Business receipts are up in the Eighth District
Contributor | 11-18-2011 |
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By Julia GabrickThe Eighth Council District, which sits in the heart of South Los Angeles, is one of the city’s poorest. But in the past year, it led all city council districts for percentage growth in gross business receipts, according to the annual LA City Council Districts Economic Report.
Gross business receipts, which measure the total revenue from services, went up to $8.1 million, representing a 5.6 percent increase for the Eighth District.
These findings are significant because the Eighth District has few big employers. It is an oddly shaped area that includes the Baldwin Hills, Leimert Park, Crenshaw, Hyde Park and North University Park neighborhoods of South Los Angeles. It is among the most densely populated parts of the city with more than 250,000 residents. But with annual wages averaging $42,093, salaries for Eighth District residents are far lower than the U.S. Census Bureau’s median income of $54,375 for L.A. County.
The district added jobs each year between 2005 and 2010, in the years before, during and after the recession, making it the only part of Los Angeles to add jobs over that five year period. Last year, more than 3,700 jobs were added, which equaled a 9.1 percent increase, the second highest in the study. But overall, District Eight employs only 45,118 people, the second lowest number of the Los Angeles districts. It is home to a mere 1,638 firms, the fewest of any district.
As a comparison, District 15, which runs from the southern end of Districts Eight and Nine to neighborhoods around the Port of L.A., was the only other area with substantial -- 10.6 percent -- employment growth between 2009 and 2010. However, with 3,346 firms, the 15th has more than twice as many businesses as the Eighth District.
Total sales tax receipts, which is the revenue earned from all taxable sales, was up by 4.9 percent for the 2009-2010 fiscal year in District Eight. While that’s positive news, 2009-2010 saw a 10.8 percent decrease in sales tax receipt totals, making the overall picture one of recovery instead of growth.
One reason for the increase in business receipts may be the Toys R Us Express located in one of the area’s major retail centers in the Baldwin Hills Crenshaw Plaza. While the mall itself is not new, renovations are wrapping up and stores have stayed open throughout the refurbishing. The Toys R Us Express is still there and open for business, even though it should have been gone long ago. It’s a pop-up store, usually scheduled to open in November and close January 15. But last year the store it met its sale numbers, so the company took a one-year lease in the mall.
Donald Gecaw manages the Toys R Us Express and is relying on 15 newly hired temporary seasonal employees to see it through the holidays. The seasonal workers will have to find other jobs, but Gecaw's own employment future is bright. Since he worked at another Toys R Us location before his mall assignment, Gecaw has bargaining power.
“Everybody else is hired from outside. I’m the only one from Toys R Us, Culver City. I know it’s temporary here. But I get to go back to another store, they don’t,” explained Gecaw. The store’s lease is up in mid-January and there’s no guarantee it will be renewed.
In the mall’s main walkway, Brea Lane arranges the display at the Barbara’s Delight Hand Painted Glassware booth. As the winner of an entrepreneurship contest, Lane’s mother was awarded the booth free of charge for six months. Now they’re in their second month at the mall, but business has been slow. “For the area, our product doesn’t fit right. People come through here and see our glasses for $20 dollars and they get surprised,” said Lane. Although both mother and daughter work here now, there’s no guarantee they’ll stay once the lease is up.
Aside from retail, the healthcare sector is an economic force for the district. Since it is not as affected by economic fluctuations as others, it served as a buffer insulating the Eighth District. “Whereas you can decide not to purchase a new car when things get tight economically, you can’t necessarily forgo healthcare services,” said Jordan Levine, the director of economic research at Beacon Economics who led the team that prepared the report. Revenue from healthcare is included in gross business receipts but not in sales tax revenue, since healthcare services are not taxed in California. For the purposes of this report, hospitals, ambulatory care facilities, nursing care, residential nursing homes and outpatient services were counted in the healthcare category.
The Los Angeles Chamber of Commerce commissioned the report with the goal of creating a benchmarking tool for evaluating city council districts. It’s rare to have specific data for sub-regional geographic areas, so Levine’s team relied on geo-coding and pulled from the city’s existing data sources to fill in the gaps. But the payoff is clear. The detailed local knowledge “gives policymakers and the city council a real opportunity to assess their strengths and weaknesses and help them make more informed decisions,” said Levine.
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