Can Pico-Union Become Like N.Y.'s Lower East Side?

Joel Kotkin, a contributing editor to Opinion, is a senior fellow at the Pepperdine Institute for Public Policy and the Pacific Research Institute.

Five years ago, Pico-Union burst into public notoriety because it was the scene of widespread rioting following the not-guilty verdicts in the Rodney G. King-beating trial. Even as the embers cooled, academics, the media and political figures proclaimed Pico-Union a "blighted" Latino-flavored dystopia, locked in a hopeless cycle of poverty, economic decline and gang violence.

Today, the community of roughly 120,000 just west of downtown remains one of Los Angeles' poorest and most neglected. Nearly half its population, according to the 1990 Census, arrived from abroad within the last 10 years. Incomes are about half the city's median; its poverty rate, at 35%, is twice the city average. Residents endure some of the most crowded housing conditions west of the Hudson River, with densities six times above L.A.'s average.

Yet, Pico-Union is not a typical U.S. urban ghetto with an entrenched welfare population and a dead economy. Rather, it shares many of the characteristics of turn-of-the-century immigrant communities on New York's Lower East Side. Pico-Union's story is not only about crime and poverty, but also about a surprisingly vibrant private economy that provides opportunity for newcomers to make it up and often out of the district.

Despite its generally low levels of education and income, Pico-Union has benefited from the region's recent economic upturn. Nearly 90%-95% of all properties destroyed or damaged in the riots have been rebuilt. The area has the highest rate of new-business formation in Los Angeles County. Several major business expansions, including a $17-million supermarket-anchored development at MacArthur Park nearby, are on tap.

None of this means that Pico-Union is a prime candidate for gentrification. What it does suggest is that, with a modicum of organization and continued business investment, the area can become a vehicle for upward mobility for its largely transient population. This was the role played by the Lower East Side when Jewish, Irish and Italian immigrants crowded into its tenements.

Much like today's Latinos in Pico-Union, turn-of-the-century newcomers worked in garment and small shops. They had a reputation for criminality and violence, which led many observers to doubt their ability to integrate successfully into mainstream society. In 1906, Jews, the largest population group on the Lower East Side, accounted for roughly one-third of those entering New York's children's court.

Yet, over the ensuing decades, the majority of the Lower East Side's immigrants gradually improved their lives. Shuls and churches provided cultural guidance; business organizations, political parties and unions supplied social clout. Ultimately, most of the immigrant population--even more so, their children--left the area and joined the swelling middle class in the outer boroughs, the suburbs and beyond.

To date, immigrant and minority success in Southern California, as elsewhere, tends to be concentrated in more upwardly mobile, suburbanized neighborhoods like the San Gabriel Valley or north Orange County. Inner-city immigrant communities such as Pico-Union, by contrast, have been largely ignored or dismissed as beyond hope.

To be sure, whether the "Lower East Side" model is applicable to Pico-Union remains moot. For one thing, unionization is no longer a reliable means, as it was earlier this century, to improve the lives of low-wage workers in a globalized economy. Efforts to unionize Pico-Union's service workers have been only modestly successful and the district's garment laborers remain mostly nonunion.

In addition, there seems to be little prospect for government activism in the form of public works or employment, which for previous immigrants provided opportunities to advance. Whether jobs at shipyards or at aircraft factories, or through programs like the GI Bill, government played a catalytic role in turning newcomers and their progeny into wage earners, home owners and even professionals.

Nevertheless, hopeful signs exist in Pico-Union. Despite his problems with drug and alcohol addiction, Councilman Mike Hernandez has boosted Pico-Union's profile and attracted some public funds to the district. Long leaderless, the district has nurtured a coterie of grass-roots activists, drawn from residents and local business, who have spearheaded anti-graffiti and anti-gang efforts. Despite the impressions created by newspaper headlines and local TV news broadcasts, violent crime has been dropping more rapidly in Pico-Union than in the rest of Los Angeles.

"The people in the neighborhood are tired of having people come here only when something bad happens," says Jasmin Corona, a member of the local LA Neighborhood Initiative board. "There are cleanups, new businesses, things are getting better. We have a lot more good people than bad."

But the region's future success will depend more on its ability to produce wealth than on converting naysayers. Building upon the district's existing warehouse and industrial enterprises may be the fastest way to becoming a larger economic player in the city.

Despite Pico-Union's unfavorable reputation, many businesses have chosen to stay and even expand there. This includes relatively high-paying manufacturers, including many printing companies and Giroux Glass, a leading glass maker that doubled its sales to $9 million last year. Wesley Ru, president of Western Badge & Trophy Co., once considered leaving the area but has since expanded his business, adding credit-card manufacturing to his novelty business, much of which is sold to Hollywood studios.

One factor is the work ethic of Pico-Union's largely Latino labor force. Rates of dependency on public assistance are below those of South-Central and other inner-city areas. Labor-participation rates among the district's predominantly Latino male workers are among the highest in the city. These workers offer employers a valued commodity.

"We have very industrious people," says Ru, who employs more than 500 people. "What I found out was that this is a good place to do business. I have a source of very good labor and I'm close to the freeways."

The immigrants' growing purchasing power, bolstered by wages earned in the "underground" cash economy, is sparking an expansion of retail operations. Major retail chains tend to ignore Pico-Union, much as they do other inner-city districts, but locally based firms like Liborio Market are filling the vacuum. Since 1992, the Latino-owned and -oriented market has enjoyed sales growth of 15% at its existing Vermont Avenue site and plans to open another, larger store at the intersection of Pico and Alvarado.

Perhaps Pico-Union's most spectacular retail success is La Curacao, which deals in electronic gadgets and home appliances. The original store, founded by two Israeli entrepreneurs, was burned down in the 1992 riots, along with millions in merchandise. But like Ru, Ron and Jerry Azarkman chose to stay, bought two office towers on Olympic to house their new store and opened a second one in Panorama City. Today, the two stores enjoy some of the highest per-square-foot sales in Southern California.

The Azarkmans' dreams for Pico-Union extend beyond Curacao. With their Olympic towers as their base, they want to turn the area, one-third of whose population comes from El Salvador and Guatemala, into something of a "Little Central America." To this end, they have enlisted many Central American consulates, lawyers and business groups. Community groups and local businesses are also behind the organization of a local Harvest Festival, to take place in late October, that will focus on the autumn traditions of Mexican, Salvadoran and other ethnic groups.

The idea of Pico-Union as a Latino cultural, as well as business, hub recalls the ways in which the Lower East Side served as an incubator of immigrant culture earlier this century. Firms like Luna Records, which operates out of a drab building on Venice Boulevard, are the seeds of a Latino-oriented mass-culture industry. Founded by former farm worker Abel Luna, the business ranks among the largest independent Spanish-language record companies in the nation, with more than 1 million records sold, mostly in Mexico and Central America.

Such signs of cultural, as well as economic, vitality underscore the risk of ghettoizing a community based on news reports that tend to dwell on its criminal element and its immigrant population. It's not that the district is on the brink of fashionability, or that most of the local population will become middle class, much less affluent. But if Pico-Union can evolve into L.A.'s equivalent of the Lower East Side, the future prospects of all Southern California correspondingly brighten.

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