County on the Edge : Job Losses Would Hit State Hard : Economy: Proposal to slash Los Angeles County’s work force by 18,000 would damage an already fragile California recovery, experts say.
Like a punch-drunk boxer staggered by yet another hard jab, California’s economy would suffer a jarring blow if Los Angeles County cuts more than 18,000 jobs to help narrow its massive budget deficit, economists said Monday.
The huge cutbacks would place yet another hurdle in front of a state economy already struggling to overcome tepid job growth, a lackluster real estate market, waning consumer confidence and economic troubles caused by the furious spring storms, they said.
“We’re very much concerned” about the cuts, said Larry J. Kimbell, director of the Business Forecasting Project at UCLA’s Anderson Graduate School of Management. “L.A. County [represents] about a third of all the jobs in the state, and to do something this huge in L.A. County is going to show up in California’s” overall economic health.
The cuts, which would eliminate 20% of the county’s work force, were part of a stark budget proposed by the county’s chief administrative officer, Sally Reed, in order to close the $1-billion deficit.
Unlike Orange County, which got into financial trouble because of disastrous investment practices, Los Angeles County has a more fundamental problem: It spends more money than it receives.
Reed’s blueprint calls for a widespread restructuring of county government that also would include deep cuts in services.
Economists cautioned that the proposal is just that. The number of Los Angeles County jobs that will actually be cut is still subject to political crosscurrents. They also said it is not clear how many of the jobs would be cut by early retirement and other forms of attrition rather than by actual layoffs.
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Regardless, the lost jobs would “be a significant hit” to California’s economy, said Jack Kyser, chief economist at the Economic Development Corp. of Los Angeles County, a private jobs-promotion agency.
“This certainly takes some steam out of what was already a modest recovery” in California, agreed Gary Schlossberg, an economist at Wells Fargo Bank in San Francisco.
Besides the jobs lost by county workers, analysts say an equal number of “indirect” jobs--at suppliers, restaurants, retailers and other firms that serve county workers--might also disappear.
Thus, in the worst-case scenario, about 36,000 jobs would vanish--a number equivalent to nearly one-quarter of the 148,200 net jobs California created in 1994.
And even people who still have jobs would have less confidence in the economy and be less willing to spend, Kyser said.
An example: Economists have been waiting for more first-time home buyers to enter the market because mortgage interest rates have fallen markedly in recent months. But buying a house always “takes courage,” Kimbell said, and the specter of more huge layoffs in the region “is not the kind of thing that would inspire bravery.”
Yet for all the pain the job cuts would cause in a county that was hit hard by the latest recession, they would not by themselves throw the state into a new recession, the economists said.
“While it’s a very large number of jobs, I don’t think it alone can derail” the economy’s expansion, said John Hekman, an analyst at Economic Analysis Corp. in Los Angeles. “But this is an awfully big chunk to absorb.”
Kimbell, too, said the county’s woes are “not enough to cause a recession in the state. But it wouldn’t be much of a tonic, either. People are already feeling vulnerable.”
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Cutting Jobs The proposed Los Angeles County budget released by Chief Administrator Officer Salley Reed would eliminate 18,255 positions-or one out of every five county jobs. *
Current work force: 88,811 Proposed job cuts: 18,255 Revised work force: 70,556 *
Proposed cuts: 20.5% *
The deepest trims would be in the largest departments. Health Services: 12,627 Social Services: 2,339 Probation: 1,034 Sheriff: 452 Children and Family Services: 276 Assessor: 260 Public Defender: 257 Superior Court: 244 District Attorney: 182 Public Library: 172 Parks and Recreation: 169 Municipal Courts: 110 Source: L.A. County Chief Administrative Office
