SoCal’s Future is with the Gen Xers

LOS ANGELES

NEW GEOGRAPHY--Generation X, the group between the boomers and the millennials, has been largely cast aside in the media and marketing world, victims of their generation’s small size and lack of identity. In contrast to the much-discussed boomers and millennials, few have recognized the critical importance of this group to the future of politics, economics, technology and business.

Gen Xers — defined as aged between 35 and 49 in 2015 — matter because they will be the generation that will run our companies and governments as the boomers, albeit slowly, fade from their long-standing dominance. As millennials struggle to “launch,” the Xers are the group that will be critical to local housing markets, tech development and, perhaps most important, the creation of the next generation of children.

Far more entrepreneurial than their millennial successors, they also will have the money to shape the economy. An analysis by the Deloitte Center for Financial Services finds that they hold 14 percent of the nation’s wealth, compared to just 4 percent for millennials and 50 percent for the boomers. But by 2030, as the boomers finally start to fade from the picture, Xers increasingly will vie with boomers, accounting for 31 percent of the nation’s wealth, twice the percentage for the millennials.

Southern California’s Xer challenge

Southern California needs to focus more on Xers. Unlike the millennials, whose share has been dropping below national norms, our region still retains a higher percentage of Xers than the rest of the country. Yet, their population is being eroded by factors such as high housing prices and weak high-end job creation.

As housing prices move to ever more unsustainable levels, the Xers now are leaving California at a rate faster than any generation, according to the most recent Internal Revenue Service numbers. After all, with households having children and buying houses later, many Xers may be going to more kid-friendly areas with yards like they grew up in. Losing Xers, at least in the short run, may be more dangerous to the state and regional trajectory than millennial migration.

In their preferences, Xers nationally tend to be somewhat like their boomer forebears. An analysis of Xer residences in major metropolitan areas showed that more than 85 percent live in suburban and exurban areas, no doubt driven by such concerns as prices, house size, yards for the kids and recreation, safety and schools. This aspiration does not match with ultrahigh housing prices.

Indeed, in a recent analysis we did for Forbes.com, using U.S. Census Bureau age data of 35-49 as our measurement, Xer shares grew most dramatically in more affordable Sun Belt cities like Austin, Texas; Raleigh, N.C.; Charlotte, N.C.; Las Vegas; Phoenix; Houston and Dallas-Fort Worth, which have enjoyed the widest growth in Xer share in the country. Since 2010, emerging tech hubs, notably Denver and Portland, Ore., also did well. In contrast, the Bay Area, despite its torrid economy, has seen its Xer share stagnate, while Los Angeles’ share actually dropped.

Gov. Brown’s war on Xer expectations

Over the past decade, California regulators — citing climate change concerns — have waged a war on the state’s “sprawl,” including recent moves to all but eliminate greenfield development. This policy hits Xers the hardest since they are demonstrably less attracted to living in dense, inner-core neighborhoods and far more likely to prefer suburban locations.

Here in Southern California, Los Angeles, Orange and Ventura counties all suffered losses in their Xer population share, while the more suburban — and affordable — Inland Empire expanded its proportion significantly, with Riverside up by over 30 percent and San Bernardino up by over 10 percent. Communities that have become more Xer-oriented since 2000 include places like Perris, Indio, Murrieta, Hemet, Victorville, Temecula, Corona and Moreno Valley. The only coastal community to rank among the top 10 for Xer growth was Irvine, with Lake Forest ranked 11th.

In contrast, most coastal cities — from Ventura down to Santa Monica to Newport Beach and San Clemente — did poorly. Similarly, many of the more affluent, high-cost cities in the region also saw large drops in their Xer shares, including Yorba Linda, Alhambra, Mission Viejo and Thousand Oaks.

California’s increasingly rigid approach to peripheral development seems destined to not only reduce the Xer footprint in the region, but also to contribute to an already rapid decrease in the number of children. For example, since 2010, Los Angeles has suffered one of the largest declines in the percentage of people aged 5 to 14 — ranking 45th out of 52 major metropolitan areas, ahead of only five Rust Belt cities, Chicago and Hartford, Conn.

What is happening with Xers could soon also occur among millennials as they enter their 30s. As the growth among twentysomethings slows precipitously, and then starts to decline by 2020, the market for the high-density urban lifestyle so beloved by our planning overloads, already a smallish minority among millennials, seems destined to decline.

Rather than shut off the prospects of young people, sparking continued outmigration and a diminution of our middle-class workforce, California needs to reconsider its current housing and land-use policies. The green-speculator-regulator triad may celebrate the end of “sprawl,” but in doing so they are creating a California that, from a societal perspective, will be fundamentally unsustainable.

Joel Kotkin is the editor of New Geography … where this piece was most recently posted … and is R.C. Hobbs Presidential Fellow in Urban Futures at Chapman University in Orange and executive director of the Houston-based Center for Opportunity Urbanism. Wendell Cox is principal of Demographia, a St. Louis-based public policy firm, and was appointed to three terms on the Los Angeles County Transportation Commission.)

-cw