VIEWPOINTS : Statistics Belie Southland’s Strength

California has finally fallen victim to the economic downturn gripping the nation, or so it would appear from the latest unemployment figures from the state Employment Development Department.

But a closer look at the dynamic nature of the regional and statewide jobs picture reveals that there are more opportunities in the Golden State--and in Los Angeles in particular--than these figures would suggest.

Belying the statewide 7.1% unemployment rate--the highest level of official joblessness in nearly five years--is a dramatic shift in the way people work, a rise in the number of small enterprises invisible to the Employment Development Department and signs of a vibrant regional economic future.

To provide a more accurate accounting and prevent unwarranted concern, the state perhaps needs to alter the way it tabulates employment figures, making a more comprehensive effort to track entrepreneurs, consultants, self-styled free-lance professionals and independent contractors.

Job seekers and economic planners, meanwhile, should look beyond official state reports and realize that a substantial and growing segment of the changing California work force is not being counted.

As more and more workers are laid off and reach career plateaus, or realize their jobs provide little or no personal satisfaction, an increasing number are leaving the corporate world behind. Up to 28 million people nationwide will run service or information businesses from their homes by the year 2000.

Far from being unemployed, these new individualists are harnessing their skills and expertise in innovative ways by becoming self-employed. Even previously button-down types are striking out on their own. According to some estimates, up to half of all aerospace workers who are sent on their way go into business for themselves.

Moreover, there is a substantial “underground” economy that accounts for further employment in such industries as construction, textiles, restaurants and many services. Although the exact extent of this underground economy is unknown, experts do say this type of employment is fairly widespread.

Yet much of this micro activity goes unnoticed by the state bureaucracy, which, economists have long noted, is notoriously poor at tracking small-business starts and independent contractors. Rather than make an effort to get complete coverage, as does the U.S. Census Bureau in its quinquennial Census of Services, state labor analysts instead base their employment projections on a sample.

Sampling is a hit-or-miss method that can result in wildly inaccurate estimates. Take the field of motion picture and television production. In 1987, state labor analysts estimated that there were 74,700 entertainment jobs in Los Angeles County, up from 63,200 in 1982. The Census Bureau, on the other hand, more accurately found that there were 99,700 people employed in the movie business in 1987, up from 62,200 in 1982.

Employment statistics, even when accurate, are never going to provide a complete picture of the job market. As I found in interviewing more than 400 industry experts and working professionals in the writing of the “L.A. Job Market Handbook,” the primary strengths of the Los Angeles-area economy are its size, diversity and resilience.

The latter bounce-back quality exists largely due to the concentration of small- to medium-size businesses that can quickly adapt to changing conditions. Of the approximately 216,000 companies in Los Angeles County, some 170,000 have nine or fewer employees. Inherent advantages such as low overhead and flexible approaches toward problem-solving enable these firms to weather turbulent times.

Los Angeles may not be immune to the inevitable ups and downs of the economy, but there is much to indicate that the region will well withstand a major downturn, no matter what news emanates from the Employment Development Department.

To place recent developments in proper context, the current slowdown in overall growth should be viewed against a backdrop of an unprecedented expansion in the mid- to late-1980s, when the public and private sectors thrived, land values soared and both unemployment and office vacancy rates in the Los Angeles area remained unnaturally low. In this light, the overheated economy of the late 1980s had to slow down sooner or later.

For the moment, the bloom may be off such heavy industries as manufacturing and construction. The related fields of real estate, architecture and financial services have also been particularly hard hit. But from an employment perspective, declines in these slump-prone fields are offset not only by the prospect of self-employment but also by ample opportunities in government, public safety, engineering, education and specialized areas of medicine and law.

Moreover, new careers are emerging in specialty areas that really didn’t exist even a decade ago. Despite uneven economic conditions and continued downsizings across a broad array of industries, fields that are almost certain to gain momentum over the next few years include the high-tech/computer industry, international trade and transportation management. New specialized careers in those fields include data security specialist, genetic counselor and transportation coordinator.

And in international trade, the Los Angeles Customs District recently surpassed New York as the nation’s busiest commercial gateway. Aggressive development of the twin ports of Los Angeles and Long Beach, as well as Los Angeles International Airport, will provide a framework for further expansion.

Despite wholesale cutbacks in selected industries, the “recession” in California, particularly Southern California, is still more psychological than real. Expected to generate some 3 million new jobs over the next 20 years, the greater Los Angeles area is likely to retain its standing as the premier job market in the country through the turn of the century and beyond.

Finally, in view of the fact that almost 5 million more people are expected to move to the Los Angeles area by the year 2010, that the region remains attractive to outside investors and that population combined with industry creates opportunity, the long-term possibilities start to outweigh the prospect of short-term loss. Those who persevere and contribute will prosper, just as previous generations of hard-working Angelenos have before them.