Decent Wages for Economic Growth : Government must help minority businesses, which tend to be in retail and service rather than manufacturing.

Mayor Richard Riordan knows what it takes to keep small business in Los Angeles; witness his recent success in persuading a Venice ceramics firm not to leave the city. But stopping the exit of business must go beyond such personal appeals to a long-term economic strategy. This is a formidable task, since between 1991 and 1993, Los Angeles County lost more than 100,000 jobs and the L.A. unemployment rate hovers at 10%.

Strategizing for quality job growth is rarely tackled by Republicans, who view government as the nemesis of private business, creating bureaucratic mazes that prevent entrepreneurs from risking capital. Also, it’s easier to attack the bureaucracy than to develop collaborative strategies to enhance the mutual interests of businesses and workers. Yet without moving forward on this latter point, any job growth will not result in stabilizing the community. Los Angeles must have job growth accompanied by a steady increase in real wages so that everyone benefits from the mayor’s business plan.

Riordan does have the leadership skills that will allow him to move beyond partisan politics to create jobs. Indeed, much of Riordan’s success comes from his ability to take ideas from both parties and mold a consensus that disarms critics because of its balanced view. This strength could easily allow him to develop a game plan for job growth that goes beyond streamlining government, a mantra that may win elections but provides little hope for most Angelenos, who depend on wage income.

One way to stimulate quality job growth is to use the tax system to reward entrepreneurs who provide those jobs. Riordan could work with the governor to support such a plan. A good model would be the one proposed by Kathleen Brown’s campaign, the job tax credit for business. This innovative program would provide companies with tax incentives for each new job that pays $17,600 to $60,000 a year; it would reward businesses that commit to quality jobs for Californians. Another Brown proposal that bears consideration is her “California First” recommendation, which provides established California companies with a competitive edge over other bidders for public projects.

Riordan also must develop quality jobs in the inner city. The future economic stability of the city is linked to stimulating small business to stay rather than move to the suburbs. Here Riordan must focus on further developing opportunities for both existing and new minority entrepreneurs. Much of the growth within the minority-business sector is in retail and services, reflecting the national trend. A profile of Latino businesses from the recent census indicates that more than half are in retail and service sectors. Latino businesses in Los Angeles County provide about a half a billion dollars in annual payroll.

Unfortunately, many of the tax strategies that have been developed do not benefit the majority of Latino entrepreneurs, as the emphasis has been to provide tax breaks for manufacturing rather than service and retail. This needs to change. Here again, Brown has proposed providing direct tax relief to minority entrepreneurs, something that Riordan should consider. Brown’s California Start-Up Business Tax Moratorium allows a new business to pay no taxes on income generated during its first year, with a gradual four-year phase-in to complete tax liability. This policy rewards entrepreneurs for the high risk they take during their first years and moves in the right direction in not targeting manufacturing.

Riordan understands small-business needs, but now he must address the needs of those workers who have suffered the brunt of California’s recession. He must also develop a focused plan for minority entrepreneurs, as they will be key to the revitalization of the Los Angeles economy. In an era when it is politically popular to degrade immigrants and ignore the working poor, Riordan must select strategies that benefit all Angelenos. The city’s economic growth will be rooted not in corporate America, but in small businesses and workers.