Los Angeles is known for its vibrant culture and diverse population. As the second-largest city in the country by population, it is also home to various industries that are responsible for the massive economy that the city boasts of. It is no wonder why the city, and by extension, the metropolitan area of Los Angeles, is the biggest powerhouse on the West Coast and the third-richest city by GDP in the world.
The economy of Los Angeles is one of the most diverse in the country in terms of its areas of specialization. It has a strong manufacturing and trade sector, as well as a vibrant creative industry. The tech sector has also been a major contributor to the area’s growth. Its diversity and stability make it an excellent place to start or establish a business. One of the most important benefits of operating in the city, and by extension the county of Los Angeles, is that it’s an international hub with access to international markets and talent.
The Los Angeles economy consists of three major components. One is the service sector where there are many jobs available in the healthcare, retail, professional services, and entertainment industries. The second component is manufacturing which produces goods such as food products, aerospace equipment, electronics, chemicals and apparel. Lastly, there is tourism that relies on events such as film festivals or sporting events and the booming hospitality industry. Several factors contribute to this strong economy including international trade agreements with Mexico and China; the diversity of businesses and more.
Some Major Contributors to the Local Economy
Entertainment: The Glamorous World of Hollywood
Hollywood is one of the main things that most people associate Los Angeles with. The impact of the city’s entertainment industry is not only limited to the country but extends to the whole world, making it arguably the most famous industry in Los Angeles, and possibly, in the whole country.
The role and impact of the entertainment industry in Los Angeles cannot be overstated. From the presence of the major American TV networks to the major movie studios to the major recording labels and more. All of these entities contribute to the employment of approximately 365,000 workers. The Motion Picture Association reports that the media industry pays out around $188 billion in annual wages and is made up of more than 90,000 businesses. Its reach accounts for more than $17 billion in trade and exports every year.
Tourism: Welcoming People from All over the World
Tourism is a major contributor to the economy of many cities and countries around the world. Los Angeles is no exception. The number of visitors to Los Angeles in 2019 was reported to be more than 50 million.
According to the City of Los Angeles Tourism Master Plan, in 2018 travel and tourism contributed $23.9 billion to the local economy. Its total economic impact is estimated to be about $36.6 billion, including about 535,358 jobs supported by the hospitality industry.
There are many reasons why people visit Los Angeles. Here are some of them:
Los Angeles is also preparing to welcome the 2028 Olympic and Paralympic Games
Technology: Growing High-Tech Industry
The tech industry in Los Angeles has been growing in leaps and bounds for many years and is not showing signs of slowing down anytime soon. There are numerous local startups that, although they have or incorporate technology at the core of their product offering, operate in or service a wide range of industries ranging from legal, marketing, real estate, transportation, and so much more. Therefore, these tech startups’ impact on the industries they serve and on the local economy is immense.
Some major tech firms have also built a base in the city of Angels. Google, for instance, has its 450,000 square feet Spruce Goose building in Playa Vista. Facebook also leases more than 300,000 square feet in the same area. Elon Musk’s SpaceX is located in Los Angeles, while Apple and Netflix are expanding in the city as well.
Los Angeles also has a booming gaming industry. The state of California houses approximately 900 video game companies, with a vast majority of them in Los Angeles. Electronic Titans, Activision Blizzard, and Riot Games are among the development studios in the city. Playstation and Nintendo also employ hundreds each for content production.
Around 140,000 people work in the technology sector in Los Angeles. These include software development, programming, and tech support. While this accounts for around 3% of jobs in the city, the industry offers higher salaries to its worker. An average tech worker in the city earns more than $100,000 every year, compared to the $69,000 average household income in the city.
Trade: Exports and Imports
In 2020, Los Angeles was the 15th largest exporter in the country. Its exports totaled $28.5 billion.
May 2021 data showed about $2.67 billion worth of exports. Top exports include raw cotton, frozen bovine meat, other edible preparations, cars, and scrap iron. The Port of Los Angeles, also called America’s Port, covers around 7,500 acres of land and water. The port has approximately 529,000 employees in the country. In 2019, it generated about $506.43 million in revenue.
Education: World-Renowned Institutions
The city is home to multiple colleges and universities. The largest universities in the city include the University of Southern California (USC), the University of California Los Angeles (UCLA, and California State University, Northridge (CSUN). There are more than 20 private colleges in Los Angeles.
Meanwhile, the community college system has nine campuses. All of these are governed by the Los Angeles Community College District trustees.
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