A Triple Whammy for California’s Economy : Recession: Changing demographics, loss of high-paying jobs and falling tax receipts signify the end of the golden years. Think global.

There will be no shortage of recovery proposals aired at this Tuesday’s economic summit on California’s ailing economy. But if the participants are honest, they will acknowledge from the outset that the state economy that produced a half-century of nearly unending boom times is gone forever. In that painful recognition is the seed of a policy of economic renewal.

California is the victim of three converging crises--economic, fiscal and demographic--that few, if any, forecasters could have seen coming.

Two industries have driven the state’s prosperity since World War II--electronics and aerospace. As late as 1987, aerospace employed almost 400,000 people; today, the figure is 250,000--and falling. Add to that 50,000 related computer and communications jobs that have been lost.

For California, the jobless number is less crucial than the nature of the available jobs. According to the UCLA Business Forecasting Project, 250,000 durable-manufacturing jobs--high technology, electronics, component suppliers--have been lost in the recession, while non-durable-manufacturing jobs, many in low-skilled industries, have remained largely unchanged.

Along with the job losses came the state’s fiscal crisis. Tax receipts, to be sure, rise or fall according to economic activity, and the weak California economy has starved government of needed revenue. Stable tax sources, like the property tax, no longer contribute as much to the revenue flow. Instead, we depend on such unstable taxes as income, corporate and sales.

Aggravating complications arise from the demographic profile of California’s work force. Population growth is fastest at the ends of the age spectrum. The consequences are unnerving: Skilled, older workers taking early retirement or leaving the state are not being replaced by equal numbers of similarly qualified employees.

Furthermore, California’s surge in population growth in the ‘80s was mainly due to foreign immigration--to such an extent that 45% of the under-8-years-old population is Asian or Latino, according to the 1990 census, but only 31% of the over-18 population. Despite hard times, foreign immigration has not slowed, because it is chiefly driven by political and economic factors in the native country. As family reunification under the 1986 immigration law kicks in during this decade, immigration may even speed up.

Throughout the remainder of this century, more and more non-white workers, many with language and skills deficiencies, will be entering the state’s work force as retirements, or other states, take away more and more highly skilled workers in the very industries that have created wealth in California.

Another way to look at this phenomenon is to consider the growing taxpayer squeeze outlined by the state Department of Finance. Until 1990, those supporting government through their paychecks well outnumbered those, such as children and the elderly, who consumed government services. A state with a growing economy produced sufficient revenues to match service demands and retain a safe budget surplus.

Then came the body blow: A state too dependent on elastic tax revenues got hit by a recession. On top of that, faster growth at the two ends of the age spectrum increased the percentage of tax receivers and reduced the percentage of taxpayers. By 1995, users of government services will equal taxpayers; by 2000, they will be the majority.

The Department of Finance estimates that 60% of state tax dollars are spent on services for young people, among the fastest growing segments of California’s population, but the segment that, by its nature, does not generate wealth.

So, for the first time in California’s history, population growth, combined with demographic change, worsens rather than strengthens its economy, a change felt in our fiscal situation. California faces a skill-shortage crisis, a fiscal crisis and an economic crisis all at the same time. There are not enough workers in high-paying, wealth-producing jobs to maintain economic strength.

But if foreign immigration and a changing international situation contribute to our woes, they also point to ways to overcome them. The most important is the international economy.

More than any other state, California reflects the diversity of Latin America, the Pacific, Asia and Europe. The California World Trade Commission notes that “California’s merchandise exports, which topped $63 billion last year, are sustaining our otherwise beleaguered economy.”

Exports were up by 11% in the first half of 1992, nearly double the national rate of export growth. In the 1980s, California opened five overseas trade and investment offices to spur this type of growth. Until the recession, California was immensely successful in attracting Asian investment.

Structural changes are making global competitiveness even more crucial. High- technology and information-age products are among California’s most valued commodities, and they compete on the international stage. While many defense-oriented manufacturing jobs are gone forever, high-paying jobs in the industries of the mind can take their place. Our future is in areas like software and biotechnology.

The trick is for the economy to grow, but that’s not easy when so many institutions shackle growth. The workers’ compensation system, for one, will probably never be reformed. Junking it and starting over may be preferable.

There is much talk about streamlining environmental laws, but not yet the political will to elevate global competitiveness to the same level as environmental protection. Yet only an economy generating wealth can afford to pay the price for clean air and water.

Most important is a better understanding of the structural changes we are undergoing because of demographic upheavals, job losses and shifting skills. People need to understand that the current malaise will not end anytime soon, because it is driven by factors beyond our control.

It won’t be easy for the participants at the California economic summit to resist the temptation to replay and refight the economic policy disagreements of the past. But the political will to do so must be one measure of their success--and a good start to developing a strategy for economic renewal.