Southland’s Slower Lane : Low-Wage Jobs Are Speed Bumps on State’s Road to Recovery

A low-wage, unskilled labor force is a significant shadow on the resounding good cheer ringing through economic forecasts from every county in Southern California.

Because so much of the region’s work is low-wage--in apparel, warehousing, retail trade--Southern California still holds back California’s overall economic recovery, says economist Mark Schniepp of UC Santa Barbara.

All seven counties--Los Angeles, Orange, San Diego, Riverside, San Bernardino, Ventura and Santa Barbara--are creating jobs at a good pace, Schniepp reports. But work in Los Angeles County, the bellwether with 4 million of the region’s 7 million jobs, is weighted heavily at the lower end of the wage scale in business and retail services, he notes.

Such figures can hide a better picture. For example, good-paying employment in the entertainment industry is undercounted because the industry is fragmented in thousands of companies and changing so rapidly, says economist Jack Kyser of Los Angeles County’s Economic Development Corp.

To be sure, the decline of the aerospace-defense industry has taken a chunk out of manufacturing--off 20% in Orange County, 28% in Los Angeles County. Yet unemployment in Orange County is less than 5%, and manufacturing is growing dramatically in Riverside and San Bernardino counties. So something else is going on in one of the fastest-changing economies in the United States.

Still, Kyser and other experts admit that low-wage employment is a worry, especially as the reform of federal welfare becomes reality. UCLA weighed in Monday with a study noting that the region’s immigrants, now one in three of Los Angeles County’s residents, will stand to lose federal benefits and need either better jobs or public assistance locally.

The UCLA study also showed that some immigrants, those educated in their homelands, moved quickly into the professions and good-paying jobs here.

The challenging prospect of an economy divided between high-paid work and burdensome toil has set off efforts to avert such division. One proposal calls for the Los Angeles City Council to pass a living-wage ordinance mandating that any employer who is awarded a city contract worth more than $25,000 pay workers $7.50 an hour plus benefits, or $9.50 an hour without benefits.

The idea is to reduce low-wage, no-benefits jobs, which impose a burden on the city because public funds must pay for workers’ health care and assist their families. But passing an ordinance isn’t the way to remedy that situation.

“It leaves the city to pick up the tab,” laughs economist John Husing of neighboring San Bernardino. He means that if the city mandates wage structures, it must enlarge its contracts to compensate for that fact or demand that bidders absorb the costs. Either way, Los Angeles becomes more uncompetitive with Glendale, El Segundo and other neighboring cities than it already is.

Scholars at UCLA’s School of Public Policy would take a different approach, trying to upgrade employee skills in apparel, medical devices and packaging--fields that employ about 2.5% of Southern California’s work force. The skill training might be as simple as English-language study for immigrant employees, but it could raise the pay they could demand from $6 an hour to $8, lifting living standards and the economy’s productivity.

“Don’t be timid when it comes to education,” says Jon Goodman, director of the Multimedia Center at USC’s Annenberg School. She knows of 10,000 jobs for motion picture and video animators going begging at $50,000 a year because of a shortage of skilled workers. No Picassos are needed, Goodman explains, simply the art skills needed to draw backgrounds.

“Community colleges could teach this in two-year courses,” Goodman says.

Labor shortages in the booming entertainment business are not the rule for other industries. There is no shortage of engineers in Southern California, notes economist Michael Bazdarich of UC Riverside. And Orange County, where healthy job growth is forecast for years ahead, is not experiencing labor shortages, says economist Anil Puri of Cal State Fullerton.

Still, shortages in entertainment fields must be dealt with because film and TV projects can so easily move elsewhere if capabilities are lacking in Southern California. San Francisco and New York are both eager for multimedia work.

What the divergent job picture points up is the economic imbalance that haunts Southern California in the wake of aerospace’s long departure. Other areas have been more fortunate, or more focused, in renewing their economies. San Jose has created 24,000 manufacturing jobs this year, taking advantage of its position at the southern end of Silicon Valley.

This region needs to get serious about economic development. It needs to organize its community college system to work closely with potential employers. It needs to redouble efforts to upgrade skills of low-wage employees, helping them to be more productive and to earn higher pay.

Calling for improved education and training as an economic policy has become a cliche of our time. But it happens to be the answer for Southern California, with its unique potential.

Low-wage earners, we should recognize, are working people--eager, ambitious for a better life. Home ownership is on the rise in almost all the neighborhoods of Southern California. This region is one of the only places in the United States that can still be called a growth market.

Now that growth has resumed, perhaps the work of development can begin.

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Employment Outlook

Though employment in the six-county Southern California region is growing steadily, Los Angeles County’s economic recovery is being hurt because many of the new jobs are in low-wage service and retail trade sectors.

SOUTHERN CALIFORNIA EMPLOYMENT

Total nonfarm employment, in millions

1998**: 7.33

Note: Includes Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura counties.

** Forecast

JOBS CREATED IN L.A. COUNTY, 1995-96

*--*

Industry Net jobs created Average salary Business services 26,520 $19,331 Retail trade 14,060 16,259 Wholesale trade 10,950 37,161 Construction 10,570 33,636 Social and other services 6,570 23,181 Motion pictures 6,000 55,955 Apparel 5,160 31,552 Health services 4,960 35,781 Transportation 4,070 35,116 Engineering, management 3,480 44,165

*--*

Sources: Jack Kyser, Los Angeles County Economic Development Corp.; Mark Schniepp, UC Santa Barbara Economic Forecast Project