The Trouble With Success : Economy: After decades of nearly unrestrained growth, Southern California is suffering severe side effects. Job opportunities and the quality of life are at stake.

Off a gritty street near downtown Los Angeles, across the Southern Pacific railroad tracks, workers toil in squat factories for a reason known to all who ever packed their bags and journeyed to Southern California: the wish for a better life.

In the 1990s, the laborers in this neighborhood of furniture, chemical and paint plants may find the wish harder to realize.

“I can see a snowball rolling at us--absolutely,” declares Stephen Wise, whose Furniture Profiles factory is in Boyle Heights, the same area where his grandparents got their start after leaving Germany and Lithuania in the early 1900s.

Wise worries that tougher clean air rules may raise his factory’s costs so much that it won’t make sense to keep it here. In fact, finding a way to repair a tarnished environment without hurting people such as Wise’s Latino work force is just one in a series of dilemmas that face Southern California in the coming decade.

Call it the price of success: jammed freeways, polluted air, out-of-reach home prices, masses of poor and unskilled people lured here for opportunities they do not have at home.

When it comes to running an economy, Southern Californians have done it their way , a free-wheeling brand of free enterprise in a climate of weak, splintered local government. The result has been fabulous economic growth but increasingly severe threats to the quality of life.

In the 1990s, Southern California may have to choose between the laissez faire style of the past and confronting its growing pains in a more aggressive, coordinated manner.

“Under every leaf you turn over, there’s a sacrifice somebody’s going to have to bear in order to solve the problem,” said Richard Weinstein, dean of UCLA’s graduate school of architecture and urban planning.

Unsolved, the problems threaten to cause slower economic progress in a region legendary for providing its residents the chance for upward mobility. Among the growing pains:

- Image problems, arising from media coverage of Southern California as a place of stalled traffic, bad air and violent crime. “I was just trying to recruit a guy from Cleveland to come to Southern California,” lamented John S. Peterson, executive director of the Russell Reynolds executive search firm. “He wouldn’t talk to me.”

- Increasing numbers of residents who lack the ability to read, write, add and subtract. The economy continues to spawn new jobs but has little productive use for the many who can’t perform them.

- Stratospheric real estate prices. In Los Angeles and Orange counties last year, only one in five households owned their home. Statewide, home ownership droped more in the 1980s during any similar period since the Great Depression, according to the California Assn. of Realtors.

- An imbalance between where people live and where they work. The search for affordable housing has drawn many to less developed areas, causing excruciating commutes. That cuts into time--and productivity--on the job.

- Overburdened public schools, transportation and other increasingly strapped public services.

“The ‘90s are going to be a period of adjustment,” warns David G. Hensley, a UCLA economist. “We feel that the state as a whole--particularly here (Southern California)--has lost attractiveness relative to other areas.”

In the adjustment, Southern California gradually will become something different from what it has been. Old-time residents may mourn the loss of a life style that once was roomy by Eastern standards but now faces inexorable forces of urban crowding. Immigrants may have to scramble harder to get ahead than did their older brothers and sisters.

For more of the middle class, the California dream will take the shape of a modest house in a desert community that is a 70-mile drive from the nearest ocean breeze.

“From a quality-of-life standpoint, Southern California is a great place to live if you have a lot of money,” said Kelly D. Conway, a Newport Beach native who is president of Telcom, a telecommunications firm in Pomona. “But it becomes increasingly inconvenient if you’re middle or lower class.”

The region is hardly in peril. In the 1990s, it will continue to close in on New York as the nation’s largest economy, propelled by international trade, diverse industry and a rich consumer base. Most industries will spawn new jobs--defense is a notable exception--but at lower rates than in the 1980s.

Indeed, some foresee robust growth on the horizon, with a helpful push from business links to Asia: “I would think the ‘90s are going to be an enormous boom for Los Angeles,” said Anthony Pascal, a senior economist at RAND Corp., a think tank in Santa Monica.

Right now, Kaiser Permanente has 3,000 job openings in its health-care system--to name just one employer. For all the mystique of Silicon Valley or Boston’s Route 128, Southern California remains home to the largest concentration of high-tech industry in the world, according to Allen J. Scott, a UCLA geography professor.

And technology is just part of the story. In the shadow of downtown Los Angeles, a seemingly endless stretch of factories makes everything from mattresses to machine parts, guitar cases to gym equipment. Its existence is even more remarkable, considering that industrial smokestacks dropped like dominoes throughout America in the 1980s.

“The Sun Belt is the heartland of the American economy, and Southern California is the capital of the Sun Belt--far and away,” Scott said.

Not surprisingly, the region remains a magnet for people. During the 1990s, almost 2 million more will live in Los Angeles, Orange, Riverside, San Bernardino, Ventura and Imperial counties, pushing the population toward 16 million, according to the California Department of Finance. Of these, more than half a million will be immigrants, largely from Mexico and other Latin American nations, the Southern California Assn. of Governments projects.

But will tomorrow’s arrivals enjoy the same upward mobility as those of yesterday did?

Inside his Guatemalan grocery shop on Pico Boulevard, Oscar Mansilla says it won’t be easy. A farmer’s son, Mansilla moved to Los Angeles from Guatemala City to seek his fortune in the 1960s. He got a minimum-wage job assembling auto brakes in Irvine, rose through the factory ranks--and saved his money.

Today, he owns two grocery stores near downtown and a hilltop house in Silver Lake.

“If you want to be rich, you can do it,” said Mansilla, 51, a polite and friendly man, during an interview by a pinball machine. But, as customers in the Latino and Korean neighborhood looked over his soups, beans, powders and other Central American products, he continued: “It’s harder now. There’s too many people. Too much competition. Too many stores doing the same thing.”

Entrepreneurs aren’t the only ones who may have to push harder. To their chagrin, employers are finding that growing numbers of employees--including many native-born Americans--are deficient in basic jobs skills.

Kaiser Permanente, for example, finds it harder than ever to get new employees with a command of English, mathematics and the ability to think critically. “The worst-case scenario for me is that if this were to continue for 15 or 20 years, the entire entry-level work force would be largely untrainable,” said A. D. Bolden, a vice president with the health-care firm.

Some of the worst growing pains will be caused by the unabating influx of people. It will mean more cars and trucks spewing out exhaust fumes, factories emitting particles, overall stress on a fragile environment. As a result, Southern Californians will have to attempt a high-wire feat in the 1990s: trying to reverse environmental damage without displacing factory workers and others struggling at the bottom of the economy.

Already, a spirited debate is in the air. In March, air quality officials proposed more than 100 restrictions on oil companies, factories using paint and solvents, automobiles and other sources of pollution. The measures--planned for the 1990s and after--would pay off handsomely, officials say: more than $9 billion yearly in health benefits alone, once they are in place.

In addition, they cite the intangible gain of transforming the Los Angeles Basin into a place of breathable air and vivid views. Such a change, goes the reasoning, would stimulate the economy by attracting people and businesses that currently stay away to avoid the smog.

“Clean air will bring a new gold rush to Southern California,” predicts Patricia Nemeth, a deputy executive officer with the South Coast Air Quality Management District in El Monte.

But not everyone is so sure. Depending on how the controls finally take shape, some employers may choose to relocate; others may pass on higher costs to their customers.

“I see it as a very big question mark in the direction of the Los Angeles economy in the next 20 years,” said Anthony J. Finizza, chief economist at Atlantic Richfield Co., which may face a costly conversion of its equipment to handle cleaner-burning motor fuels.

For tens of thousands of the poor, a critical question is how smaller manufacturers, especially users of paint and solvents, will respond. Southern California’s ability to retain its low-tech industrial base has meant jobs for people such as John Enriquez, an Arizona native who grew up in Guadalajara, Mexico. Over the years, Enriquez, 60, has worked sanding, spraying and applying wood filler in furniture factories.

Today he is plant manager at Wise’s Furniture Profiles, making $50,000 a year and in charge of 68 workers.

“This is an industry that permits people to learn a trade,” he said in a deep, measured tone. “You can learn and you can progress.” Cutbacks, he went on, “would have a tremendous effect on all of us, including me.”

A backlash to the proposals may be starting. After the new proposals came out, Eric Morgan Inc., a furniture plant in Vernon, laid off 200 workers. Chairman Carl H. Schulman sold his home in Woodland Hills, moved to San Diego County and set up shop in Tijuana.

“Somebody’s going to turn around a decade from now and say, ‘What the hell did we do?’ ” said Schulman, maintaining that he previously had invested “hundreds of thousands of dollars” in equipment to prevent stains and lacquer from polluting the air.

Schulman offered some employees the chance to stay on. But leaving the area seemed impractical to Gilbert Chavez, a forklift driver with a 10th-grade education who owns a home in Montebello. “I said no. My wife said no,” recalled Chavez, 52, who was born near the site of Dodger Stadium. “Why should I sell my house and go down there for?”

Yet Chavez, who was making $6.70 an hour, acknowledges the risk of staying put. “It’s going to be hard for me,” he said. “This (job) is all I know. Maybe I’ll try in the post office to be a janitor or something.”

Non-polluting companies face their own problems. More than ever, strains on an already jammed freeway system will irritate motorists and eat into time on the job.

Executives at Telcom, for example, considered a move to Irvine in 1987, an area far richer in high-tech business services than Ontario, its location at the time. But Telcom’s work force balked.

“We would have had a tremendous turnover of people who wouldn’t make the commute,” recalled Conway, U.S. president of the French-owned firm. Telcom settled on Pomona--to the relief of its 110 workers. Yet even now, it employs a vice president of sales and marketing who lives in Dallas. “He wouldn’t want to move out here, and one of the main reasons is the cost of housing,” Conway said.

Clearly, Southern California’s once limitless supply of land has become limited.

When Defense Systems Corp. of Torrance needed to buy 11 square miles of property for an extraordinary expansion, it searched in Southern California, which long had supplied it with an experienced labor force. But it picked a site in Nevada, recalled William O’Dell, a vice president.

“You’re talking hundreds of thousands of dollars--or millions--an acre,” in Southern California, O’Dell pointed out. Defense Systems--which found its giant tract east of Reno for “$2 million to $3 million”--recently hired 140 workers there and is continuing to expand.

The quest for affordable space is triggering new growth away from established, older communities in Los Angeles and Orange counties and to places thought of as the boondocks until quite recently. In the 1990s, more employers will join the migration.

But the majority of jobs continue to be generated in Los Angeles and northern Orange counties, a troubling imbalance that will make traffic and overall crowding even worse in the future.

“We’re still having people move here faster than jobs,” notes Stephen Albright, president of Keep Riverside Ahead, a nonprofit economic development effort.

Others are abandoning the area altogether. Obscured by the huge immigration from abroad, a surprising exodus seems to be taking place from within. Since the 1970s, the number of Southern Californians moving out to other parts of the West has surpassed the number moving in from those areas.

Evidence is sketchy, but those leaving seem to have above-average educations, and the trend may be accelerating. “A lot of it is, they’re just going home,” observed James T. Minuto, a program manager with the Southern California Assn. of Governments.

It is, perhaps, just a modest trend, but some companies wonder what’s going on. Minuto got a telephone call recently from a national truck rental firm that wondered why so many more people seemed to be renting trucks to leave California than were renting trucks to come here. “They were having trouble keeping trucks in California,” he said.

Of those who remain, many residents are fighting as never before to preserve a less crowded, less stressful life style. After all, much of what distinguished Southern California--available land, lack of congestion, relatively low crime--is fading. Many people moved to the region for those very advantages.

Yet underneath the slow-growth movement, some argue, is an economic contest between those who have attained a certain life style and others still scrambling up the ladder.

“Growth control is an extremely selfish approach,” argues Charles R. Adrian, professor emeritus of political science at UC Riverside and a California historian. “I don’t think it will work or should work. I don’t think you can send people away just because you got here first.”

The emerging scuffles between those trying to preserve a standard of living and others trying to achieve one are the sorts of policy dilemmas that Southern California will face increasingly in the coming years. But unlike the past, economic growth may not be enough to pay for the big improvements needed in education, transportation and other public services.

“Southern California will have to clean up its environment, repair its infrastructure and improve its schools on a pay-as-you-go basis,” writes Harold L. Hodgkinson, a population expert and consultant to Arco. “This is a radical idea, as Californians, being younger than the rest of us, have always imagined that they could get good roads, libraries and schools without paying taxes. They still believe this.”

Others question whether the fragmented collection of local governments is up to the formidable task of conquering the demons that threaten future economic progress.

UCLA’s Weinstein contends that single-interest bureaucrats, such as air quality officials, will need to consider the broader social implications of their acts more than ever.

“Somebody’s got to say that when jobs are threatened, job training programs are at least considered,” he said.

Few believe that Southern California will lose all its economic vitality. Even if the region muddles forward with strapped public services and an overburdened infrastructure, it will remain a powerhouse relative to other areas.

Tougher environmental measures, for instance, may spawn new industries for pollution-control technology. Land-use restrictions will create opportunities for engineers and land planners. Business services should grow with the overall economy. Pacific trade should continue to boom and provide a key source of growth. Even the defense retrenchment will be offset somewhat by new orders for civilian aircraft.

On Pico Boulevard, when customers ask Oscar Mansilla whether they should launch a business of their own, the Guatemalan grocer never discourages them. Things are getting tougher than they used to be, but people should take a chance, he advises with time-tested wisdom, “if you’ve got courage--and you work hard.”