It Takes Hard Work to Make Jobs

From 2000 to 2004, Los Angeles lost more than 80,000 jobs. To bring back at least a portion of them, the next mayor will have to take the following five steps, according to economists and government officials.

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Reduce the cost of doing business

According to one business survey, L.A. ranks as the 16th most expensive city in the country to do business, largely because taxes here are more than five times higher, on average, than elsewhere. The tax most in need of revision, according to Daniel Blake, director of Cal State Northridge’s San Fernando Valley Economic Research Center, is the gross receipts tax, whose rate varies from $1 per $1,000 of revenue to $6. A new law eliminates the tax for 130,000 companies whose gross revenue is $100,000 or less. But because the tax is one of the city’s biggest revenue sources, an outright repeal is highly unlikely.

Streamline and simplify permitting and licensing

Completing these procedures takes longer in L.A. than almost any other city, which disproportionately hurts small businesses, a major engine of jobs. For example, it takes, on average, two to three years to receive a zone-change permit with a full environmental impact report. The same process takes half the time in other cities. A task force under former Mayor Richard Riordan made some progress by giving businesses one contact for a variety of permit and license applications, but failed to simplify the applications. “Because more jobs and money could come into the economy earlier, L.A. could get thousands of jobs if it processed permits more quickly and efficiently,” said Larry Kosmont of Kosmont & Associates.

Increase investments in infrastructure

Improving roads, airports, ports, parks and cultural assets that raise the quality of life creates jobs and attracts others. After the riots and Northridge earthquake in the early 1990s, the city made major investments in its infrastructure, but spending since then has declined. Spending on cultural and recreational projects, for example, has declined overall from 1998 to 2003. Public safety spending, alternately, has risen, as has transportation spending in the form of new rail and bus lines and traffic improvements. Investment in the port, also up, will produce more jobs in 2005, given an expected 9.9% gain in container handling, says Jack Kyser, chief economist of the Los Angeles County Economic Development Corp.

Expand city bureaucracy

The most direct way to create jobs is to increase the size of government. According to the federal Bureau of Labor Statistics, the city of Los Angeles employed 51,241 people in 1991. But as of October 2003, the city employed 45,986 full-time workers. Although more recent statistics aren’t available, the number of city jobs probably hasn’t significantly changed, expect for the Police Department, because of revenue shortfalls.

Court businesses outside the city

Two city offices -- the Los Angeles Business Team, part of the Mayor’s Office of Economic Development, and the Community Development Department -- work to attract businesses. The proposed 2005-06 city budget would only slightly increase funding for the Business Team. The Community Development Department’s budget would increase by about $500,000, but the budget of its economic development program -- the only one specifically designed to court businesses -- would decrease by $160,000.

-- Swati Pandey