Study Offers L.A. Goals

Los Angeles’ prosperity depends on how well it integrates its low-skilled immigrant workforce into its knowledge-based industries, according to a report to be released today.

The city also must do more to attract and sustain small and medium-sized businesses, in part through improved access to affordable capital.

Those are among the key findings of a yearlong, city-funded study on the Los Angeles economy by Santa Monica-based Milken Institute.

Former Mayor James K. Hahn commissioned the economic think tank to recommend practical economic steps that the city “can actually put into place in the next few years,” said Kevin Klowden, a Milken Institute research economist and a principal author of the report.

“This is an exciting snapshot as well as a call to arms,” said Los Angeles Councilman Eric Garcetti. He said expanding economic opportunities for city residents, along with improving public safety and traffic, would be his top three priorities next year when he takes over as council president.

The report says that Los Angeles has recovered from significant declines in two of three sectors that defined its economy two decades ago -- manufacturing and financial services -- thanks to the creation and growth of thousands of small businesses in recent years.

But those booming small businesses tend to be very local and are concentrated in service industries dependent on low-skilled, low-paid workers -- not the types of jobs that will help the city prosper in an increasingly high-tech, knowledge-based economy, the report says.

The city “remains polarized between high-end and low-end jobs,” the report says. “It suffers from a labor force that is disproportionately unskilled.”

The city also is hampered by high housing costs and aging manufacturing, the report says.

The study adds to a continuing debate about how best to improve the local economy. Many agree that upgrading the region’s low-wage workforce is a major challenge. But the political will and consensus to solve the city’s economic problems is often lacking, some business and community leaders say.

Some analysts suggest that the policies and conditions most needed to improve the local business climate -- including lower tax rates, reduced regulation and more affordable housing -- are more dependent on actions in Sacramento or Washington than in City Hall.

Among the report’s key recommendations:

* Expand opportunities for workers to improve their educational attainment and English-language proficiency;

* Focus worker-training efforts on industries -- including residential construction, financial services, motion pictures and hospitals -- with the greatest potential for growth, stability and good wages;

“The goal of workforce training traditionally has been to train the largest number of people without any goal of where they are going to get jobs,” research economist Klowden said;

* Encourage the development of commercially viable technology at such institutions as UCLA and USC, and the transfer of this technology to entrepreneurs;

* Create initiatives to improve small businesses’ access to capital, such as using city funds to help provide loss guarantees to encourage lenders to make more loans. Such programs are in place in 20 states, including California, as well as in at least two cities, New York and Akron, Ohio, said Betsy Zeidman, director of the institute’s Center for Emerging Domestic Markets.

The institute plans to hold five public forums to solicit feedback for the City Council and mayor’s office.