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Wages Lag in L.A. County, Study Says

Report shows a pay gap between local workers and their counterparts in the rest of the state.

September 18, 2006|Joe Mathews | Times Staff Writer

The wages, education and benefits of workers in Los Angeles County lag those of their counterparts elsewhere in California, according to a report to be released today by the nonpartisan California Budget Project.

The report, titled "Left Behind: Workers and Their Families in a Changing Los Angeles," relies on data from the Census Bureau as well as the state Employment Development Department and Franchise Tax Board to paint a portrait of California's leading city as an economic world apart.

The typical Los Angeles worker -- one whose earnings are in the 50th percentile -- makes 83 cents for every dollar earned by the typical worker in the rest of the state, according to the report. Over the last generation, that wage gap has widened. From 1979 to 2005, the inflation-adjusted hourly wage of the typical L.A. worker decreased by more than 6%, while increasing nearly 6% in the rest of the state.

Over the last 15 years, the number of jobs in L.A. County -- home to more than one-quarter of California workers -- declined by 2.8%, while increasing in the rest of California by 28.5%.

"The breadth of the disparity between Los Angeles and the rest of the state is important, and it really is pervasive," said Jean Ross, director of the California Budget Project. "Los Angeles was at the center of the bust in the early 1990s and on the periphery of the boom in the late 1990s."

Ross pointed in particular to figures on construction jobs, an area of growth in most of California but not in Los Angeles, where the number of such jobs, 145,000, was the same last year as in 1990.

Mary Gutierrez, a spokeswoman for the Los Angeles County Federation of Labor, said the report did not seem out of line. "I'm not really surprised by all those numbers," she said.

The report, while focusing on low-wage workers, also found that the purchasing power of the top 20% of workers in Los Angeles had lagged the rest of the state. And while the share of Los Angeles taxpayers with an inflation-adjusted annual income of at least $100,000 more than doubled from 1989 to 2003, the increase was even greater in the rest of California. "That surprised us," Ross said.

The report draws few hard conclusions about the causes of the disparity, but points to a number of factors.

Half of L.A.'s workers are foreign-born, compared with less than a third in the rest of the state. In 2005, the percentage of workers who had not completed high school was the same as in 1979 -- a little more than 20%. In the rest of the state, 13% of workers had not finished high school. Also, the value of a high school diploma is less in L.A. than in the rest of California. Workers with a high school education here earn 86.7 cents for every dollar earned by workers with the same schooling in the rest of the state.

After accounting for differences in education and ethnicity, the wage gap narrows but does not disappear, the report states.

Ross and the study's lead author, Alissa Anderson Garcia, acknowledged that the numbers do not reflect Los Angeles' considerable underground economy and self-employed people who have not incorporated.

"There are some mitigating things: There's a huge cash economy, and reported wages are quite different than wages," said Joel Kotkin, the author of "The City: A Global History."

The report identified a number of bright spots, including a 40.4% increase in entertainment industry jobs from 1990 to 2005. Los Angeles also is minting more millionaires than the rest of the state; that number more than doubled from 4,011 to 9,208 between 1998 and 2003.

Union members have done well, seeing their wages increase over the last 15 years as pay has declined for nonunion workers, the report concludes.

"We do definitely have challenges in Los Angeles County," said Jack Kyser, chief economist for the Los Angeles County Economic Development Corp. "We have no economic development strategy, and this is very dangerous in the type of global economy in which we operate."




Sector by sector wages

State 2002 to 2012 forecasts show local manufacturing jobs down by 12% and service jobs up by 15.2%. The 2005 wage gaps echo this shift:

*--* L.A. Rest of L.A. as % of Sectors County Calif rest of Calif. All industries $15.00 $18.00 83.3% Manufacturing 12.00 19.23 62.4 Construction 12.50 17.62 70.9 Prof. and Bus. services 17.00 21.15 80.4 Trans. and utillities 15.00 18.00 83.3 Other services 11.00 13.00 84.6 Ed. and health services 17.31 19.23 90.0 Financial activities 19.23 21.00 91.6 Public administration 21.40 23.08 92.7 Wholesale/retail trade 14.00 15.00 93.3 Information 23.36 24.00 97.3 Leisure/hospitality 9.85 10.00 98.5


Sources: California Budget Project's "Left Behind: Workers and Their Families in a Changing Los Angeles," Census Bureau, state Employment Development Department

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