NEW GEOGRAPHY-For the better part of a century, Southern California has been seen as the land of surfers, hipsters and youthful innovators. Yet the land of sun and sea is becoming, like its East Coast counterpart Florida, increasingly geriatric.
This, of course, is a global and national phenomenon. From 2015-25, the number of senior-headed U.S. households, according to the Joint Center on Housing Studies at Harvard University, will grow by 10.7 million, compared with 2.5 million households headed by people ages 35-44.
After some delay, this aging process is accelerating in California. Large-scale immigration, which supplied a younger population for decades, is slowing markedly. Once considerably younger than the country, the state appears to be heading toward the national median age. Since 2000, the senior population in Southern California has grown by 24 percent compared with 18 percent nationally. Unless immigration or domestic migration pick up soon, this aging trend should accelerate.
At the same time, our analysis shows that some areas – notably along the Orange County coast – are rapidly becoming virtual retirement communities, with a diminishing number of children and young families. For those sitting in their houses in affluenza-afflicted enclaves of Southern California, this may seem good news: “aging in place” while their homes increase in value. But this trend is less a boon for younger people, particularly families, as well as for companies seeking to launch and expand here.
Aging in (a nice) place
Today, the most aged parts of the country remain largely either in Florida or in the old Rust Belt cities where young people have been decamping for generations. In contrast, Southern California’s grey tide has set in later, and is occurring most noticeably in specific areas.
The aging process is most marked in two kinds of areas. First, as geographer Ali Modarres has demonstrated, historically Latino sections of Los Angeles, such as East Los Angeles and the Pico-Union district, are aging rapidly. In LA now, immigrants are older than the rest of the population, as their offspring decamp elsewhere, and the oldest, and most dependent on the services unique to ethnic enclaves, remain behind.
Similarly immigrant-rich areas like Santa Ana, although still relatively young, are getting old more rapidly than the region as a whole. But the most dramatic aging is taking place in traditionally Asian immigrant communities, like Westminster and Garden Grove.
Westminster, the original Little Saigon, has seen its share of seniors grow from 11.0 percent to 17.8 percent from 2010-14, an astounding 60 percent increase and far above the state and national averages. The aging wave now sweeping East Asia now has a California counterpart.
The other major incoming gray tide is building along Orange County’s affluent coastal communities. A land renowned for fit bodies and surfer gals and dudes is getting pretty weather-beaten. There’s only so much plastic surgery can do.
Newport Beach and San Clemente are the leading edge of the oldster wave. More than 20 percent of Newport Beach residents and 18.6 percent of those in San Clemente are at least 65, a population share well above the county, regional, state and national norms. These towns are rapidly becoming what demographers refer to as “NORCs”: naturally occurring retirement communities.
Most Inland Empire communities remain relatively youthful. With an 11.8 percent share of seniors, the Riverside-San Bernardino area ranks considerably below Los Angeles, Orange County and the state. Although some areas, like Hemet, Apple Valley and Redlands, have double-digit shares of 65-and-overs, many of the Inland communities remain well under national averages for seniors, including Rancho Cucamonga, Riverside and Ontario. Overall, the Inland regions seem to be retaining a more youthful population.
Preserving, not creating wealth
The greying of California, particularly along the Southern California coast, could well shape the state’s future. Older populations tend to be more interested in preserving wealth than creating it; for them, high housing prices – particularly given Proposition 13 protections – serve as a hedge against old age.
In the short run, the economic impact may be muted, since much of the growth will take place among what may be described as “the young old,” who may be economically and socially active for at least another decade. Senior entrepreneurship rates have grown, while those for other age groups, notably millennials, have dropped.
On the other hand, the “young old” likely will be staying in their old homes for a protracted period of time. Whatever their political orientation, they actually benefit from the current regulatory regime, which keeps housing supply limited, all but guaranteeing rising property values, particularly for single-family homes and offices.
This may explain why so many prominent property owners express remarkably little concern about the future impact of the decreasing migration of younger, educated workers from other parts of the country. Seniors have made their beds in the nicest parts of California, and seem determined to stay there, even if their kids will never be able to live there. Apres moi, le deluge!
The rising prices, however, will impact basic services. As baby boomers, particularly those with nice pensions, continue to retire, they will reduce the number of experienced teachers, police and fire personnel. With much of Orange County and Los Angeles County housing now beyond the price range of most public servants, the strains will likely be greatest there. The same is true of similarly skilled private-sector workers.
Aging demographics, and out-of-sight housing prices, also are having an impact on corporate relocations and expansions. In the coastal locales, the affluent, predominately white but increasingly Asian populations can still fill the top positions at tech or business service firms, but it’s increasingly difficult to staff companies that require middle managers and skilled technicians.
Companies that need to staff up for these kind of jobs will increasingly need to head to lower-cost locales. In this sense the Toyota U.S. headquarters move in 2014 from Torrance to the Dallas suburbs, notes Southern Methodist University Dean Albert Neimi Jr., was motivated largely by a need for affordable middle-class housing and may be the precursor of the Southern California coast’s economic future.
These dynamics are also being felt in the technology industry, long concentrated along the state’s coastal counties. A recent report by the California Legislative Analyst’s Office refers to the difficulty that high-tech employers have in retaining and recruiting staff. LAO cited survey data from the Silicon Valley, which for years has been California’s economic “Golden Goose.” In a 2014 survey of more than 200 business executives and conducted by the Silicon Valley Leadership Group, 72 percent of respondents cited “housing costs for employees” as the most important challenge facing Silicon Valley businesses.
The last great alternative for most young, middle-class families who wish to remain in California is moving to places like the Central Valley and the Inland Empire, where the senior population also tends to be smaller. Of all Southern California, the Inland Empire also has had the most marked millennial growth, far more than in Los Angeles. The Inland area has also seen the state’s most rapid rate of growth in ages 25-to-34 college-educated people.
Yet these places, while still family- and youth-friendly, will be hard-pressed to compete with similar regions, notably in Texas, Arizona and the Southeast. These areas may not enjoy California’s natural and cultural amenities, but also do not have to function under the draconian tax and regulatory regime imposed by Sacramento, which is supported implicitly by residents along the greying coast.
Unless the housing issue is addressed, we are doomed to become an older society that likely will be less innovative. High housing prices are making California, long an importer of talent, into a talent exporter.
Over the past 10 years, notes economist Bill Watkins, California has produced twice as many holders of four-year degrees as new jobs. If these young people are getting trained, often at least partially at taxpayer expense, the beneficiaries of their skills will be more affordable and, often, less senior-dominated places.
Nothing can alter this dynamic until there is some change in California’s planning regime. The state’s increasingly burdensome anti-growth message clouds the future of younger families who lack inherited wealth. Yet few in Sacramento seem concerned about how well California manages to retain young people, and avoids transitioning, particularly along the coasts, into a retirement community for the affluent.
If you want to see where that future leads, look at Japan, where high costs and low birth rates, after decades of remarkable success, have helped usher in 20 years of stagnation. California, fortunately, is not there yet, but it may be time to concern ourselves on how to avoid a similar fate.
(Joel Kotkin is R.C. Hobbs Presidential Fellow in Urban Studies at Chapman University. He is executive editor of New Geography … where this piece originated and executive director of the Center for Opportunity Urbanism. Wendell Cox was appointed to three terms on the Los Angeles County Transportation Commission by Los Angeles Mayor Tom Bradley. He chaired the Service Coordination Committee and also served on the Rail Transit and Finance Review Committees. This piece was first posted most recently at newgeography.com.) Prepped for CityWatch by Linda Abrams.