It produces large portions of the nation's rivets, cooking oil, upholstery filling and guided missiles. New residents clamor in at the rate of 1,000 a day--opening bank accounts, filling their shopping carts, jamming the freeways, walking into classrooms, struggling for a better life in mom-and-pop businesses.
If it were a country, its economy would rank 12th in the world (just behind Brazil but ahead of India).
Southern California--a hard-to-define territory that begins somewhere around Santa Barbara and sprawls eastward along the Tehachapi Mountains and south to the Mexican border--has emerged as an economic colossus, the nation's leading source of new jobs, a place where opportunity booms even as the population soars and changes in unprecedented ways.
"The size of the region and the size of the issues and the size of the changes just boggle the mind," said Stephen Levy, senior economist with the Center for Continuing Study of the California Economy, a nonprofit research organization in Palo Alto.
Los Angeles has been a major city for many years, of course, but something new is apparent. The labor force has gotten so big, its consumers such a tempting market, the industrial base so varied, that it has become an economic magnet as never before. "Once you reach a certain size--with so much going on--then everyone else has to locate here," observed Phillip E. Vincent, a vice president and economist with First Interstate Bancorp.
This new phenomenon is having profound effects on the area's economy and culture, both good and bad. It means old-line law firms from New York racing to put out their shingles in Los Angeles. It means banks from Tokyo building towers that alter the downtown skyline. It means more garbage and congestion. It translates into the emergence of a whole array of businesses--consultants, computer services, temporary personnel, accountants and others--cropping up to serve industries both on the high and low ends of technology.
Indeed, if there is one word to describe the Southern California economy, that word is diversified. Outsiders may identify the area with Hollywood and Disneyland. Natives are more keenly aware of the importance of aerospace and defense-related industries. In fact, a big manufacturing base in such traditional areas as apparel, paper products, furniture and chemicals remains an important part of the Southern California economy.
And the services are booming as never before, including port facilities that benefit from the growing trade with Japan, South Korea, Taiwan and many other nations. "We're not tied to any one manufacturing industry," said Duane Paul, a vice president and economist at Bank of America. "We're not tied to any one service industry. The region's future is not tied to one, two or a dozen firms."
It's way too big for that--and getting bigger all the time. The combined population of Los Angeles, Ventura, Orange, Riverside and San Bernardino counties now approaches 13 million. Add San Diego County and the total exceeds 15.5 million people--and growing fast.
The broad, murky, but highly coveted area known as high tech is as good a place as any to start a tour of the area's economic landscape. Motion pictures and television make for a glamorous image, of course, but the reality is that fewer than 100,000 people earn their livings locally in those fields. By contrast, 290,000 people work in the production of computers, office equipment, semiconductors, aircraft, spacecraft, guided missiles and pharmaceuticals in Los Angeles County alone; Orange County has another 106,000, and San Diego, 58,000.
"The term that (President Dwight D.) Eisenhower coined--the military-industrial complex--is really meant for Southern California," said Alan Clayton-Matthews, an economist at Data Resources Inc. of Lexington, Mass.
Such industries are sought after because they're low in pollution and pay more than average, which means that they bring in a work force of affluent consumers to patronize retail shops and purchase services. Southern California, for example, has the greatest concentration of mathematicians, scientists, engineers and skilled technicians in the United States, according to a recent report by Security Pacific Corp.
Moreover, the area is holding its own in traditional manufacturing, even as other parts of the country endure the pain of losing such employers. Estimates vary, but Los Angeles County, with some 886,000 manufacturing jobs, accounts for roughly half of all such employment in the state. Orange, San Diego, Riverside and San Bernardino counties add another half-million workers.