority neighborhoods

Five years after one of the worst riots in US history,South Central Los Angeles is infamous around theworld as the archetypal inner-city ghetto filled withgangs, poverty and hopelessness. But these imagesare not the true South Central. This essay confrontsboth media and academic stereotypes that depictSouth Central as yet one more inner-city in economiccollapse, with rising poverty rates, a large and grow-ing underclass and disappearing jobs. Instead, datareveal an area of redevelopment and growth with astrong economic base. There are problems that con-strain development in South Central, but they ofteninvolve such mundane details as finding adequateparking for shoppers.

This look at economic life in South Centralincludes the many middle-class families who areexperiencing a rising standard-of-living (from teach-ers to policemen, firefighters, accountants and actors)and reports on resurgent and new community organi-zations whose members are bringing businesses backto long neglected neighborhoods as the area resumesa resurgence begun in the 1980s, and interrupted moreby recession than by fires. For those willing to lookbehind the public image (or distorted mask), SouthCentral is revealed as full of surprises — attractiveneighborhoods and revitalized commercial areas.Housing prices are rising and the commercial sector isexpanding, with chain restaurants, supermarkets, autoparts stores being built, often for the first time. Whilesome jobs have left the area, others have come in andthere remain numerous jobs for both skilled andunskilled workers.

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South Central Los Angeles is neither a well-definedgeographic area nor socio-economic environment.Depending upon definition, South Central has a popu-lation of 600 000 to over a million residents. In thislarge area one can encounter the South Central of themovies or the South Central that bustles around Cren-shaw Plaza (a large shopping center) and the MagicJohnson Theaters, or the South Central of small busi-nesses and cafes in Leimert Park. One area neardowntown and adjacent to the University of SouthernCalifornia has museums, beautiful Craftsman stylehomes and a variety of architectural wonders.

There are no signs to indicate that a visitor hasentered South Central and there is no clear definitionof the area’s geography. The definition used for thisreport is the area from Washington Blvd. in the northto Imperial Highway in the south and from AlamedaBlvd. in the east to Crenshaw Blvd. in the west.1 Thisarea currently has a population of over 600 000people in an area of 33 square miles. This “quin-tessential” Black ghetto today is about one-half Latinoand will soon be majority Latino. As recently as 1970,South Central was 80% Black. The ensuing popu-lation change reflects both the exit of Blacks and the

1The western boundary always seems to be debated. Some writershave included the entire Crenshaw district plus Ladera Heights andBaldwin Hills (the latter two areas have some expensive real estateand are certainly not considered “poor” in any sense). Some wouldgo further south than Imperial Highway. Others would mark thewestern boundary as much further east. This definition is also usedby Ong (1993) and seems to be a useful compromise.

An economic view of South Central Los Angeles: T Larson

Figure 1 Halldale Ave

entrance of Latino immigrants. Because of a greaternet inflow, the area’s population has grown, a factthat is critical in assessing the prospects for the devel-opment of South Central. (Fig. 2)

While many White Angelenos shun South Central,those who do visit quickly notice that the area doesn’tlook like a ghetto. West of Figueroa Blvd., many fam-ilies own their own home, creating miles of neighbor-hoods filled with attractive single-family detachedresidences with tidy colorful yards and playing chil-dren. (Fig. 1) South Central is an area that doesn’tget flooded, doesn’t have mud slides, doesn’t sufferfrom grass and forest fires and has suffered only mod-est earthquake damage, but still enjoys the almostendless California Summer weather. The real storyhere is that South Central, despite its negative imageand with little government help, is developing itself.(Fig. 3)

South Central is a “city-in-the-city” with variedcommunities that include poor, middle-class and evenaffluent families. While much of the housing is olderand there are more renters than owners, there is a sub-stantial supply of single detached houses, most ofthem owner occupied. There are relatively few high-rises and no towering public housing projects.

There are a number of common myths about SouthCentral, based on ghetto stereotypes. It is commonlywritten that South Central has a growing underclass(that is responsible for the devastation of the 1992urban unrest) and a shrinking job base (causing a risein Black unemployment). The economic and demo-graphic data on South Central, however, reveals thatalong with a growing population is a developingeconomic base with a high ratio of jobs to residents(Larson and Finney, 1996). Below, this evidence willbe presented in greater detail.

One of the most important factors driving econ-

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omic growth is population growth. The rise anddecline of urban neighborhoods has often been linkedto the arrival (or lack of) of immigrants. Eastern citiesthat no longer see net in-migration tend to have stag-nant economies with falling populations. Forexample, between 1950 and 1990, Cleveland’s popu-lation declined from 914 000 to 505 000, Detroit’spopulation fell from 1 514 000 in 1970, to 1 028 000in 1990, New York lost 500 000 between 1970 and1990, and Philadelphia lost almost 400 000 between1970 and 1990.2 In contrast to these declining cities,Los Angeles has experienced heavy in-migrationbetween 1970 and 1990, especially from Mexico andCentral America. Latino population growth has beenespecially strong in South Central.

Los Angeles has had a high rate of economicgrowth in general and this has had some spillover tothe poorer neighborhoods. Cities such as Gary,Newark, Detroit, Pittsburgh, St. Louis, Cleveland andNew Orleans all experienced population decline in the1980s of more than 10%. These cities are describedby Anthony Downs as in rapid decline and are thecities most afflicted by inner-city decay. By contrast,the city of Los Angeles gained over 500 000 in popu-lation in the 1980s (from 2 969 000 to 3 485 000 —a 17.4% gain) and is described by Downs as a highgrowth urban area with “dynamic” and growing inner-city neighborhoods (Downs, 1994).

While it is generally true that suburban areas haveexpanded rapidly while central cities have lost popu-lation, not all central city neighborhoods have goneinto permanent decline as our suburbs have grown.Migrants looking for inexpensive housing near jobsand transportation still can benefit from being in the

2Statistical Abstract of the United States, 1993.


Figure 2 Map of South Central

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Figure 3 Photo of Dunbar Hotel

central city. This has been true in South Central, asLatino immigrants have found affordable housing andeasy access to a variety of jobs. In and near SouthCentral are numerous low and medium wage jobs thatare held by immigrants. Michael Porter (1995) haspointed out that inner-cities can provide a variety ofeconomic advantages, and South Central’s ability toretain jobs and attract immigrants attests to the pos-session of some advantages. The economic turnar-ound that has been occurring in South Central is atleast aided by immigrants who are more than replac-ing out-migrants and keeping the area from becominganother de-populated inner-city wasteland. But theimmigrants are being drawn to South Central becauseof some comparative advantages offered by the area.The main advantages may be the combination of low-cost housing and the nearness of accessible jobs.

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William Julius Wilson (1996) points out the hard-ships faced by residents of inner-city neighborhoodsthat have lost higher income Blacks who have movedout of central city ghettos in Chicago. While this maybe a common pattern in large cities in the Midwestand Northeast, this is not the pattern in Los Angeles.Blackshavemoved out of South Central — to a var-iety of destinations, from Inglewood to Pomona toRiverside, to the San Fernando Valley. The Blackpopulation in Los Angeles has succeeded in becomingmore geographically dispersed — but has not left apoor Black underclass behind in a decaying inner-city. There are inner-city areas that have gone througha period of decline only to develop once again. Forinstance, Keating and Smith (1996) cite a number ofneighborhoods that have been reborn due to heavyimmigration flows since the 1960s in Philadelphia,


New York, and Miami (pages 33–4). South Centralbelongs on this list.

While many inner-cities may appear to have intrac-table problems that prevent economic development,Downs concludes that we now have enough experi-ence from a variety of inner-city development experi-ments to know that development is “likely to succeedbest” in neighborhoods with successful businesses,strong churches, established community organiza-tions, successful public or private schools and majoremployers (Downs, 1994). These characteristics aresubstantially present in South Central. There remainmany successful businesses (although there are fewfirms that employ more than 500 workers), there areboth private and public colleges and universities(University of Southern California, California StateUniversity at Dominquez Hills, Los Angeles TradeTechnical College, Compton Community College,Southwest City College), hospitals (Martin LutherKing/Drew Medical Center, St. Francis MedicalCenter, Los Angeles Orthopedic Hospital, with DanielFreeman in nearby Inglewood), large churches (FirstAME, Crenshaw Community Church, Second Baptist,Church of God in Christ), and active communityorganizations (Los Angeles Progress Partners, TEL-ACU, Watts Labor Community Action Committee,Westminster Neighborhood Association, etc.).

Poverty in South Central

High and rising poverty rates are not just associatedwith urban decay; poverty itself is seen as a root causeof neighborhood decline (Krumholz, 1996). Inner-citypoverty is associated with high levels and long-termpoverty among Blacks. Nationally, the poverty ratefor Blacks has remained over 30% since the 1960s.In Los Angeles County, the Black poverty rate ismuch lower (only a little over 20% in 1989: see Table1) and the general trend has been downward since1969 (excepting a rise in the early 1980s). While min-ority poverty rates remain high relative to White rates,poverty rates in the city of Los Angeles are lowerthan in other major cities: the overall rate for Los

Table 1 Los Angeles County poverty rates by race: 1969–1991. Percent of persons below poverty level

1965 1969 1979 1987 1989 1991

Anglo 7.8 7.5 6.9 7.1Black 24.2 23.2 24.5 21.2Latino 16.6 19.2 25.2 22.9Asians 11.2 14.6 14.2 13.2Overall 11.1 13.4 15.6 15.1 18.9California 11.1 11.4 12.3 12.9 15.7US 17.3 12.1 11.7 13.4 12.8 14.2Black 47.1* 32.2 30.9 32.6 30.7 32.7Latino NA NA 21.6 28.1 26.2 28.7

*Includes “other” race.Source: Paul Ong (1989), 1969, 1979, 1987 Los Angeles poverty rates; US Census (1990), Social and Economic Characteristics of the Population,1990, 1987 poverty rates. US Report of the President (1996). Current Population Report, Consumer Income, Series P-60.

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Angeles was 18.9% in 1989. In 1989, the overall pov-erty rate in Detroit was 32.4 percent. In Chicago, theoverall rate was 21.6 per cent (see Table 8). Whilethe differences in overall poverty rates might seemsmall between cities like Los Angeles and Chicago,there are large differences in the types of neighbor-hoods where the poor live when comparing across cit-ies.

The spatial distribution of poverty is moreimportant than the overall poverty rate of a city ormetropolitan area (Greene, 1991). Residential segre-gation of Blacks and Latinos tends to increase theconcentration of poverty in Black and Latino neigh-borhoods (Massey and Denton, 1993). Where the pov-erty rate among Blacks is high and Blacks are highlysegregated, most Blacks must live in areas with highpoverty rates. Fortunately, in Los Angeles,Black/White residential segregation has been declin-ing since 1970 (Table 2) and the percentage of peopleliving in high poverty census tracts is quite low fora major city. For comparison, in Newark, 38% of allcensus tracts had a poverty rate of 40% or more. InLos Angeles, only 4% did so (Table 9). In New YorkCity, 34% of the poor live in census tracts with pov-erty rates of 40% or more. This is true for only 9%of the poor in Los Angeles. Census tracts with pov-erty rates of 40% or more are considered “ghetto”or underclass neighborhoods (Wilson, 1996). In LosAngeles, poor Black families are less isolated and lessconcentrated than in most large cities in the U.S. andfew live in “underclass” neighborhoods. (Fig. 4)

The overall poverty rate for South Central was

Table 2 Residential segregation, 1990. Los Angeles County, indexof dissimilarity, by tracts

1970 1980 1990

Black/White 0.901 0.809 0.730Black/Latino 0.711 0.635 0.504Latino/White 0.362 0.476 0.499

Source: Clark (1996)


Figure 4 Map of Los Angeles county with poverty rates over 40%

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32.9% in 1990 (Ong, 1993). This rate reflects the factthat the South Central population consists almostentirely of Blacks and Latinos, groups with high ratesof poverty. The mixed character of South Centralneighborhoods is reflected in the wide variation inpoverty rates. Some neighborhoods have low rates (aslow as 7.8%), and only a few have rates above 40%.Twenty-five percent of the census tracts in South Cen-tral have poverty rates below 22% and only 10% haverates above 40%. The eastern part of South Centralhas higher poverty rates, but also has a majority popu-lation of Latinos, who have a higher group povertyrate. Poverty rates of 40% and more are rare in SouthCentral, but occur more in Latino neighborhoods thanin Black neighborhoods.

Having the poor spread out rather than concentratedhas a big impact on the nature of minority neighbor-hoods. In areas where the poverty rate is 40% or 50%,with additional high numbers of the near-poor, neigh-borhoods look like ghettos, with dilapidated build-ings, few stores and growing numbers of vacant lots.High minority poverty rates coupled with intense resi-dential segregation produces neighborhoods that looklike slums. Inner-city areas in Chicago, Detroit, NewYork, and Philadelphia that have almost entirelyBlack populations have high average poverty ratessimply because poverty rates are so high among theBlack population (30–32% nationally and higher insome cities). This high poverty incidence amongBlacks means that the average Black neighborhoodhas a poverty rate of 30%. In Los Angeles, if theentire Black population lived in one area, the povertyrate there would be only 21%. In a number of inner-cities, more affluent Black families have been leavingpoor areas, causing poverty rates to rise in the Blackinner-city areas. While Black families in Los Angeleshave also been exiting the inner-city areas, povertyrates remain well below the rates observed in poorChicago and Detroit neighborhoods. The vastmajority of South Central families are not living inpoverty and this simple fact has important impli-cations for economic development in South Central.

Home ownership in South CentralWhile most South Central residents live in rentedhousing, there are neighborhoods filled with detachedsingle-family houses that have relatively high rates ofhome ownership. In the beginning of the 20th century,the ability to own property in Los Angeles was anenticement that brough Black families from otherstates. In 1916, 36% of all Black families in Los Ang-eles County owned their own home, compared to 2%in New York City, 11% in New Orleans and 14% inDallas. No large city in America had such a high rateof home ownership among Blacks (Bunch, 1990).

1n 1990, 39.3% of Black families in South Centralowned their own home. This is a higher rate of owner-ship than among Black families in LA County (at37.4%). While both rates are well below the national

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average for all families and are below the Countyrates for whites, they are high for a large metropolitanarea and high relative to White rates. The Black homeownership rate in Los Angeles is 75% as high as theWhite rate. For comparison, the Black/White ratio is0.52 in Chicago, 0.48 in New York and 0.42 in Bos-ton.

Owning a home is difficult for many in Los Ang-eles due to high property values, and Blacks havefaced additional barriers due to discrimination fromfinancial institutions (Dymskiet al., 1991). Owner-ship is a significant achievement and South Centralhomeowners take pride in their homes and defendtheir housing values. New developments in SouthCentral have to take into account opposition fromhome owners, just as in the rest of the city. Homeownership rates would certainly be higher, if not foryears of financial red-lining. Years of being ignoredby mainstream banks for residential and commercialloans, is finally being turned around today as largebanks such as Bank of America have stepped up lend-ing in the inner-city (Griego, 1997).

Home ownership is important because a home isthe single most important asset most families possess.As an asset, it can provide a basis for business loans,personal loans, can help a family through times ofhardship and can be the basis for easier lives in retire-ment.

Jobs: mismatch or new structure?While the years since 1970 have seen little economicgain for Black men nationally, this is not the case inLos Angeles. Upward economic mobility is likely animportant factor behind the movement of the Blackpopulation out of South Central and may be part ofthe reason for the decline in residential segregationsince 1970. In Los Angeles, Black incomes and occu-pational status have improved. Still, it has often beenclaimed that, in the 1970s and 1980s, Blacks werebypassed by growth sectors of the economy whilebeing pushed out of good blue-collar jobs due to dein-dustrialization (see Wilson and Hamilton). This storymay be true in classic smokestack cities such asDetroit or Gary, but it is not true for Los Angeles.Blacks never did gain many jobs in traditional coremanufacturing industries in Los Angeles, so econ-omic restructuring of the smokestack industries hasnot had the impact that is commonly alleged. In LosAngeles, rather than recently losing out on disap-pearing high-wage blue-collar jobs, Blacks have longbeen bypassed by many manufacturing jobs, first bywhites (who had “good” jobs in the traditional coreindustries such as steel, auto and tires) and now byLatinos (who are working in low-wage industrialjobs).

Thirty years ago, the higher paying manufacturingjobs were predominantly held by whites. Since Blacksobtained few of these jobs in past decades, it seemsa stretch to state that Blacks have lost good jobs in


and near South Central. What is true is that the old“good” jobs in manufacturing were held primarily bywhites and that the new “poor” jobs in manufacturingare often held by Latinos. For instance, Latinos domi-nate production jobs in textiles and apparel (“poor”jobs). The jobs in steel and auto were mostly held bywhites (“good” jobs).

It is helpful to remember that Los Angelesremained a largely white city until the 1970s. Blackshave always been a small minority in Los AngelesCounty (about 10% of the population) and even Lat-inos were a small minority until the heavy immi-gration of the seventies and eighties (Table 11).

Employment data for Black males for decennialyears from 1950 to 1990 show that Blacks had rela-tively few jobs in the steel, auto or rubber industries(Table 3). In 1970, there were small percentages ofBlack males employed in the auto (1.7%) or steelindustries (1.2%) but many were employed in the postoffice (4.2%) and by aircraft firms (4.8%). Los Ang-eles was late in integrating Blacks into industrialjobs — by the time this was happening, the jobs intraditional core industries were disappearing. The sec-tor that saw large employment gains for Blacks waspublic employment (Scott, 1996). By 1981, 26% ofLA. City employees were Black (compared to a 17%population share) and in 1980, 32% of all LA. Countyemployees were Black (percentages are for full-timeworkers, Larson, 1993). In 1980, one in ten employedBlack men worked for either local, state or federalgovernment (see Table 3). While traditional manufac-turing jobs may have provided substantial employ-ment and helped raise Black families into the middleclass in Detroit, in Los Angeles it was governmentwork (from school teaching to general government to

Table 3 Employment by selected industry, black males, 1950–1990. Los Angeles County

Industry 1950 1960 1970 1980 1990

14 + 14+ 16 +Population, 103 735 224 196 211 154 309 179 337 426Employed 53 159 99 777 142 081 184 381 192 769Percent Employed 51.2 44.5 67.3 59.6 57.1Mining 25 32 208 343 654Construction 6 530 8 530 9 552 9 422 12 296Manufacturing 10 652 24 977 39 173 45 780 32 749

Auto 376 1 383 2 442 1 590 1 146Aircraft 976 5 341 6 763 11 366 6 397Food Prod. 2 097 2 473 1 729Printing 1 138 2 309 1 743Rubber 1 748 920 121Steel 1 256 1 357 1 647 2 521 328

T.U.C.* 6 645 9 073 14 568 16 077 29 977Public Transit 521 744 1 406 3 999 2 369Telecomm. 1 270 2 805 2 361

Trade Services 9 348 14 420 24 741 30 200 31 74932 983 49 185 44 335

Professional 3 313 7 733 16 898 28 603 33 428Public Admin. 5 316 9 754 14 893 17 945 11 862

Postal Service 2 445 4 570 5 942 5 441 5 605

*T.U.C. = Transportation, Utilities and Communication. Source: US Census (1960), Census of the Population, Detailed Characteristics, California,1950, 1960, 1970, 1980; PUMS, 1990

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the postal service), services and a few industries withlarge government contracts (and subject to affirmativeaction) such as aerospace, that helped lift Black famil-ies into the middle class.

Blacks have gained high shares of jobs in both thepublic sector and among larger firms and havebecome primarily white-collar workers in Los Ang-eles. While Latinos have gotten many jobs in manu-facturing, they work predominantly in industriescharacterized by a prevalence of small firms and lowwages (such as apparel, furniture, and foodprocessing) while Blacks have gained employment inindustries with large firms, such as telephone, bank-ing, and aerospace (see Table 4).

Table 4 examines employment by industry by eth-nicity among males in 1990. Table 4 shows thatemployment across industries is not random. WhileBlacks are 8.1% of the male labor force in 1990, theyare 24.2% of public transit workers, 11.1% of aircraftworkers, 16.3% of hospital workers and 28% of postalservice workers (among males). The columns labeledBlack Conc. and Latino Conc. show how Black andLatino employment by industry compares to “par-ity” — where parity represents the same share ofindustry employment as of total employment. If thereis parity, then we would expect employment by indus-try to reflect overall employment shares (8.1% forBlacks, 36.2% for Latinos, 10.9% for Asians and44.5% for Whites). We can see that Blacks are belowparity in a variety of industries: construction, apparel,printing, auto repair, etc. Blacks are also over parityin many industries: aircraft, trucking, public transit,department stores, hospitals, schools, government,etc. Latinos tend to be above parity in manufacturingjobs — in low-wage industries (such as apparel and


Table 4 Employment by selected industry by race, males, 1990 Los Angeles County. Industry employment shares (in percentages)

Black Latino Asian White Black Conc.* Latino Conc. B/L Conc. Ratio

Employed 8.1% 36.2 10.9 44.5 1 1IndustryConstruction 5.5% 44.9 6.1 43.5 67.90 124.03 0.55Manufacturing

Apparel 2.6 74.2 12.6 10.7 32.10 204.97 0.16Printing 5.0 35.9 9.5 49.6 61.73 99.17 0.62Furniture 2.0 78.5 4.4 15.1 24.69 216.85 0.11Electrical machinery 6.4 37.7 16.3 39.6 79.01 104.14 0.76Aircraft 11.1 22.8 9.2 56.8 137.04 62.98 2.18Missiles 7.6 12.0 12.3 68.1 93.83 33.15 2.83

TransportationTrucking 14.1 42.0 5.9 37.7 174.07 116.02 1.50Public Transit 24.2 30.2 12.2 33.5 298.77 83.43 3.58Air Transport. 14.3 22.5 14.7 48.5 176.54 62.15 2.84

UtilitiesTelephone 13.0 21.8 9.3 55.9 160.49 60.22 2.67

TradeGroceries, Wholesale 6.7 49.7 11.2 32.4 82.72 137.29 0.60Groceries, Retail 7.4 39.1 17.3 36.2 91.36 108.01 0.85Department Stores 12.5 34.2 11.7 41.5 154.32 94.48 1.63Restaurants 4.0 57.9 13.6 24.6 49.38 159.94 0.31

ServicesAuto repair 5.1 55.5 9.4 30.0 62.96 153.31 0.41Banking 10.2 22.3 21.9 45.5 125.93 61.60 2.04Insurance 8.9 15.8 12.4 62.9 109.88 43.65 2.52Real Estate 7.3 19.8 11.4 61.5 90.12 54.70 1.65Business 7.4 25.2 13.0 54.5 91.36 69.61 1.31

Hospitals 16.3 27.0 19.5 19.5 201.23 74.59 2.70Schools, K-12 16.5 23.1 7.6 7.6 203.70 63.81 3.19Govt, General 18.9 21.9 14.9 14.9 233.33 60.50 3.86

Postal Service 28.0 21.3 19.8 30.9 345.68 58.84 5.87

* Black Conc./Latino Conc.= overall Black (or Latino) employment share divided by specific indusrty employment share. “Conc.” stands forConcentration. Source: 1990 PUMS

furniture). Latinos are below parity in major indus-tries where Blacks are above parity: banking,insurance, hospitals, schools, government, postal ser-vice.

In a non-discriminatory economy, we would expectBlacks to experience upward mobility and followwhites into better paid jobs as education levelsimprove. This has been happening in Los Angeles asBlacks have followed whites into better jobs in vari-ous sectors, including in manufacturing. Blacks haveincreased their representation in management andaverage earnings have improved. Blacks have greatlyincreased their employment in the service sector andBlack earnings have improved in Los Angeles(though large disparities definitely remain betweenwhites and Blacks in terms of earnings, occupationalstatus and employment levels).

The changing occupational structure shows thatBlacks have made progress in gaining employment inprofessional and managerial occupations while Lat-inos remain heavily in blue-collar jobs (see Table 5).Between 1980 and 1990, Blacks increased their rep-resentation in professional, management and technicaland sales occupations. In 1990, Blacks were almosttwice as likely as Latinos to be either professionalsor managers (21% versus 11%). Blacks continued to

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Table 5 Occupation by race, Los Angeles County, 1980, 1990

1980 Race

Asian Black Latino WhiteOccupation (%) (%) (%) (%)

White-collar 75.5 71.8 47.0 77.1Management 12 8 5 15Professional 15.2 9.9 4.1 16.5Technical and Sales 36.5 35.9 22.3 36.1Service 11.6 18.6 15.8 9.5Blue Collar 24.5 28.2 53.0 22.9Production and Craft 10.0 9.5 15.9 11.9Operators 14.5 18.7 37.1 11.0

1990

White collar 81 77 54 82Management 14 9 6 17Professional 15 12 5 20Technical and Sales 40 38 25Service 12 18 19 9Blue collar 19 23 46 18Production and Craft 8 8 15 10Operators 11 15 31 8

Source: PUMS, 1980, 1990


lag behind whites and Asians in these occupations,but shared the pattern of moving out of blue-collarwork and into white-collar work and into more pres-tigious occupations. Latinos have also increased theirshare of white-collar jobs, but 46% were employedin blue-collar jobs as recently as 1990 (compared to18% among whites).

One problem that greatly affects Blacks in LosAngeles (and across the nation) is low employment.The employment rate in Los Angeles County forBlack males was 51.2% in 1950, went up to 67.3%in 1970 and fell to 57.1% in 1990. In 1990, only 24%of Blacks aged 16–19 were employed. In South Cen-tral, while employment rates were even lower, therewas little difference between the employment rate of53.1% and the county-wide rate of 57.1% amongBlacks (Table 6). In poor inner-city neighborhoods ofChicago, the employment rate is only 37% (Wilson,1996).

In many inner-cities, jobs have disappeared, leav-ing residents with fewer and fewer opportunities foremployment. This is not the case in South Central. In1993, there were 316 979 jobs in central Los Angelesbut only 221 650 residents were employed.3 Thismeans that at least 95 000 jobs in the area were heldby non-residents. There is no mismatch between jobsand area of residence. The jobs in and near SouthCentral range from unskilled to skilled with plenty ofjobs to suit the educational and training levels of arearesidents. Despite the high number of jobs, Blackshave high unemployment rates. Among teenagers, themain cause is a lack of youth-type jobs (primarilybecause there is a tiny retail sector, see Larson, 1995).

South Central itself is zoned mostly residential, butthere are many manufacturing jobs nearby, especiallyjust east of Alameda Blvd. and south of ImperialHwy. The nearness of the jobs coupled with the avail-ability of buses and a lack of congestion on surfacestreets makes many jobs accessible. While there maybe spatial mismatches in other cities between whereBlacks live and where there are jobs, this is not thecase in Los Angeles. Here, Blacks also have highrates of joblessness, compared to whites, but they livenear many jobs. It is clear that Blacks are not beinghired while others are. This partly reflects educationbut also reflects on-going employer discrimination.Few firms are owned by Blacks, so Blacks must find

Table 6 Employment by Race, South Central, 1990

Black Latino White

Employment rate 53.1% 61.7 56.7Unemployment rate 12.6% 11.4 5.9Labor force participation 65.7% 73.1 62.6

3The job data is from the Southern California Association ofGovernments (SCAG) and is based on Dun and Bradstreet andAmerican Business Information data (Larson and Finney, 1996).

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work with non-Blacks. Firms who wish to hire at lowwages may feel that Latinos are more willing toaccept low wages (and often poor conditions as well).

It is commonly reported that both stores and jobsare leaving South Central. While there are few retailstores in South Central, not only was there evidenceof an increase in the number between 1982 and 1987,but the stores greatly increased employment levels (a34% increase in five years, Table 7). While theincrease in the number of stores was concentrated inone area (the zip code around the University of South-ern California), employment gains were found in allzip codes except one (90018).

While many have reported an exodus of manufac-turing jobs from South Central (Hamilton, 1988; Sil-verstein and Brooks, 1991), there has been almost noreporting of firms that move to South Central. Theusual story told is that good high wage jobs have leftand where new jobs have been created, they are low-skill, low-wage jobs. There have been many manufac-turing jobs in and near South Central and while somefirms have left, others have moved in. Between 1984and 1988, the number of manufacturing firms in SouthCentral actually increased by 143 and the number ofmanufacturing jobs increased by 11 034, from 37 179in 1984 (a 30% rise in four years).

Still a weak commercial base

“I like it here, I like that we don’t have floods andour houses don’t fall down the cliff. What I’d like inmy neighborhood is a nice salad bar.”

Anonymous South Central resident4

It is a common problem that inner-city residentslack adequate retail shopping. A study by the LosAngeles Times found only 2 411 retail stores in theirdefinition of South Central (Silverstein and Brooks,1991). With a population of over one million, thisworked out to be one store for every 415 residents.The rest of the County had at least two stores per 415residents. Using 1987 Economic Census data for thispaper’s definition of South Central, there were 1310retail stores, or one for every 466 residents. Not onlyare there relatively few stores, but the stores aresmaller and have fewer employees than elsewhere.The area is especially short of banks, drugstores,supermarkets and discount stores. Even family res-taurants are scarce (Silverstein and Brooks, 1991).Residents must often leave the area for recreationbecause there are no theaters or bowling alleys. Thewest side of South Central now has the Magic John-son theaters in Crenshaw Plaza, but residents of Wattsmust still travel for miles to get to a movie theater(Stewart, 1997).

While supermarkets have virtually eliminatedmom-and-pop stores in the rest of Los Angeles

4Quoted in Farnham (1997).


Table 7 Firms and employment in South Central, retail and manufacturing

1982 1987Retail firms

Firms Jobs Firms Jobs Firm Change Job Change Residents per Retail Store1306 11 012 1 310 14 712 4 3 700 466Manufacturing firms1984 1988Firms Jobs Firms1131 37 179 1 274 48 213 143 11 034

Source: Retail data: US Census (1982) CD-ROM, data by zip code. Manufacturing data: Commercial survey data

County, mom-and-pop stores remain the principaltype of grocery store in South Central (or in any otherretail business). This weak commercial base is not theresult of a poor environment for retail, but rather isthe result of a lack of investment in the community.The community is forced to shop outside South Cen-tral for much of its groceries, clothes, furniture, andentertainment. There is enough purchasing power tosupport a larger commercial sector and because ofthis, community groups are today trying to developnew retail centers.

South Central lacks community malls and has apoor utilization of land for commerce. South Centralis one of the oldest parts of Los Angeles and has thezoning and infrastructure of an older city. Retail store-fronts are spread out in strip malls along major streets.There is mile after mile of commercial property liningstreets such as Vermont and Central, in the heart ofSouth Central. This property typically consists of nar-row short lots that back up to residential propertieson the other side of the block. While there are toofew retail stores, there are too many small narrow lotszoned for retail stores (many are vacant). The zoningis archaic and prevents development of modern retailstores and malls — there is a need to aggregate smalllots to create large lots where supermarkets and dis-count stores could build and have adequate parking.

The Urban Land Institute (1996) has reviewed thepotential for retail development and concluded thatthere was indeed a need for more retail centers inSouth Central. But the retail sector needs to berestructured with malls and larger stores replacing andadding to the small mom-and-pop operations thathave constituted most of the retail sector in SouthCentral. The ULI estimated that there was enough ofa market just in the eastern half of South Central tosupport three community malls (where there are nonetoday) and many more convenience-scale retail stores.

Supermarkets and food pricing

In a study by RLA (RLA, 1995), it was estimated thatresidents of South Central spend $1 billion annuallyon groceries, but only $637 million of that is spentin their area of residence. This means that residentsleave South Central to spend almost 400 million dol-lars just on groceries each year. RLA identified 55

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full-service grocery stores serving 900 000 residentsin South Central. This included 23 independent full-service stores and 32 owned by major chains. Some ofthe “unmet” demand was likely provided by smallergrocers, convenience stores and liquor stores and bystores near the boundaries of South Central, but thelack of grocery stores is keenly felt by residents. Asurvey of community needs revealed that the numberone priority among residents for retail needs was aneighborhood full-service grocery store. There maybe room for at least three dozen new supermarkets inSouth Central. Even though average family income iswell below the average for LA. County ($20 000 vs.$38 000), there is a high population density in SouthCentral that provides a high level of purchasing powerper square mile. Grocery stores are not the only storesthat are needed: residents also complained about alack of department stores and clothing stores.

Besides the shortage of stores, complaints aboutmarkets in South Central range from claims of excess-ive prices at small stores to a lack of variety and poormeat and produce sections. Often, the solution is seenas bringing in large chain stores. This would alsobring in good jobs and would be particularly helpfulin providing additional youth employment. Bringingin large supermarkets promises to bring in qualitygroceries with improved meat and produce sectionsand lower prices, based on the assumption that super-markets will pass on their lower costs in the form oflower prices and higher quality.

Unfortunately, the food business may no longer bevery competitive in Los Angeles. For example, formilk, it has been reported that Los Angeles chainstores tend to charge more than San Francisco chainstores, even though wholesale milk prices are nohigher in Los Angeles (Gellene, 1992a). This suggeststhat milk prices are less competitive in Los Angeles,where a series of mergers between chain stores hascertainly reduced the number of large grocery chains.It also appears that large chain stores are chargingmore for a variety of food items than are smaller inde-pendent stores (author’s survey).

As part of a class project, I had students collectmilk prices from a variety of stores in Los AngelesCounty. While large supermarkets are acknowledgedto enjoy cost economies over smaller markets (Shawet al., 1989), we found that milk prices were highest


Table 8 Poverty rates in major U.S. cities, 1989. Persons in pov-erty

Detroit 32.4Chicago 21.6Houston 20.7Philadelphia 20.3New York 19.3Los Angeles 18.9

Source: US Statistical Abstract (1996)

at the chain stores and lowest at the medium sizestores. The largest chain in Los Angeles, Ralph’s, wascharging $3.99 a gallon for regular milk, while asmall chain, R Ranch Market, was charging $2.49 pergallon. We observed that Ralph’s sells milk cheaperif the consumer buys two gallons (yoked together andsold under the label “Imperial Supreme,” rather than“Ralph’s”5 one only pays $4.45 or about $2.23 pergallon). Milk prices in South Central were about thesame as in other areas, but there was a large differ-ence in the prices charged by supermarkets and bysmaller full-service independent grocers. Milk pricesin South Central were no higher than elsewhere bytype of store.6

It is not clear that bringing in more chain supermar-kets to South Central will permit residents the advan-tage of lower costs, since the large chain marketsseem to have successfully developed non-competitivepricing strategies and are not passing on lower costswith lower prices. Since it is difficult to locate orassemble large lots for supermarkets, it may be betterto develop a strategy for developing mid-size storesthat fit in the neighborhood and that have proven tobe lower priced on a variety of grocery items (besidesmilk, students have also priced produce and otherstaples)7. Indeed, South Central may provide a goodenvironment for independent stores to thrive. Thiswould enable residents to be owners and would leadto greater circulation of income in the community,providing a higher multiplier effect for income.

Strategies for renovating inner-cities

Approaches to combating economic decline in ourinner-cities have changed over time. Keatinget al.(1996) identifies three different strategies used since

5Imperial Supreme and Ralph’s milk were both from Ralph’s milkproduction center. This is simply a form of price discriminationwhere one label is priced lower than the other, even though themilk bottled under each label is the same and comes off the sameproduction line. This strategy is effective: even after it wasexplained, many students insisted that the milk under the two labelsmust be different. All the major chains seemed to engage in thesame practice (Gellene, 1992b).6Ralphs in South Central sold milk at $3.99 a gallon and inde-pendent full-service stores in the area charged around $2.50.7A possible reason for the lower prices at the independent marketsis that they often are non-union while the large chains are unionoperations and incur higher labor costs.

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Table 9 Percentage of census tracts with 40% poverty rate, 1980

Newark 38Atlanta 30Memphis 22Cleveland 20Cincinnati 18Baltimore 17New Orleans 17Chicago 15Birmingham 14Buffalo 14Louisville 14New York 14Philadelphia 14Detroit 13St. Louis 13Nashville 12Norfolk 12Tampa 12Jacksonville 11Pittsburgh 10Toledo 10Columbus 9San Antonio 9Milwaukee 8Boston 6Phoenix 6Kansas City 5Houston 4Los Angeles 4

Source: Richard Greene (1991)

the 1950s. In the 1950s and 1960s, urban renewalemphasized bringing back the middle-class by bull-dozing slums and rebuilding downtown areas. In the1980s, the Reagan agenda called for cutting govern-ment funding for social programs and advocated mar-ket strategies. Empowerment Zones were proposed assolutions. A third approach is the use of neighborhoodmovements combined with local official support topromote community development. This last approachhas been developing in the 1980s and 1990s as federalprograms have diminished. The community develop-ment corporations have so far emphasized creatinglow-income housing, but have also been involvedwith economic development. Los Angeles has a his-tory of few community development groups, but sev-eral have been formed in the wake of the 1992unrest/riot/rebellion. Los Angeles may be one of theareas that is best situated to benefit from a combi-nation of community organizations and private sectordevelopment, because there is already a relativelyhealthy economic base to work with (this is also alikely reason for the past lack of community groupsdevoted to economic development). There are othermetropolitan areas with inner-cities that are seeing ris-ing populations as Latinos and Asians move in, cre-ating multi-ethnic societies, that may also be candi-dates for development. South Central may advancefrom being an stereotype to a prototype.


Forces for community developmentAdvantages of the inner-cityThere are certainly disadvantages that createimportant barriers to economic development in theinner-city: Insurance costs are high, land is cheaperin the suburbs, older properties often have environ-mental problems that must be cleaned up (from asbes-tos in buildings to toxic chemicals that have seepedinto the ground), and there numerous small lots thatmust be aggregated into larger parcels in order to cre-ate attractive development packages. But there areeconomic advantages in South Central that more thancounterbalance the disadvantages. Data reveal thatthere are plenty of jobs in and near South Central(except for teenagers), so this is no jobless wastelandlike the one Wilson describes in Chicago. There areimportant natural advantages in South Central thathave attracted and retained business investmentdespite negative stereotypes.

Location. A great advantage of the inner-city is itscentral location relative to the regional economy.South Central is near Downtown and has access tomajor freeways. It is no doubt that locational advan-tage is a major reason there are so many jobs in thearea. Regional economic growth should further stimu-late the South Central economy and such major indus-tries as food processing.

Location is also an advantage for those who wishto cater to ethnic product demands. More and moreproducts and services are being designed for minoritymarkets. One consequence of residential segregationis that minority clients are easier to serve since theyare residentially concentrated. Serving ethnic tastescan also aid in developing minority-owned enterpris-es.

Purchasing power.While family income is lower inSouth Central than in the county at large, populationdensity is high, as is consumer purchasing power peracre of land. South Central has a growing populationof working-class families that need many productsand services. The substantial and growing purchasingpower combined with the small ratio of stores percapita provides obvious room for further commercialinvestment. Just as the South Central market is poorlyserved, so are many inner-cities, in terms of retailingand services (Porter, 1995).

Table 10 Percentage of poverty population living in poverty cen-sus tracts, by poverty rate, 1980

City 0–19.9% 20–29.9% 30–30.9% 40+ %

New York 29% 17 20 34Chicago 29 18 21 32Los Angeles 39 28 24 9

Source: Greene (1991)

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Table 11 Population by race, city of Los Angeles, 1960–1990

White Black Latino Asian/Other

1960 71.9 13.8 10.7 3.61970 59.0 17.7 18.3 5.01980 51.0 16.7 27.5 6.61990 37.3 14.0 39.9 9.8

Source: US Census (1960), 1970, 1980, 1990

Human resources.South Central also has advantagesin its human resources. There is already a concen-tration of talent for major industries that are currentlylocated in South Central (apparel, textiles, furniture,food processing). The immigrant population that hascome to South Central may offer some unique skillsto employers. In New York City, manufacturers havetaken advantage of sewing skills learned in Caribbeanfactories (Porter, 1995). The growth of the apparel,textile and furniture industries may be aided by theavailability of immigrant workers. Michael Porterbelieves that the greatest human resource that can betapped is the “large and growing pool of talented min-orities who have been trained at the nation’s leadingbusiness schools and gained experience in many ofAmerica’s leading companies” (Porter, 1995). TheLos Angeles area has several business schools,including nationally known schools (such as Clare-mont, USC and UCLA), that are bestowing MBAdegrees on hundreds of minority candidates.

New community resourcesFollowing the 1992 civil unrest, existing communityorganizations, such as the First AME Church, NewEconomics for Women, Concerned Citizens of SouthCentral, and LISC, became more interested in econ-omic development and new organizations were startedwith the mission of assisting economic development.RLA was the most prominent of the new organiza-tions.8

The economic recession that is only now ending inLos Angeles was in full swing before 1992, makingrecovery even harder, but there are clear signs of pro-gress in the new stores that have sprouted up in manyparts of South Central. Almost 400 million dollarshave been spent just by major corporations, creating17 new supermarkets and a variety of new chain andfranchise operations (from Chief Auto Parts andSmart and Final stores to Taco Bell and the KentuckyFried Chicken on Central Avenue) (Table 12).

Initial estimates of the damage to businesses fromthe 1992 civil unrest were over a billion dollars. Sincethen, in addition to the expenditures by major cor-porations, government agencies have contributed over

8Leavitt (1996) provides a discussion of community responses tothe 1992 civil unrest and provides a more detailed discussion ofgroups that are involved with economic development today inLos Angeles.


Table 12 Corporate expenditures, 1992–1996 in millions

Economic development and Job training Community activities Charitable donations Unallocated Total expendituresrevitalization

311.6 28.7 18.3 24.5 1.6 388.6

800 million dollars for rebuilding, investment andtraining (Table 13). The above numbers do notinclude what private citizens have spent of their ownresources on rebuilding. The numbers suggest that therebuilding phase is now over and the community canfocus on development itself.

After 1992, RLA, the Coalition of NeighborhoodDevelopers (CND) and the ULI all tried to increasethe attention paid toward poorer neighborhoods andgenerally worked to develop the information neededfor planning development in South Central (as wellas other neglected areas). RLA has been folded intoa successor organization, Los Angeles Progress Part-ners, that will pursue job training programs as wellas economic development. RLA’s focus, under CEOLinda Griego, was to retain manufacturers and helpnew commercial businesses. RLA developed data on“neglected areas” (defined as areas with poverty ratesof 20% or more) in order to provide guidance on whatneeded to be done. As a consequence of work by RLAand other groups, there is much more informationabout market conditions in South Central today andthis information is being used to encourage both priv-ate investment and government assistance.

Today, there are resources available for develop-ment that were not present in the 1980s. The Los Ang-eles Community Development Bank was started justlast year, but has 430 million dollars to use to assistin economic development. This money can be lever-aged and can assist in funding a much larger grossinvestment. There is a growing list of communitydevelopment organizations, including: Dunbar Econ-omic Development Corp., Vermont Slauson Econ-omic Development Corp., Inner City DevelopmentCorp., Korean Youth Community Center, EsperanzaEDC, New Economics for Women, and ConcernedCitizens of South Central.

Conclusions

South Central is an area in transition. It remains animportant Black community, but has also become a

Table 13 Government expenditures on recovery and rebuilding

BusinessEmergency Home Communitydisaster Totalassistance loans programsloans

233.7 383.5 170.1 91.9 879.2

Source: RLA (1997)

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major Latino community. It has become a multi-eth-nic set of neighborhoods that include poor, working-class and middle-class families. Many of these neigh-borhoods do show signs of neglect (vacant lots,graffiti), but often they are also showing signs ofrenewal. Many neighborhoods have new stores open-ing up, and show rising housing prices with theirgrowing populations. Rising employment in the LosAngeles area should help return South Central to thekind of solid growth that was evidenced in the 1980s.While the Black community has become bifurcated,(with a growing middle-class but also with a largeproportion of unemployed), poor Blacks are not beingleft behind in a decaying inner-city as has beenreported in a number of Northern and Eastern cities.

Many commentators on life in Los Angeles haveconcluded, falsely, that South Central exhibits a socialpathology that precludes the ability of massivegovernment subsidies to uplift the area. The literatureon the underclass has been seen by many as describ-ing South Central, even though the data and imagesused in that literature are typically from Chicago andNew York (and may be dated even in those cities)and do not apply to Los Angeles. South Central sim-ply does not mirror the desperate portrayals of life inEastern and Northern inner-cities nor the dark viewsof much post-riot knee-jerk “analysis.” One key dif-ference is that South Central is located in the midst ofa growing and vibrant Southern California economy.

While inner-city areas in some cities have beendepopulated, with increasingly destitute populationsleft behind, this is not the case in South Central. SouthCentral is in transition and there is a net out-migrationof Blacks. But it is not an area that is being abandonedby people, it is an area with a growing population andmany low-income working people. There certainlyare unemployed adults and welfare recipients in SouthCentral, but they are joined by many working peopleand working families who are looking to better them-selves.

There is evidence in Los Angeles of under-invest-ment in areas that simply have high proportions ofBlacks in the population (Grigsbyet al., 1991). Evenaffluent Black neighborhoods such as Crenshaw andBaldwin Hills lack retail stores and services. The lackof investment in areas with middle-income and high-income African-American families suggests financialred-lining and discrimination at work.

There is no lack of jobs for adults in South Centraland nearby areas, but there are high unemploymentrates among both Latino and Black residents. Job


training and vocational education programs may bevery effective in helping the area’s unemployedadults. While public officials focus on bringing inmore industrial and service jobs, there is a danger ofignoring the greater need for investment in humancapital and on holding on to existing jobs. This studyquestions the advisability of offering tax incentives tolure more factories and service industry firms to thearea, given the need for human investments ratherthan capital investments. The greater metropolitanarea certainly should be concerned with further jobcreation, but offering incentives to locate specificallyin South Central seems unnecessary, given the largenumber of existing jobs.

Overall, the available data do not show South Cen-tral in economic decline, aside from the effects of therecent recession. Quite the reverse is the case. Despiteneglect from government and major financial lenders,South Central neighborhoods are developing econ-omically. The good news is that South Central offersimportant incentives to attract further private invest-ment. Among the missing elements of the South Cen-tral economy are job training programs and retaildevelopment (new industrial development is reallynot needed and there is little available land for newindustry).

A great deal could be done to improve the dailylife of residents by encouraging new investments inretail stores, especially grocery stores, but also banks,variety stores, theaters, clothing stores, and drugstores(just to list some obvious needs).

Among the bad news is that teenagers have pooraccess to jobs (importantly because of the lack ofretail employment, Larson, 1995) and this is likely toinhibit their ability to develop careers and will act toreduce their adult earnings. The development of alarger retail sector would help teenagers get animportant start in the working world (South Centralteenagers also need help getting jobs outside SouthCentral).

Market opportunities that promise competitive pro-fits provide hope for the continued development ofSouth Central, but development will be aided if morebusiness people learn of the financial rewards avail-able and city planners are able to help work out zon-ing problems that are retarding development and resi-dents become more entrepreneurial. Overall, furthergrowth in the South Central economy can be expectedwithout added assistance. But if the existing solideconomic base can be augmented by additionalfinancing through the Community DevelopmentBank, more lending as a result of the CRA Act, andgreater investment by the private sector in responseto the studies showing a need for investment, SouthCentral may become famous for its civic improve-ment rather than infamous for its civil unrest.

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Documents

An economic view of South Central Los Angeles