Job Cuts Dash Dreams for Middle Class
Before the Northridge earthquake, the San Fernando Valley was rattled by events half a world away. When the Soviet Union collapsed and the Cold War ended, the Valley’s industrial base began to implode.
Between 1989 and 1995, the Valley lost tens of thousands of manufacturing jobs, mostly in aerospace and defense. And while many in aerospace hung on to their jobs or landed on their feet elsewhere, thousands of jettisoned workers remain unemployed or stuck in jobs that pay far less than their former wages.
The result is an increasingly anxious middle class, forced to scramble for jobs at a time when the Valley’s surging poverty rate exceeds that of the rest of the country.
In thousands of Valley households, any unexpected expense threatens financial crisis, say social service workers and community leaders.
Had they been dumped on the job market gradually instead of all at once, the situation might not be so bad, analysts say. As it is, many are fighting to save their homes or have already lost them. And they face the painful possibility that life may never be as it was in the past.
They are struggling to “maintain their financial obligations, and through circumstances entirely beyond their control, they are reduced to rubble,” said Steven J. Gorman, a former aerospace worker from Canoga Park who has been laid off twice in recent years. He currently works for a fraction of his former salary.
Gorman, 48, knows whereof he speaks. Married with an infant son and a stepdaughter, he and his wife have no health insurance and are in danger of losing their home. “Is a roof over a person’s head a right or a privilege?” Gorman asked bitterly.
“Apparently, it must be a privilege the way things look today.”
Nationwide, about 25% of all aerospace jobs were eliminated between 1989 and ‘94, according to a Rand Corp. study. California, with 25% of U.S. aerospace employment, saw 40% of those jobs disappear. But the epicenter was Los Angeles County, home to about 10% of all the workers in the industry--nearly half of whom lost their jobs.
The San Fernando Valley took a heavy hit. Lockheed closed its giant Burbank complex, slashing 12,000 jobs there and in Calabasas and Palmdale. Rockwell International pared 3,800 employees at its Rocketdyne Division in Canoga Park. The Hughes Missile Systems Group, whose Canoga Park plant had a peak employment of 3,500, closed the plant and moved to Tucson. Litton Industries trimmed its work force and absorbed part of Teledyne Inc., resulting in combined reductions of about 1,800 local jobs for the two firms. ITT Corp. jettisoned about 1,100 workers in Burbank, Chatsworth and Van Nuys.
The bleeding didn’t stop with the major defense firms, because hundreds of their suppliers--including parts makers and machine shops--also laid off workers.
The contraction wasn’t limited to aerospace, either. In 1992, General Motors closed its Van Nuys auto manufacturing plant, which had employed 2,600. And last year, personal computer maker Packard Bell Electronics, which had a payroll of 1,500, left the Valley for Sacramento.
Altogether, employment in aerospace and high technology manufacturing in Los Angeles County shrunk from about 274,000 jobs in 1988 to 135,000 last year, according to a report by the Economic Development Corp. of Los Angeles County. Jack Kyser, chief economist for the group and author of the report, estimated that about 30% of those jobs--or more than 40,000--were lost in the Valley.
Job losses, in turn, have fueled a real estate depression that has helped some first-time home buyers--but has also slashed the net worth of thousands of blue- and white-collar families whose only major asset is their homes.
Unemployment in the county is about 3 percentage points higher than the national rate, but the problem isn’t limited to joblessness. It also involves the jobs that are replacing the high-wage work that has disappeared.
A computer analysis of private-sector employment in the Valley shows that wages fell about 4% between 1987 and 1992, adjusted for the rise in the cost of living. That figure probably understates the drop in purchasing power, because the number of manufacturing jobs continued to fall after 1992.
The wage comparison was calculated by The Times from data compiled by the Stanford Research Institute for the Valley Economic Development Center. According to the data, the number of jobs in the Valley stayed virtually constant from 1987 to 1992--falling from 632,970 to 632,599. In nominal terms, the average annual salary rose about 17%, from $23,094 to $27,079.
But the cost of living in Los Angeles increased 25.5% during that five-year period, according to the U.S. Department of Labor. When adjusted for inflation, real wages fell.
The comparison reflects employment loss in such high-wage categories as industrial machinery, transportation equipment, electronics, and aircraft and parts--with corresponding increases in lower-wage jobs.
The decline in real wages “doesn’t surprise me,” said John Rooney, president of the Valley Economic Development Center. “I think that everybody has suspected that this is happening because of the loss of manufacturing jobs and the increase in service jobs.”
Jobless claims in the Valley have declined from the peak years of 1992 and 1993, “but the job market is a lower-paying one than it was before,” said Dolores Robbins, a research analyst with the state Employment Development Department.
The recently announced redevelopment plan for the General Motors site illustrates the dilemma.
The plan envisions a complex of retail stores, restaurants, movie theaters and manufacturing that could employ about 2,000 people. But General Motors, with its larger payroll, paid three or four times the hourly wages that will be the norm at the new retail complex.
The entertainment industry, a high-wage business that is expanding in the Valley, has been a vital counterweight. For the most part, however, displaced aerospace workers have been unable to take advantage. In fact, as they struggle to get back on their feet, aerospace workers carry heavy baggage, say officials of employment and retraining programs.
Accustomed to earning $18 or $20 per hour with a full range of benefits, they must compete for jobs against younger rivals who are happy to make $14. Whether fairly or not, aerospace also carries a stigma that colors hiring decisions, said Kyser.
According to the economist, aerospace is widely viewed as an ivory tower where “there was no consideration about cost or performance” and workers were oriented to serving “a very, very . . . eccentric customer.”
Moreover, the salaries--or former salaries--of aerospace workers often scare off prospective employers, said Don Nakamoto, former research director for the International Assn. of Machinists in Burbank.
Nakamoto observes that some employers are reluctant to invest the time to train aerospace workers, expecting them to leave at the first chance to regain their previous salaries. At one time, this might have been a fair reading, but after being jobless or earning $6 an hour for an extended period, “all of a sudden you’re so grateful for an $8- or $10-an-hour job,” Nakamoto said.
Braxton Berkley knows all about that.
After downsizing cost him his $16-an-hour job at Lockheed in Burbank in 1989, Berkley caught on as an airline mechanic and eventually worked his way back to his former salary. But he later lost the airline job in a reorganization and now works part time driving a van for a senior center in Pacoima.
With his modest salary, Social Security checks and his wife’s small income from a part-time job, the Berkleys are squeaking by on far less than before.
Still, Berkley, a 64-year-old Pacoima resident, considers himself luckier than many co-workers who weren’t old enough to get retirement benefits. One is a manager at a chicken restaurant. Another is a security guard at Edwards Air Force Base. Others have had to resort to similar endeavors, earning $6 or $7 an hour--if that.
“Most of the workers I know and have spoken with, they’re very bitter,” Berkley said. “They feel the transitions should have been more subtle and slow. Their main concern is that this country is shipping the jobs overseas and all over the world.”
The problems caused by the lost jobs have not been solely economic, Berkley said.
“It takes away their dignity and their pride,” he said. “It takes away everything. It’s led to families breaking up, people losing their homes, good people doing bad things. . . . It’s real pitiful, it’s sad.”
Dave Hendon, manager of the Verdugo Jobs and Assessment Center in Burbank, said the federally funded training program has helped many aerospace workers find jobs. But Hendon estimates that no more than 10% to 15% got positions at their previous wages.
Steven Gorman is not one of those 10-to-15-percenters.
On Valentine’s Day of last year, Gorman learned that his $1,100-a-week job as a senior engineer at Northrop Corp. in Hawthorne was being eliminated. This was not his first misfortune. Thirteen months before, the townhome he shared with his wife and infant son was rendered uninhabitable by the Northridge quake.
But for a while, it seemed, Gorman’s luck was turning. After losing the Northrop job, he quickly joined a smaller aerospace concern in the Valley. As a contract worker, he received no benefits but made close to his Northrop salary. But on Dec. 7, Gorman was informed that the job would end Dec. 8.
Gorman was unemployed from December to March, and to make matters more difficult, his wife lost her job as a secretary. And on top of mortgage payments and other bills, he is responsible for paying child support for his two children from a prior marriage.
Gorman now works full time as a draftsman at the International Electronic Research Corp. in Burbank. “I started in March at a rate that is approximately half of what I was making when I was at Northrop,” he said.
And things are about to get worse. For now, Gorman works under contract through an employment agency, but the Burbank firm wants to hire him. When that happens, he will begin earning even less than he does now, he said. Although he will receive medical benefits for himself, none will be provided for his family.
“It is good to be working, but the reality of the wages--it’s very difficult,” he said. “The outlook has gotten even gloomier.”
Some worries are more immediate. Unable to make payments to their lender, the Gormans are in danger of losing the house they bought after their home was destroyed by the temblor.
In the short term, and probably the long term too, “we’re going to have to take a giant step down,” Gorman said. “The reality of the world is hitting us right in the face, and it’s horrible out there.”
Times staff writers Doug Smith and Jocelyn Y. Stewart contributed to this article.
