Monthly Archives: April 2013

Droning On

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Can the emerging unmanned aerial vehicle (UAV or “drone”) industry lead to a turnaround for California’s aerospace industry that was decimated by the DoD budget cuts and industry consolidation that took place following the end of the Cold War.

Torey Van Oot in the Sacramento Bee’s article
California lawmakers look to regulate, attract drone industry to state” contemplates the implications of potential nonmilitary applications of Drones including its economic impact.

“An expected boom in the use of nonmilitary “unmanned aerial vehicles,” commonly known as drones, has California looking to regain some of the aviation industry swagger it enjoyed for decades”

“At stake for California and other states is a piece of $82 billion in economic activity the drone industry estimates it will generate between 2015 and 2025.”

California is home to many leading industries, such as such as computer and communication technologies, that are integral components of UAVs. Thus these developments offer the prospect of a resurgent California aerospace industry. However it’s seems unlikely that the Golden State can come close to restoring this sector of the economy to its past glory.

See The Man Who Invented the Predator for a brief history of the birth of this dynamic technology and its garage-based origins in Hacienda Heights in Los Angeles.

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The Real Problem

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The long-awaited recovery of California’s housing markets is welcome news. But it’s also time to reconsider that exorbitant housing costs are arguably the Golden State’s principal economic shortcoming.

Out of Reach by the National Low Income Housing Coalition compares and contrasts on a state-by-state basis “the gap between wages and rents across the country.” Unfortunately, California compares quite unfavorably with most states (and Texas in particular).

The collapse of the housing market in the wake of the Great Recession drove up the demand for rental units. According to the U.S. Census, in 2011, over one third of American households were renters. The nation’s rental vacancy rate dropped from 8% directly at the beginning of the recession to 4.5% by the third quarter of 2012. The, so far, inadequate investment in new affordable housing units coupled with the fact that nearly a third of renter households live in poverty has created a severe affordability problem.

The map above indicates the number of hours of minimum wage work would be needed to pay rent for a typical two-bedroom apartment. As you can see, California ranks as nearly the least affordable state, behind only Hawaii, Maryland/D.C., New York, and New Jersey. California is also notably less affordable than Texas, which largely explains the migration of middle and low-income households to the Longhorn State.

The map below estimates the full-time hourly wage that a household must earn to afford a decent apartment at the HUD estimated Fair Market Rent (FMR), while spending no more than 30% of income on housing costs.

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