CA tech juggernaut jumps above rest of state

by John Seiler | February 2, 2015 12:49 pm

Apple creativityApple Inc. continues to lead California’s high-tech economy — with no end in sight for now. The earnings [1]it rang up for the last quarter of 2014, a record for any company, were based on selling 74.5 million iPhones worldwide.

That’s a harbinger for the rest of the state, Esmael Adibi told; he’s the director of the A. Gary Anderson Center for Economic Research at Chapman University. “The economic growth is in that area,” he said. “This is the growth of social media at Apple, Facebook, Google, Yahoo and other companies. It’s design and research in Northern California.”

But not even Northern California can contain all the tech. The Playa Vista area of Los Angeles also is burgeoning with new developments.

The Los Angeles Times reported [2]that in January, “Yahoo Inc. is moving its Santa Monica operations to Playa Vista, joining the droves of major tech companies that have opened offices in the booming Westside neighborhood.

“The Sunnyvale, Calif., Internet company signed a long-term lease for about 130,000 square feet at the new Collective campus in Playa Vista. The move will bring at least 400 jobs from its current location, with space to accommodate growth.”

And[3] Google Inc. “has spent nearly $120 million on 12 vacant acres next to a historic hangar where aviator Howard Hughes built his famous ‘Spruce Goose’ airplane in the Playa Vista neighborhood near Marina del Rey.

“Google is also expected to lease the Hughes hangar built in 1943. The 319,000-square-foot building … could be home to as many as 6,000 well-paid, highly educated workers.”


Adibi said this is a major difference from the high-tech economy of decades past, which centered on manufacturing. But that sector has declined as aerospace jobs have moved to other states. And as Apple and other companies moved manufacturing mostly overseas.

Apple ended its California manufacturing when it closed [4]its Fremont plant in 1993. Now most Apple devices read, “Designed by Apple in California. Assembled in China.”

Adibi said California’s factory employment dropped to 334,000 in 2014 from 664,000 in 1990. Most factory jobs are for the middle-class workers of the type who built the state, especially Los Angeles and its surrounding communities. Jobs include skilled work, such as for engineers; accountants and managers; and unskilled work for those on the assembly lines.

By contrast, the new tech jobs largely are for the “digerati,” the high-IQ, well paid workforce of the information economy.

New economy

The changeover to the new economy, which Apple’s phenomenal recent growth underscores, brings up the worm in the apple, as it were: the worry economists have over income inequality, which is something politicians are taking up.

The New York Times reported [5]today on President Obama’s new budget proposal, a 10-year plan that “stabilizes the federal deficit but does not seek balance, instead focusing on policies to address income inequality as he adds nearly $6 trillion to the debt.”

A U.S. Census Bureau report [6]found that, from 2012 to 2013, California was one of 15 states to see income inequality increase.

And a new study[7] by the Economic Policy Institute found income growth in California from 1979 to 2012 rose 190 percent for the top 1 percent of income earners — but declined 6 percent for everybody else.

Such inequalities inevitably bring calls for higher taxes on the wealthy. But taxes for higher-income earners in California already have risen, with the top state income tax rate currently set at 13.3 percent, compared to 9.3 percent as recently as 2004[8] — a 43 percent increase.

California’s economic future is bifurcated by its gleaming high-tech companies climbing to ever-higher success — as the rest of the economy struggles and falls behind.

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