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'Burbs to L.A.: Goodbye!

In the sweepstakes for economic growth and well-paying jobs, surrounding areas leave Southern California's core county far behind.


If the economy were a game show, Southern California's counties might turn to Los Angeles and say: "You are the weakest link."

In the business world, though, there is no bullying master of ceremonies to pronounce judgment. Instead, statistics tell the story: The L.A. core has been losing its middle class and providing fewer opportunities for its poor, low-skilled residents. Neighboring counties are gaining good-paying jobs and attracting growth industries such as high technology.

Despite record job creation across the state and country in the late 1990s, Los Angeles County had 76,900 fewer jobs at the end of last year than it did when employment peaked in December 1989. The county's unemployment rate stands at 6.3%, far higher than in Orange and San Diego counties, where joblessness is less than 4%.

Los Angeles County also has the lowest family income and worst poverty among all the urban counties in Southern California.

That pattern of uneven development might worsen the already severe strain on schools, hospitals and other government services in the heart of Southern California. It probably means increasing separation of the poor, mainly Latino immigrants from the middle class. And if Los Angeles stops feeding companies, business services and educated workers to outlying counties, it eventually could hurt economic growth throughout the region.

"We're reaching a critical juncture now in that many of the growth areas of Southern California are becoming more mature themselves. Without a solid core, it begins to harm their long-term economic development potential," said Ross C. DeVol, director of regional studies for the Santa Monica-based Milken Institute.

The county's economic problems have been masked somewhat by the strong recovery that Southern California as a whole made from its devastating downturn in the early 1990s. The region in the last year suffered only a minor slump while the Bay Area, and much of the country, struggled.

But the best economic news in Southern California is coming from outside Los Angeles. Many of the region's biggest public companies, including some of its brightest high-tech stars, are headquartered in Orange, San Diego or Ventura counties. Manufacturing and distribution businesses have flocked to the Inland Empire.

To some extent, what's happened in Los Angeles is part of a historical pattern that has occurred in other aging metropolitan areas. Wide-open spaces for development have become scarce, and existing buildings often are unsuitable for new, higher-tech industry or, for that matter, low-tech factories and warehouses.

Los Angeles, in the meantime, has not managed to develop a vibrant financial services industry or enough other thriving sectors to replace the companies being driven out by high costs and congestion.

"Big cities such as New York and Chicago have moved farther along in the transformational change," DeVol said.

Given Los Angeles' shortage of developable land, the low skills of much of its work force and long-term problems with red tape in city government, the prospects for radically transforming Southern California's core any time soon appear dim. The recent Kosmont Cost of Doing Business Survey, which tracks the municipal burdens placed on companies in Southern California, once again ranked Los Angeles as the most expensive city in Southern California for business.

"L.A. is moving in the right direction, and faster than ever before," said Larry Kosmont, president of the Kosmont Cos. real estate consulting organization, which sponsors the survey. "But because it has the highest business tax rate in the Southland, it has not been able to move quickly enough or far enough to keep more nimble neighbors from luring firms away."

High-technology companies, though still abundant in Los Angeles County, increasingly are flourishing and producing jobs in the region's outlying areas.

After looking around Southern California, Baxter BioScience Corp. last year decided to move its headquarters and 350 employees from Glendale to Westlake Village in Ventura County.

Baxter spokeswoman Tali Kaplan said the company had run out of room in Glendale and chose Ventura County with an eye toward the future. With 2001 sales topping $2 billion and plans to reach $10 billion by 2010, Baxter BioScience needed a location that could grow with the company, Kaplan said. Ventura County "is somewhat rural, and it has a nice quality of life," she said.

Kaplan said Ventura County officials have been helpful, reflecting their long-standing desire to build a critical mass of high-paying bioscience jobs in a county that already boasts industry giant Amgen Inc.

San Diego, like Los Angeles, was hammered by crushing losses in aerospace jobs in the early 1990s that saw tens of thousands of high-paying jobs evaporate. But a concerted effort by business organizations, public officials and university leaders to foster high-tech employment has helped turn San Diego into a hotbed for technology entrepreneurship.

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