The Indicator Goes To California : Planet Money California is way more than Hollywood. Today on the show, we look at what else is going on in this powerhouse state economy.
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The Indicator Goes To California

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The Indicator Goes To California

The Indicator Goes To California

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Stacey Vanek Smith.


Cardiff Garcia.

GARCIA: We host PLANET MONEY's other podcast.

VANEK SMITH: The daily podcast - we're not other.

GARCIA: Yeah, the daily podcast...

VANEK SMITH: We are us.

GARCIA: ...The Indicator.

VANEK SMITH: The Indicator.

GARCIA: Stop othering us.

VANEK SMITH: (Laughter).

GARCIA: And we just got back from a week in California.

VANEK SMITH: Yes, we did.

GARCIA: And while we were there, one day I trekked up a hill in Los Angeles with NPR business reporter and LA resident Sonari Glinton.

Sonari, where are we?

SONARI GLINTON, BYLINE: We're at the Baldwin Hills Overlook, which is - you have likely seen this in a commercial where it's sort of in the middle of the LA Basin. And it gives us this incredible view, so as - you can look almost 360 and see all a way around the Los Angeles Basin.

GARCIA: This is what the literary types would call a sweeping vista, I think. Where are the movie lots?

GLINTON: Well, one of the movie lots we're, like, very nearby. That right there is Culver Studios. That's where Mel Brooks has his office. It's where they filmed "Gone With The Wind." Sony is over there, and Century City obscures 20th Century Fox or 21st Century Fox, the movie studio. And the other movie studios, we can't see because they're in the Valley, and Paramount is somewhere in Hollywood.

GARCIA: OK. And we've got you out here because when people think of LA, they think of some fairly obvious industries, right? Film, entertainment, Hollywood. There's more to it than that.

GLINTON: Yeah. Do you think that 18 million people moved here because of Hollywood?

GARCIA: That's a lot of people with dreams of stardom.

GLINTON: Yeah. That ain't what it's about. I mean, Hollywood is very important, clearly. But that's just one of the bobbles in a drawer full of industry.


GARCIA: Hello, and welcome to PLANET MONEY. I'm Cardiff Garcia.

VANEK SMITH: And I'm Stacey Vanek Smith. And we are the hosts of The Indicator from PLANET MONEY. Now, California is just a huge, formidable economy. It's one of the largest economies in the country. It's actually also one of the biggest economies in the world. California's economy, Cardiff, is bigger than France's economy.

GARCIA: Oh, take that...

VANEK SMITH: (Speaking French).

GARCIA: ...France.

VANEK SMITH: (Speaking French).

GARCIA: So today on the show, The Indicator goes to California. We see what we can learn from this powerhouse economy. We start at a celery farm facing a labor drought. We head to a metro station at the heart of the state's housing crisis. And we end up in one of the country's biggest ports.

VANEK SMITH: You may or may not hear a ship horn.

GARCIA: You definitely will hear a ship horn.

VANEK SMITH: You'll definitely hear a ship horn.

GARCIA: (Laughter).

VANEK SMITH: Stay with us.


VANEK SMITH: Dollar for dollar, California is the biggest agricultural economy in the country. Almonds, oranges, avocados, spinach, berries - they're all big business out here.

GARCIA: But that business is having big trouble. Each year, it's been tougher and tougher for farmers to find workers to harvest all their crops.

VANEK SMITH: It smells like celery out here.

TOM DEARDORFF: Yeah, I know. You definitely get the - it's kind of nice where we are today because we're really close to the ocean, so you get a combination of that sea air and a little bit of celery hint, so pretty nice spot to be.

GARCIA: That pretty nice spot to be is a celery field in Ventura County, Calif. We were there with Tom Deardorff. His family has owned farms in that area for about 80 years.

VANEK SMITH: It's like an ocean of celery.

DEARDORFF: Yeah, I know. There's probably 80 acres of celery here in the field that we're at right now.


DEARDORFF: So that will all get harvested in about 2 1/2 weeks.

VANEK SMITH: In the middle of the ocean of celery, there is a crew of about 30 workers. They walk in a row in big straw hats hacking off celery stocks and tossing them onto this motorized platform, which stretches across the field and chugs along behind them.

They're so fast. It's really cool.

DEARDORFF: They are. It's a skilled position that takes a lot of years of experience to be able to perform at this level. And obviously, you can see they've mastered it.

GARCIA: On that moving platform, another worker cleans up the celery stalk and then packs it into a box. Alec Martinez is the harvest manager out here, and he shows us his celery blade.

ALEC MARTINEZ: It's a 12-inch Dexter stainless steel machete that is then cut about four inches from the top, turned and rewelded back to it.

VANEK SMITH: Oh, this is, like, a custom job.

MARTINEZ: So - yes.

GARCIA: A lot of crops can be harvested by machine - crops like wheat, corn, potatoes - but most fruits and vegetables aren't quite uniform enough to be harvested like that and, for the most part, they have to be harvested by hand.

VANEK SMITH: It is really hard and dangerous work - 10-hour days, swinging a knife in the hot sun. And when the job market's strong, like it has been for the last few years, these workers have a lot of other options.

DEARDORFF: They move into - whether it's landscaping jobs, construction jobs, food service jobs, whenever there's an increase in demand from the general economy, workers generally migrate away from farm work into other areas.

GARCIA: So Tom Deardorff has had to compete for workers. He's raised their pay by actually quite a lot. Back in 2006, working the celery field paid about $8.70 an hour. Now, it pays more than $21 an hour. So pay has gone up by more than double, and that is way faster than wages have grown in most of the country. Now, we are well aware of the criticism that's been around for a while that the agriculture sector relies on underpriced labor and in particular on undocumented workers who take very little money for backbreaking work. We couldn't speak to any of the workers on Tom's farm, but Tom says his workers all are documented and that even doubling wages hasn't solved the labor problem.

DEARDORFF: Yeah, I don't think it's an economic issue. I think it's a political issue. I mean, it is not sustainable under the current political environment, that is true, because we do not have a legitimate immigration policy that allows us access to workers.

GARCIA: Tom says the agriculture visas that the country offers are not realistic for his business. They're too difficult to get. They're expensive, and there just aren't enough of them. Deardorff Farms used to hire more than 600 workers every year, but Tom says he can't make that happen anymore, so he's had to make changes to his business. For example, he's changed the crops that he plants.

DEARDORFF: We've shifted away from the most labor intensive crops, so things like vine-ripe tomatoes we no longer grow anymore.

VANEK SMITH: You don't grow them at all because of labor.

DEARDORFF: Correct. Yeah. They're just - that program alone took about 400 workers. And so we just got to the point where we could no longer find a steady supply of labor and decided that we just needed to get out of that business altogether.

VANEK SMITH: Deardourff Farms also got out of strawberries. Instead, Tom has gotten into leafy greens, things like kale, cilantro, broccoli and celery. They require fewer workers and can be at least partly automated. Where Tom used to hire about 600 people every year, now he hires around 200. But even finding 200 workers has been hard, so Tom made another change.

DEARDORFF: We've also shifted a large amount of our production down into Mexico, so...

GARCIA: You shifted production of a big chunk of what you do away from the United States, and now it's being made in Mexico because you couldn't find workers.

DEARDORFF: Correct. Yeah. I mean, basically the fact of the matter is is that a foreign-born person is going to be harvesting your fruits and vegetables, so the decision is do we want to do that within the United States with a guest worker program or do we want to have that foreign-born worker stay in his country and harvest your fruits and vegetables? So based on what we've seen in the political environment over the last 15 and 20 years, we have decided to go down there into Mexico.

GARCIA: How hard was it to make these kinds of decisions based on, like, what you were seeing?

DEARDORFF: I mean, if I was looking at spreadsheets all day long, it was a really simple decision and one we probably should have made five years before we made it. But, I mean, these are ranches that my great-grandfather farmed, and we'd rather keep them active. But the economics and the politics of it are suggesting that we do otherwise, so...

GARCIA: So Tom keeps doing what he can to attract workers, including using that little motorized platform because it means that the workers don't have to carry these giant boxes of celery across a field.

VANEK SMITH: So this machine is, like, kind of one of the ways that you attract the best people.

DEARDORFF: Definitely, yeah, no, you're looking for a competitive advantage in the labor market. And this is one way to do that, to provide a work environment that is safer, it's more efficient, and it's just slightly easier than what may occur in somebody else's field.

GARCIA: Do you worry that one year you're just not going to be able to produce whatever it is that you're aiming to produce because enough people just don't show up?

DEARDORFF: Yeah, and we try and forecast that a little bit, and we reduce planting sizes, and we spread things out a little bit and readjust based on what we feel the labor availability is going to be. And then we're constantly looking for innovation to get us the same production with less people. So we kind of attack it on two fronts.

VANEK SMITH: Tom says his business has become this constant calculation of how to harvest more with less, how to get more crops out of the ground with fewer hands because in spite of everything, the harvesting machine, the higher pay, the different crops, his turnover rate keeps growing. Fewer and fewer of the same workers come back to his farms every year.


GARCIA: While we were in California, there was one very big piece of news - state legislators killed a bill called Senate Bill 827, or just SB 827.

VANEK SMITH: Yes, SB 827 was meant to address the housing shortage in California. It's a shortage that has led to sky-high home prices. Of course, that is not just a California issue. It's a problem that California shares with a lot of places in the U.S.

GARCIA: And to talk about California's housing problems and to discuss why bills like SB 827 in particular struggle to get passed, we called Paavo Monkkonen. He's a professor of public policy and urban planning at UCLA. And he said, do you know what? Meet me at this one particular metro station, and I'll show you what this is all about.

COMPUTER-GENERATED VOICE: Please stand back from the platform edge.

PAAVO MONKKONEN: We're standing at the Westwood/Rancho Park expo station, one of the stations in the city of LA's new transit infrastructure.

GARCIA: Why did you choose to have us meet you at this metro station?

MONKKONEN: Yeah. I think this is a good example of what's wrong with planning in California. So we've had this massive public investment in a metro system surrounded by single-family homes as far as the eye can see. Most of them are one-story, 1950s stock.

VANEK SMITH: This train station surrounded by all these 1950s one-story houses is new. And it looks like not that many local residents are using it.

MONKKONEN: Yeah. I mean, I'm very skeptical that they do, but even if they did, you know, maximum 150 people from this neighborhood would be commuting to downtown.

VANEK SMITH: Los Angeles is known for its sprawl, people who drive cars living in flat, single-family houses as far as the eye can see. And near this train station, there are no visible apartment complexes.

GARCIA: Paavo says that's too bad. Local zoning laws don't allow for certain kinds of buildings, like apartment complexes, in certain areas, and that limits the overall housing supply. And that means fewer people using public transit stops like this train station. And also it means that house prices stay high and so does the rent.

MONKKONEN: If you look at zoning in Los Angeles, 75 percent of residential land is zoned exclusively for low-density, single-family homes. Those low-density, single-family homes on average are 20 percent more expensive than houses in multi-family buildings. So I think that a logical housing policy would be to legalize the less expensive kind of housing if in fact we want to make housing more affordable.

GARCIA: And Los Angeles can't do that why?

MONKKONEN: Political opposition to change.

GARCIA: Remember that housing reform bill SB 827? It was defeated literally the day before I met Paavo at that metro station.

VANEK SMITH: Literally?

GARCIA: Literally - and not like the way the kids use literally where it means figuratively but actually.


GARCIA: Right, right.

VANEK SMITH: And this bill would have literally allowed more construction of apartment buildings close to a busy public transit stops, like bus stops and train stations. And the idea was that building more apartments would mean more options for where people could live, and that would mean cheaper rent.

GARCIA: It was kind of amusing to see how many politicians liked what the bill was trying to do but ended up opposing the bill itself.


UNIDENTIFIED PERSON #1: I do think we have a housing crisis in this state, but we also have to get it right. And I'm unfortunately not going to be supporting the bill today...

RICHARD ROTH: It pains me a bit to have to refrain from supporting the measure today, so - and I mean that...

UNIDENTIFIED PERSON #2: I will continue to work with your bill if it doesn't get out of this committee today and hopefully be able to support it. I have to see what the...

GARCIA: And the reason SB 827 was so controversial is that it would have overruled the zoning laws that were already put in place by cities and towns throughout California. The laws determining where new construction is allowed, what kind of buildings are allowed, apartments versus houses, how many stories high the buildings can be. Paavo Monkkonen says there's a few reasons that neighborhoods like the one surrounding the train station where we met him don't often allow new building. One reason is that new building can go against the financial interest of homeowners.

MONKKONEN: In the U.S., we've devolved land use controls to local governments, and often they respond very much to neighborhood associations' interests. So I think there are a lot of reasons that people oppose new housing near them, but one of the main ones that's been out there in the literature for a long time is thinking about single-family homeowners as a kind of cartel where they get together and collude to prevent new supply in order that their assets increase in value.

GARCIA: That's interesting because nobody really thinks of homeowners as a cartel. They're thought of as, like, living the American dream.

MONKKONEN: Yeah. I mean, I think - and that's a problem with the way we think about housing in the United States, right? So we want housing to be affordable on the one hand, but if we own a house, we might be happy when that house increases in value, right? And so I think people often in their own minds don't realize what's happening.

VANEK SMITH: A second reason people oppose more building in their neighborhoods is that they could simply be afraid of having their lives disrupted by the physical changes, by the construction.

MONKKONEN: People think that the city might come in and bulldoze their house and put up a public housing unit when in fact what would happen is as people sell their houses from year to year, some people that want a single-family house might buy that and keep it the same. In some cases, a developer might buy it and tear it down and build a four-story building or something. There are neighborhoods like this in LA and people like them. They're not unpopular neighborhoods. So I don't think that people kind of understand how the change would affect the quality of life, and I think it would be probably minimal.

GARCIA: More legitimately, Paavo says, a third reason is that people worry that there will be more traffic, more congestion in their neighborhoods. Though, of course, that worry is somewhat addressed if the building takes place near public transit and also some neighborhood in the city is going to have to accept the traffic. Paavo's point is that the traffic would be more evenly distributed throughout the city if more building were allowed in the wealthier neighborhoods.

VANEK SMITH: A fourth reason that some communities have opposed more building is that they just don't like developers.

GARCIA: Not at all.

MONKKONEN: We have a recent paper where we looked at an experiment where we give people different reasons to oppose housing development. And we found that the one that elicits the most opposition to a hypothetical project is when we say that the developer's going to make a lot of money. So this is the one reason that actually doesn't affect people's neighborhood, but there's kind of this fairness, repugnant idea where a developer...

GARCIA: Do they think they're getting ripped off or something?

MONKKONEN: I think it's connected to people seeing housing as kind of an important necessity for human life and then disliking people that profit off that - when often they themselves are profiting off...

GARCIA: Right?

MONKKONEN: ...The fact that there's a scarce supply of housing. So you know, people are complicated and often hold contradictory opinions.

GARCIA: And finally, one of the effects of preventing new building, Paavo says, is that it can keep the city's segregated by wealth and in some cases by race and ethnicity. People who live in apartments and pay rent on average make less money than people who own homes. But those apartments are not getting built in areas with a lot of single family homes. So a final reason - also the ugliest reason - is that some communities want to exclude categories of people from living in their neighborhood.

VANEK SMITH: Now, there is no simple solution to the conflict between communities that feel they have the right to decide for themselves what their neighborhood should look like and the need for more housing supply. But Paavo said when housing costs remain unaffordable, it doesn't just hurt people who are forced to leave a thriving area because they couldn't afford rent or people who couldn't afford to live there in the first place. It also affects future generations. Paavo cites a paper from economist Raj Chetty.

MONKKONEN: And he finds that kind of some of the counties where it's best, you know, for your life's prospects to be born to a low-income family are in the Bay Area or in LA. And so by preventing low-income households from from living here, we're denying their children a chance at a better future.

GARCIA: Right. So in other words, by making it impossible for low-income people to move to some of these high-growth areas, it also has an effect that reverberates down to the next generation - or multiple generations even.


GARCIA: That sucks.



MONKKONEN: Welcome to California.

VANEK SMITH: After the break, we take to the scene.

GARCIA: We go to a port.

VANEK SMITH: And side note - one of the best things about being a reporter is that you can be a grown woman and still ask people to honk their horns for you.

LOU ANNE BYNUM: How long do you want it for?

VANEK SMITH: Five seconds.

BYNUM: OK. So five seconds on the first one - just...


GARCIA: Was that something that we're not supposed to do any more when we became adults?

VANEK SMITH: (Laughter).

GARCIA: I didn't know that.


GARCIA: In California, everyone was talking about - and actually still is talking about this possible trade war between the U.S. and China because California is, among other things, home to the biggest ports in the country. The Port of Long Beach and the Port of Los Angeles shipped nearly $390 billion worth of goods every year.

MARIO CORDERO: So you can see this is the greater harbor - the state-of-the-art terminal over here where you see those cranes moving.

VANEK SMITH: Oh, yeah.

CORDERO: That's the Long Beach container terminal.

VANEK SMITH: The Port of Long Beach is this long stretch of coastline in Southern California. There are these giant white and red cranes that hang out over the water and huge ships crawling along the bay. I'm here with Mario Cordero. He's the executive director of the Port of Long Beach. He points out this massive pile of lumber being loaded onto ships bound for Asia. There's a big oil tanker on the horizon and an enormous white ship called the Sea Launch.

CORDERO: It launches a satellite.

VANEK SMITH: That ship launches a satellite?

CORDERO: Satellite launcher.

VANEK SMITH: Oh, my gosh.

CORDERO: It will go down to, you know, Ecuador.

VANEK SMITH: And just launch satellites down there?


VANEK SMITH: Wow. And then they're just like stacks and stacks and stacks and stacks of shipping containers, all different colors, over there.

CORDERO: Right. For 2017, we moved upwards of 375 million containers.

VANEK SMITH: And most of these containers are coming from and going to China. Lou Anne Bynum is the president of the Board of Harbor Commission for the Port of Long Beach. She loves the port.

BYNUM: I think it's beautiful. I think it's a piece of art. I mean, everything that everybody has in their homes is touched by the Port of Long Beach in one way or the other.

VANEK SMITH: Is that true?

BYNUM: I think so, yeah.


BYNUM: I mean, when you talk about textiles and electronics and furniture and clothing, you know, they're all goods that come through the port.

GARCIA: Lou Anne says more than 7 million TEUs come through the Port of Long Beach every year.


BYNUM: A total equivalent unit.

VANEK SMITH: What's a total equivalent unit?

BYNUM: So a 20-foot long equivalent unit.

VANEK SMITH: Are those the big...

BYNUM: The boxes.

VANEK SMITH: They just go like right onto the back of a truck, right?

BYNUM: Yeah.

VANEK SMITH: A TEU is basically the back of a semi-truck. And the Port of Long Beach moved 7 1/2 million of them last year.

GARCIA: The stuff in those TEUs is going to retailers like Walmart and Target and Lowe's. And the port facilitates the deals between shipping companies and these retailers. Mario Cordero says that the port business is all about volume. The port makes more money when more ships come in and out. For the last decade, business has been on a tear.

VANEK SMITH: The economy's been growing. U.S. consumers have been buying more stuff. Trade's been expanding. And ship's have been getting bigger and bigger to meet this demand. And the Port of Long Beach has been investing billions of dollars to accommodate that growth.

CORDERO: We've invested at the tune of $4 billion over a ten-year period to increase our infrastructure here. We're ready to receive here 20,000 TEU vessels.

VANEK SMITH: Twenty thousand TEU vessels - that is a ship that can hold 20,000 semi trucks loaded up with stuff, like the Benjamin Franklin ship which came through the port last year. It made a big impression on Lou Anne.

BYNUM: It's 20 stories high. That can hold 91 million pair of shoes.

GARCIA: This would be like if you tipped over the Empire State Building and filled it with shoes...

VANEK SMITH: (Laughter).

GARCIA: ...Shoes from China. And in fact, 70 percent of the ships coming to and going from the Port of Long Beach are coming from and going to China. So when the trade war talks started between China and the U.S., Lou Anne and Mario were on high alert.

VANEK SMITH: Do you remember when you heard about the tariffs? Do you remember like where you were when you heard that news?

BYNUM: Yes, I was glued to the TV like I've been glued to the TV for the last 18 months.

VANEK SMITH: Lou Anne and Mario were waiting. They were waiting for China and the U.S. to release the list of things that would be taxed. And when those lists finally came out, they poured over them right away.

GARCIA: And Mario saw lots of foods, like nuts and fruits. He also saw steel and aluminum. The Port of Long Beach ships all of these things. But Mario says the list was actually kind of a relief because the lion's share of their business was not on the list.

CORDERO: Here at the Port of Long Beach, our largest commodity that is imported is in fact furniture, you know. And that's at the tune of 25 percent.

VANEK SMITH: Twenty-five percent of what comes in here is like dressers and couches and beds.

CORDERO: Furniture - which is the reason for the Targets and the Lowe's and, you know, Walmart's. In addition, number two is footwear. So right now, those commodities have not been talked about in terms of the tariff discussion.

VANEK SMITH: Those items aren't on a tariff list right now. But Donald Trump has talked a lot about rethinking free trade and free trade deals. He scrapped the Trans-Pacific Partnership deal, or the TPP, early on in his presidency. And he's talked about throwing out NAFTA. And, of course, there's the trade war talk with China that has been escalating.

GARCIA: And this is happening just as the Port of Long Beach is finishing up its $4 1/2 billion remodeling to accommodate bigger ships.

VANEK SMITH: I mean, there is a possibility that at least for a little while - for the foreseeable future, free trade is going to move backwards in this country, and the larger ships won't have maybe as much of a future as we thought.

CORDERO: I don't see it going backwards, even in a temporary nature, whatsoever.

VANEK SMITH: Really? I - because it does seem like maybe we're in a moment, at least politically, that we may be stepping back from free trade. And, you know, I mean, if huge tariffs get put in place, there's nothing you can do.

BYNUM: Well, it's 2018 not the 1930s.

VANEK SMITH: That's true. That's really true. You just think things are too interconnected and globalized to go back?

BYNUM: I think that the economy is so integrated and linked in more.

GARCIA: Got to admire her optimism.

VANEK SMITH: It's true.

GARCIA: Lou Anne points out that President Trump got a lot of backlash from farmers over the China tariffs. And she also noted some reports that the Trump administration had been reconsidering entering the TPP though that's all still really uncertain right now. But even so, Lou Anne says they are covering their bases. She and Mario have been exploring trade routes into South America and even Africa. And that's a tiny part of the port's business now, but she says they've got to be ready for anything.

VANEK SMITH: After all, Lou Anne wants to keep ships moving in and out of the port. In fact, she says sometimes she just likes to go out on the pier and watch them.

BYNUM: I mean, to be able to see the terminals and the cranes and the ships moving in and out of the harbor, it's a wonderful appreciation of this economic engine.


BYNUM: That's the piece of art. That's the artwork. Look at this. It's beautiful.


GARCIA: We post every episode of PLANET MONEY on Facebook. So if you have thoughts about the show, leave a comment on the post. The Indicator is produced by Darius Rafieyan and edited by Paddy Hirsch.

VANEK SMITH: One quick note - we have a new video out this week. It's part of our PLANET MONEY Shorts series. This one is about the rise of the Honeycrisp apple. It's really good. Check it out. And you can find all of our videos at

GARCIA: And lest we forget, listen to The Indicator.



GARCIA: It comes out every single day. We host it. It's the best.

VANEK SMITH: It is the best.

GARCIA: I'm Cardiff Garcia.

VANEK SMITH: And I'm Stacey Vanek Smith. Thanks for listening.


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