L.A.’s Shaky Pyramid : Dynamic Growth Rests on Underpaid Workers
Last year, Greater Los Angeles produced $250 billion worth of goods and services, making the 12.6-million-person metropolitan area the world’s 11th-largest “nation” in terms of gross national product, ahead of Australia, India, Mexico, Sweden and Switzerland.
In coming years, the region’s economy will grow even larger, according to Southern California Assn. of Governments projections, and the number of jobs is expected to jump from approximately 6 million at present to 8 million in 2000.
Greater Los Angeles (which includes Orange, Ventura, Riverside and San Bernardino counties) owes much of its economic strength to its ability to combine First World management, talent, funding and location with Third World labor provided by recent arrivals from Latin America and Asia. Indeed, Los Angeles is the only combination First World-Third World city on the globe.
Why does Greater Los Angeles have such a dynamic economy? One reason is the built-in market provided by its 12.6 million residents, a population figure projected to reach 16.4 million by 2000 and 18.3 million by 2010. Those 12.6 million residents already spend more retail dollars, in total and per capita, than the 18-million-person New York City metropolitan area.
Another reason is Greater Los Angeles’ diversified economy, with its particular strength in areas that are now experiencing the strongest prosperity and employment growth. Greater Los Angeles--not the Silicon Valley--has the greatest concentration of high-tech industries, mathematicians, engineers and skilled technicians in the United States. Over the next decade, according to one independent study, Los Angeles will lead the nation’s major cities in adding new high-tech jobs.
Los Angeles has also become the West Coast’s financial center, having surpassed San Francisco in banking deposits a decade ago. Los Angeles’ $130 billion worth of deposits (including savings and loan funds) ranks second nationally, topped only by New York’s $175 billion. In 1986, 173 out-of-state banks, 126 of them foreign, maintained offices in Los Angeles. And the Los Angeles deposit totals have been rising rapidly, while New York’s have declined slightly.
And who would ever suspect that Greater Los Angeles is the nation’s largest manufacturing location, in terms of the value of goods produced? Or that manufacturing provides 22% of all regional jobs, making products as varied as sophisticated aerospace equipment and inexpensive clothing?
Although manufacturing is expected to play a declining role in the nationwide economy during the next 20 years, it will still gain an estimated 300,000 jobs. It is forecast to provide 17% of employment in 2010 in Southern California, compared to less than 10% nationwide.
Because of the recent immigrant wave, Los Angeles has some of the lowest labor costs in the country. Without this plentiful cheap labor, Los Angeles would lose much of its furniture, garment and heavy manufacturing to lower-cost locations, just as New England lost its textile industry in the 1950s and 1960s and Detroit lost a large share of the automobile market in the past decade. Wage rates in other blue-collar and service jobs in Los Angeles are kept down by the influx of Third World labor. Where else in America can middle-class families afford gardeners?
Some Los Angeles factories even undersell Third World manufacturers. Recently, a UCLA professor interested in labor conditions asked to be taken on a tour of factories in the industrial area near downtown Los Angeles, and his request was granted on condition that he was blindfolded. When the blindfold was removed, the professor found himself standing inside a large factory building with blacked-out windows. Dozens of Latino and Asian workers were manufacturing the steel wheels on which automobile tires are mounted. The workers’ only protection against dust and airborne metal particles were cloth bandannas over their mouths and noses. But the greatest shock for the professor was not the sweatshop working conditions nor the potential immigration and pollution violations; it was the label attached to each wheel at the end of production. It read “Made in Brazil.” The goods were headed for Detroit.
For better or worse, Greater Los Angeles has always been a national trend setter. Now, it seems possible that our metropolitan region is leading the way toward a two-class society, beset by an almost unbridgeable chasm between rich and poor, native-born and immigrant, educated and uneducated. The long-term social problems--not to mention the present-day ethical issues--are troubling in ways that we can hardly comprehend today.
In the short term, Los Angeles benefits from low-cost labor, which allows the region to be globally competitive, even if it is at the price of our conscience. We can easily rationalize that immigrants, legal or illegal, are better-off working for low wages here than for even lower wages in Mexico or the Philippines. But everyone knows that it is nearly impossible to live on the present minimum wage in Southern California, much less the even lower wages paid by many of Los Angeles’ small service and manufacturing employers, including private households.
Henry Ford was not exactly a social progressive, but he realized that there would be few buyers for his cars if he did not raise the wages of his workers. This set in motion a movement that is partially credited with the postwar economic boom. Employees were paid a high enough wage to meaningfully participate in the economy, which in turn fueled further growth.
Los Angeles’ evolution toward a two-class society based on a foundation of cheap labor is potentially socially disruptive, morally repugnant and ultimately economically disastrous. In the short term, the way to avoid the scenario is by increasing the minimum wage and enforcing its application. For the long term, we must continue to increase our commitment to public education to improve the recent immigrants’ chance of assimilation and economic advancement.
