L.A. County Jobs Surge Since ‘93, but Not Wages

Since the depths of the last recession, in the winter of 1993, more than 300,000 new jobs have been created in Los Angeles County. But a majority of these jobs pay substantially below-average wages--less than $25,000 a year--and barely one in 10 averages $60,000 or more, a Times analysis shows.

And perhaps most significantly, this recovery has yielded virtually no net jobs in industries that pay solid middle-class salaries, between $40,000 and $60,000.

The big picture that emerges from the analysis of state payroll records for all employers from 1991 to 1998 is that Los Angeles County’s job base has been increasingly shifting toward the lower end.

Although not unique to Los Angeles, that trend has been more pronounced here because changes in the labor force and the industrial structure have been so dramatic. Economists say that this will only exacerbate income disparity.

“We’re becoming more polarized,” said Mark Drayse, research director at the nonprofit Economic Roundtable in Los Angeles.

It has long been apparent in this recovery that many high-paying jobs have vanished as defense-related cutbacks continued and banks and other Fortune 500 companies left or consolidated. In the process, premium jobs in entertainment, technology and international trade have been created by many smaller firms.

But the new data show sharp and lasting job losses in a surprisingly wide array of professional services and other industries that pay well.

For example, engineering and accounting services, where employees earn an average of $54,000 a year, have shed 26,000 jobs between 1991 and 1998. But most of the cuts have come since the county’s recovery in 1994.

Those cutbacks aren’t a shock to Cal Poly Pomona accounting professor John Karayan. With the spread of personal computers, he said, “You don’t need as many white shirts summarizing data.”

As Karayan also observes, some of those displaced professionals have moved into new jobs and are making even more money today as consultants and professional advisors. The stronger economy has opened up more doors for people to start their own businesses, work as independent contractors and take on second jobs.

But most self-employed people do not make that much. And one consequence of low wages is that those workers are far more likely to go without health insurance. As previous research has shown, Los Angeles County’s workers have the lowest rate of employer-provided health coverage among all major metropolitan areas.

And with more low-wage jobs, it is harder for workers to meet their housing needs. Although more members of households in the county are working today, their combined incomes are still not enough for many to buy a house.

That helps explain why the rate of home ownership in Los Angeles County has barely budged, whereas it has surged in areas like Orange County to 63%, from 53% a decade ago. Nationwide, a record 67% of households now live in their own homes.

In Los Angeles County, despite the relatively high rate of home buying among immigrants, the historically low overall ownership rate has improved only slightly since 1996; it has hovered in the 48% range since the mid-1980s. That is just slightly higher than the U.S. home ownership rate back in 1940.

The sheer number of jobs created does matter, of course. Los Angeles County has now recovered nearly three-fourths of the 425,000 jobs lost during the severe 1990-93 downturn.

Although a good year away from reclaiming all the jobs lost, the county’s payrolls have once again surpassed 4 million, and unemployment recently fell below 6% for the first time in nine years. Job growth in the county has revived confidence, slowed the exodus of residents, and beefed up retail and housing sales.

To be sure, some very good jobs have been created in recent years. Motion pictures, although slowing in the last year, added 33,000 workers between 1994 and 1998, and the industry’s average annual wage per employee has risen from $55,000 to $64,000.

Few other high-paying industries have added significantly to their payrolls. But driven by motion pictures and the booming stock market, which has propelled employment and wage gains among a relatively small group of financial services firms, the average annual wage of all workers in the county jumped to $35,000 last year, from $30,000 in 1994. Adjusted for inflation, that is a real gain of almost 7%.

Take securities brokerages and dealers, which have added about 2,000 workers since 1994. That industry has just 12,300 employees in the county. Yet its payrolls exceeded $1.5 billion last year--half the entire amount paid in wages to the nearly quarter-million workers in Los Angeles County’s restaurant industry.

This great divide has widened considerably in recent years, as the data from the Employment Development Department confirm.

Between 1994 and 1998, the number of jobs paying less than $15,000 a year has grown by an average annual rate of 4%--more than double the rate of all other jobs. The average pay for those jobs has nudged higher, thanks to the rise in minimum wage. But such wages pale next to the high-paying industries. Domestic help and restaurants have added a total of more than 43,000 jobs since 1994. Among other categories producing batches of low-end jobs: parking attendants, video store clerks and child-care workers.

At the other end of the scale, the county has added 14,000 jobs in computer software and Internet-related fields, most of them in the last two years. The typical software worker grossed $56,000 as of late last year, and the county had about 40,500 employees in this burgeoning field--16% of the statewide total.

But this industry’s growth rate in the county, while impressive at 24% for the last two years, still lagged the statewide 31% pace for software jobs. And excluding software, employment in the county’s high-tech fields, from biotech to telecommunications to surgical instruments, has been disappointing. Combined, they lost about 700 jobs between 1994 and 1998.

Richard Powers, a former city manager in Norwalk and a veteran of economic development, partly attributes this to a familiar culprit: aerospace.

Although aerospace job cuts have resumed this year, the employment toll they took on the county subsided by 1996. In fact, between aircraft and missile systems manufacturing, the two actually added about 4,000 jobs last year.

But Powers says that one vestige of the aerospace decline--gigantic facilities and land abandoned by defense firms--is still hurting the county economically. That is especially true for Pico Rivera, Downey and other so-called gateway cities that make up a corridor along the southern part of the county. As head of a council of gateway governments, Powers has tried to build on that region’s history as a center for precision machining, to draw biotech and other high-tech firms. But sites simply aren’t available, he says.

“We’re burdened with huge, old facilities where ceiling heights are too high and the inside is too shallow.”

Some are starting to be redeveloped. But with city governments hungry for sales tax dollars, those areas are often earmarked for retailers. For instance, the 200-acre Northrop Grumman site in Pico Rivera is being recycled for light industrial and retail use. That means the $60,000-a-year aerospace job there is being replaced by a job at an auto or home supply store that pays $40,000 less.

Although the seasonally adjusted unemployment rate for the county dropped to 5.6% in May, joblessness has been running much higher in some of the gateway cities, including Compton, Lynwood and Bellflower. Those cities typify the regional polarization that has widened in this recovery, as the upscale Westside and the Burbank-Glendale area in the San Fernando Valley have soared above others with top-flight jobs in multimedia, entertainment and finance.

Pushing this dichotomous growth trend, particularly in Los Angeles County, is the growing availability of immigrant labor.

Although immigrants have been a major source of economic strength, especially in places like the San Gabriel Valley, their plentiful supply and generally lower skill levels have enabled the creation of a myriad of labor-intensive, lower-paying jobs in apparel, textiles and other manufacturing.

“Their presence tends to bring down average incomes overall,” said Deborah Reed, a labor specialist at the Public Policy Institute of California, a nonprofit research organization in San Francisco. In her report earlier this year, she said that income inequality is increasing faster in California than in the nation as a whole. Los Angeles is seen as a primary contributor to that.

Given that and related job-creation trends, economists see the problem of income disparity increasing, particularly between the very top and the bottom. L.A. County’s job data are less clear on whether the middle class is shrinking.

Between 1994 and 1998, the number of jobs paying between $25,000 and $40,000 showed a net increase of almost 100,000--more than half of that due to a flurry of teacher hiring by local schools, largely to meet the smaller-class-size mandate. As of last year, there were 1.6 million workers in that pay range, about the same as in 1991.

But some economists say that in Los Angeles County, given its higher living costs, “middle class” might be more appropriately defined by jobs paying between $40,000 to $60,000. Viewed this way, the job picture is sobering: Since 1991, the total number of such jobs has fallen by 97,000, while jobs in the $15,000 to $25,000 range have risen by about that much during the same period.

“This is a major issue in the region,” said Mark A. Pisano, executive director of the Southern California Assn. of Governments, a regional planning agency. But Pisano says he is optimistic that this pattern can be reversed.

The county has a solid manufacturing base, although apparel, textile and other industries are relatively low-paying.