YOU ARE HERE: LAT HomeCollections


Steering clear of a downward jobs spiral

May 18, 2007|RICK WARTZMAN

GULP. That was my initial reaction last week when I read about the publisher of the Pasadena Now website having hired two reporters to help cover the Pasadena City Council -- from nearly 9,000 miles away, in India.

I mean, come on, what's next? An L.A. business column that's composed on the cheap in Mauritius?

No wonder that more and more economists -- including some, such as former Federal Reserve Vice Chairman Alan Blinder, who once were free-trade purists -- are beginning to question the unbridled pace of globalization and its potential effect on tens of millions of U.S. workers.

For all the hand wringing, though, this is a force we can't begin to stop. I'm not even sure we can slow it down much. It's too late for that.

As John Husing, an economist in the Inland Empire, likes to say: "We argued with the Chinese for 50 years that they should abandon Communism. Unfortunately, they finally agreed with us."

What we can do is better prepare our workforce to absorb the blows inevitably inflicted by a flat world -- and, in the meantime, be thankful that we live in a region where international trade could be more of an overall positive than a negative, if we handle things right.

The big question is: Will we?

Trade, it turns out, is a bit like real estate: What matters is location, location, location. Of course, here in Southern California we have the good fortune of being the gateway to the Pacific Rim -- long a source of fuel for the local economy.

"As Grows Tokyo, Shanghai, Kobe and Canton So Grows Los Angeles," declared the cover of the L.A. Chamber of Commerce's monthly magazine in February 1932.

Sure, we've lost a lot of manufacturing jobs in more recent years -- about 370,000 through the region since 1990 -- and a fair share of that bleeding has undoubtedly resulted from work being shifted abroad. But we've also seen a slew of jobs created, thanks to all the goods being shipped through the ports of L.A. and Long Beach, the nation's busiest.

At present, more than 650,000 Southern Californians work in the logistics sector -- wholesale trade, trucking, supply-chain management, warehousing, rail transport and other fields. That's an increase of more than 100,000 jobs since 1990.

Best of all, many of these positions pay quite well. A recent analysis by the consulting firm Wilbur Smith Associates found that logistics workers earn, on average, $47,411 a year -- right in line with the $48,397 in manufacturing (and substantially higher than the $35,000 and change the service sector provides).

Husing, who has studied the numbers as closely as anyone I know, notes another plus, especially in a place where more than 40% of adults over the age of 25 haven't taken a single college class: Most entry-level jobs in logistics require no advanced schooling.

The industry, he's confident, thus offers "an answer to ... upward social mobility" for residents of Southern California.

But we should be careful before we get too rosy-eyed; logistics (beyond needing a sexier name) is no panacea. When you slice and dice the figures, you see that trade spawns higher-end jobs but also plenty of lower-end ones, such as trucking and temp slots in warehouses, which essentially pay minimum wage.

These "are classic exploited workers," says Goetz Wolff, an economic development researcher at UCLA. His fear -- which I share -- is that the unyielding pursuit of lower costs by big corporations can't help but infect the logistics industry here, holding down employee pay and threatening to erode job conditions.

So what to do?

The first thing is to impose standards, wherever possible, that help ensure we don't get swept up in the race-to-the-bottom nastiness that is a hallmark of globalization.

Last month, the ports of L.A. and Long Beach took a bold step in this direction when they announced that, as part of a broader plan to clean up diesel pollution, they would transform the trucking business at the ports. Drivers, who now mostly operate as low-wage independent contractors, will become company employees and receive workers' compensation and other benefits.

For those interested in logistics, we also need to make sure they acquire the right skills to land one of the industry's more lucrative jobs. A number of local colleges, including Cal Poly Pomona, have tailored programs to teach the math necessary to calculate formulas for moving freight and the computer competency that's essential for completing certain shipping-related documents. But considerably more investment should be poured into this arena.

Lastly, we should keep in mind that, even in our region, trade will continue to take away and not just give. Today, just a few months of training is typically made available to displaced workers. The government -- both federal and state -- must do more to help. And we should fully expect that this might not be a one-shot deal, either. People may well require retraining several times during their careers.

Indeed, very few occupations -- white-collar or blue -- are truly safe at this point, as evidenced by Pasadena Now's actions. Lori Kletzer, a UC Santa Cruz economist, believes that 38 million U.S. jobs in the service sector alone are conceivably "tradable." Pretty much any task that can be zipped around the world electronically stands exposed.

Some weeks back, a report in the Financial Times warned of yet another type of enterprise being sucked overseas: It was none other than a slice of the logistics industry. In a money-saving process dubbed the "distribution center bypass," goods are increasingly being sorted and packed for retailers not in consuming countries but right in China.

I just hope that nobody is sharpening his pencil in Mauritius.


Rick Wartzman is an Irvine senior fellow at the New America Foundation.

He is reachable at

Los Angeles Times Articles