Tough Times Just Seem to Get Tougher : Economy: Unemployment is up, sales are down, and city governments are barely staying afloat. Few people in the region see any signs of an impending turnaround.

A few months ago, a national chain planning to open one of its patented one-stop shopping centers in La Puente advertised in a local paper for 195 boxers, checkers, clerks and managers.

Four thousand people applied.

For the record, officials of the company pronounced the massive turnout for mostly $9-an-hour jobs “an indicator of the community’s interest” in Smith’s Food & Drug Centers. But privately, they conceded that there was another overriding explanation: recession.

Good jobs are just as tough to come by in the San Gabriel Valley as elsewhere in the massively stalled U.S. economy.

It was just six or seven months back that economists were talking about the imminent “bottoming out” of the recession of 1991. Despite a bright spot or two, the indicators continue to be as grindingly gloomy in the San Gabriel Valley as they have been in other parts of California and the nation.

Unemployment is up and the welfare rolls are growing as a result; sales are off and city governments are going through contortions to stay afloat. Demands on charitable organizations are much higher than last year, say advocates for the poor and the homeless.

Many San Gabriel Valley people still await a sign that, in fact, a turnaround is somewhere down the road.

“I haven’t seen any change yet,” said Lynne Best, who was laid off twice in the past 1 1/2 years. The Temple City resident worked in an industry, insurance, that is particularly vulnerable in a recession.

“The last thing people buy when hard times hit is insurance,” said Best, 45, who finally found a job in September as a church secretary--but at $1,000 a month less than she had been making.

“All year I kept hoping that I’d get back into a decent paying job, but it never happened,” she said.

Business interests in the region still rail about gloom-and-doom scenarios portrayed in newspaper articles and on television.

“What about the 93% of the work force that still has jobs?” asked Bruce Ackerman, executive director of the Pasadena Chamber of Commerce. “The money hasn’t all dried up. It amazes me to see how much is said (about recession) in the media.”

Nevertheless, joblessness has increased across the board in the region’s cities, with even upscale San Marino edging up to 2.5% unemployed, from 1.9% last year.

Much of the unemployment appears to be of the “imported” variety, with residents of the area’s bedroom communities being laid off from jobs in Los Angeles and elsewhere.

“Part of the recession commutes into the San Gabriel Valley,” said Cal Poly Pomona economics professor George Galbreath.

But major employers in the region--such as General Dynamics, the Pomona-based missile maker--are scaling back too.

“We’ve been down before and bounced back up,” General Dynamics spokesman Eric Solander said. “But I have a feeling it’s not going to happen this time.”

The firm expects to pare down its present complement of 4,500 workers to about 4,000 next year, Solander said.

As the end of the Cold War approached, General Dynamics eliminated hundreds of jobs. Four years ago, the firm employed 10,800 in its Pomona and Rancho Cucamonga plants. By August, 1990, when the company consolidated into one plant in Pomona, it was down to 7,400 workers.

Despite unemployment increases in all San Gabriel Valley cities, however, only six out of 25 cities surveyed in October exceeded the Los Angeles County rate of 7.8%. Hardest hit was El Monte, with 10.9% unemployed. Baldwin Park, with 10%, and Pomona, with 9.7%, were not far behind. The rate was 8.1% in La Puente--home of that brand-new, one-stop shopping center.

San Gabriel Valley advocates for the poor say more people have been seeking their services.

“The last couple of months, our numbers have tripled,” said Sylvia Franco, director of El Monte’s Interfaith Community Outreach, which passes out surplus food and hand-me-down clothing to the needy. “We’re seeing 8,000 people a month now.”

Patients at the organization’s tiny medical clinic--a “primitive sort of Third World program, with one doctor,” Franco says--have increased from 30 to 250 a month in the past year.

Meanwhile, the Salvation Army’s Pasadena Tabernacle had to call for emergency donations in order to accommodate all the families requesting Christmas dinner baskets and toys.

“We had people who were givers last year coming in for assistance this year,” said business director John Jones.

Retailers are hurting too. Sales in area stores continue to fade, with the predictable exception of such recession-immune items as books or do-it-yourself home improvement materials.

Sales of construction supplies are way down, says analyst Lloyd de Llamas, and the car business locally has been as cold as anyone can remember. Established dealers, such as Longo Toyota in El Monte, appear to be weathering the storm. But others have pared down operations or shut down.

In Glendale, car sales plummeted from $140 million in the first six months of 1990 to about $92 million during the same period this year.

De Llamas’ firm, Glendora-based Hinderliter, de Llamas & Associates, said San Gabriel Valley cities generally suffer more than others because of their dependence on auto dealerships and construction suppliers as a principal source of sales tax revenue.

Indeed, there seems to be a bunker mentality in city halls across the area. South El Monte, a largely industrial city of 21,000, has been cutting back programs and staff as it lost industry for the past seven or eight years now, Assistant City Manager Steve Henley said. He added that if another round of cutbacks is needed, it will mean drastic losses of service to residents. Already, the city is making do without vacation backup in most departments, he said.

“If I go on vacation, there’s nobody here to give sewer information, nobody to review building plans,” Henley said.

Despite these measures, hard times persist. The city’s old-line industries, whose manufactured products generated sales tax revenues, are giving way to garment makers, whose products are sent--untaxed--to larger companies in other cities.

“It’s getting so that the reduced revenues are starting to impact unforeseen areas,” Henley said.

Thus, a recession-driven drop in gasoline consumption and the resultant loss of gasoline tax revenues have reduced the city’s share of state transportation subsidies.

“Out of the blue last month, the county Transportation Commission tells us our estimated revenues are down by $52,000,” Henley said. “That’s a good chunk of the money we use to purchase buses and pay bus drivers. We only had $250,000 to begin with.”

Other cities have similar complaints.

Baldwin Park, whose troubled finances led in September to a bond rating of BBB-, the lowest investment grade rating, continues to sputter along. The city expects a 15% reduction in sales tax revenues this year, and it has been losing more than $15,000 a month in hotel bed taxes because of ongoing litigation with the operators of the San Gabriel Valley Hilton Hotel.

Covina has laid off 27 city employees and eliminated six other jobs by attrition, for a total reduction of more than 13% of the city’s work force since mid-1990.

“We projected a no-growth level of sales tax revenues, but it has been even worse than that,” said Finance Director Stan McCartney.

The big revenue generators in town are car dealers and the Sears and Target retail outlets.

Even Pasadena, one of only a half-dozen San Gabriel Valley cities that recorded real revenue increases in 1989 and 1990, is looking to the future with trepidation. Revenues have been static, says Finance Director Mary Bradley, as personnel costs, 74% of the city’s budget, continue to rise.

“We don’t want to paint a really horrifying picture,” she said, “but unless costs stay the same as revenues, we’re going to be in the hole.”

Many city administrators have been tackling their revenue problems with old-fashioned remedies--such as hiring freezes--as well as some innovative ones.

The city of La Verne, instead of paying salary increases it could not afford, elected to go to a four-day workweek, closing City Hall on Fridays.

“It was a win for the workers, who get another day off,” said Assistant City Manager Jeff Allred. “And it was a major win for the city, which was able to freeze salaries and other expenses tied to cost of living.”

The real estate business, a longtime sign of prosperity in the region, has been slow. A mini-boom that hit much of the area last spring, particularly in the Western San Gabriel Valley, appears to have flattened out.

In Pasadena, for example, real estate brokers had closed on 1,107 single-family and condominium units by the end of November, 1990. Closings through November of 1991 were just 1,000.

“The buyers are there, but they’re willing to step up to the table only if they see a truly attractive value,” said William Podley, president of Pasadena-based Podley, Caughey & Doan Associates.

Other areas, such as the central San Gabriel Valley (Covina, West Covina, El Monte, San Gabriel and City of Industry), are doing better, with mild increases in closings. But real estate agents all over the area say that the attitude is largely wait and see.

Most-affected by the recession have been properties in the $300,000 to $800,000 range, Podley said.

“That’s the discretionary move-up range,” he said. “When the economy is sluggish, people start saying, ‘We don’t have to make a move this year. Let’s wait until I feel more secure about my job.’ ”

One bright spot in Glendale and Pasadena has been the market for offices. As far as such space is concerned, the Burbank-to-Pasadena corridor represents “probably the best market in Southern California,” said Kirby Greenlee, a broker for the national real estate firm of Grubb & Ellis.

An expansion-minded entertainment industry and a shortage of office buildings because of local growth restrictions have kept vacancy rates down, Greenlee said. The rate is 10% now in Pasadena; 15% in Glendale. Downtown Los Angeles, meanwhile, has about 18% office vacancy, and the number jumps above 20% if offices available to sublease are counted.

“The demand is still there,” Greenlee said of Pasadena and Glendale. “In other markets, there’s no demand at all.”

Some businesses continue to do well. For example, a Good Guys electronics store that opened in Pasadena two months ago has been doing better than expected, said Phillip Lee, the national chain’s regional manager.

“Maybe home entertainment is a little more economical than going to the movies regularly,” he said. “In times of recession, you make one investment, and you can have a system that compares with the best movie theaters in Los Angeles right in your living room.”

Vroman’s Book Store on Colorado Boulevard in Pasadena has been doing a steady business through good times and bad, says owner Joel Sheldon.

“A book is a small unit of sale, compared to a house or a car,” Sheldon said. “I think there’s also a perceived value in the book itself. A grandmother who doesn’t have that much wants to give a gift. There’s the perceived value of giving education, of giving something valuable, to her grandchild.”

Local economists and financial consultants tend to take a long view of current conditions.

Recessions are cyclical, a normal part of a free market economy, says Gary Pia, president of Pasadena-based Capital Growth Management, a financial consulting firm.

“The serious investor doesn’t make the mistake of thinking this is necessarily what we’re going to be experiencing for the next five to 10 years,” he said, “any more than he expected the heady days of the mid-1980s to last forever.”

“A characteristic of recession is that people lack confidence,” added economist Galbreath. “People dwell on things; they don’t spend much money. If everybody thought that things were lovely and went out and blew their wads, then we wouldn’t be in a recession.”

What can ordinary people do about the recession? Not much more than wait it out, Pia said. The financial consultant then pondered the question for a moment.

“You can avoid incurring debt,” he said. “If you don’t have any debt, don’t get any. I don’t mean to pontificate about buying dinner with plastic. But if you have to make sacrifices, there are far better ways to do it than paying those horrendous interest rates on credit cards.”

San Gabriel Valley Unemployment Unemployment is up almost everywhere in the greater Los Angeles area, according to a comparison of the unemployment rates in October, 1989; October, 1990, and October, 1991. All numbers are percentages.

City 1989 1990 1991 Alhambra 2.8 4.1 5.2 Altadena 3.5 5.2 6.5 Arcadia 1.9 2.8 3.5 Azusa 4.4 6.4 8.0 Baldwin Park 5.5 8.0 10.0 Claremont 2.7 3.9 5.0 Covina 2.8 4.2 5.3 Diamond Bar 2.3 3.4 4.3 El Monte 6.0 8.7 10.9 Glendora 2.7 4.0 5.1 Hacienda Heights 2.6 3.8 4.9 La Puente 4.4 6.5 8.2 La Verne 2.4 3.5 4.4 Monrovia 4.2 6.1 7.7 Monterey Park 3.2 4.6 5.9 Pasadena 3.4 5.0 6.3 Pomona 5.3 7.7 9.7 Rosemead 4.4 6.4 8.1 Rowland Heights 3.4 5.0 6.4 San Dimas 2.8 4.1 5.3 San Gabriel 3.5 5.2 6.5 San Marino 1.3 1.9 2.4 Sierra Madre 2.1 2.9 4.0 Temple City 2.4 3.3 4.5 Walnut 2.7 3.7 5.0 West Covina 3.3 4.5 6.1 Los Angeles County 4.2 6.2 7.8

Source: State of California, Employment Development

Department Employment Data and Research Division