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Putting California back to work

With state unemployment at 12% and even more underemployed, the financial insecurity caused by our economic malaise must be addressed.

November 07, 2009|TIM RUTTEN

The great military historian John Keegan reminds readers of the old axiom that a general's worst fault "is to take counsel of his fears." On the other hand, while politics lends itself to martial metaphor, an elected official can fail when he does not make voters' anxieties his own.

That's why the one-two punch of this week's election results and Friday's dismal unemployment numbers are a message that President Obama and other Democratic officeholders dismiss at their peril. In New Jersey and Virginia, independent suburban voters -- who went overwhelmingly for Obama in the last general election -- voted for the Republican gubernatorial candidates. In both states, nearly nine out of 10 cited jobs and the economy as their greatest concerns.

There's a reason for that beyond the brute fact of Friday's report that, for the first time in 26 years, more than 10% of American workers are without jobs. The underemployment rate -- those who want full-time work but are forced to accepted part-time positions -- now stands at 17.5%.

Hofstra University's National Center for Suburban Studies recently reported that three of every four suburban residents either have lost a job over the past year or know someone who has. Those who have held on to their jobs are only too aware of the dirty secret behind the supposed recovery that the administration and Wall Street bulls claim is sputtering into gear: It's being fueled by a dramatic increase in worker productivity. Companies, in other words, are cutting workforces while working those who remain harder and pocketing the difference.

The implications of these abysmal employment numbers are particularly sobering for California and Los Angeles. If this state were an independent country, its $1.6-trillion economy would be the world's eighth largest -- just behind Italy and ahead of both Canada and Mexico, America's first- and third-ranking trade partners. California accounts for 13% of the U.S. GDP, 40% more than the next-biggest state, Texas.

Yet according to Friday's federal statistics, California's unemployment rate is the nation's third worst. Many economists believe that, if you aggregate the unemployed with the underemployed, our rate of what you might call job distress is 20%. Think about that: One in five willing workers in the world's eighth-largest economy is without full-time employment.

As grim as those numbers are, they mask a more troubling economic reality. Since 2000, this state has lost nearly 30% of its manufacturing jobs. That's helped fuel a growing inequality. Over the past decade and a half, the most affluent 1% of Californians have seen their share of the state's annual income go from just under 14% to more than 25%. The current recession, with its jobless recovery, is accelerating that trend: Immigrant Latinos have been particularly hard-hit because they make up 32.4% of the state's construction workers, 25.7% of those employed in the battered leisure and hospitality industries, and more than 27% of those employed in manufacturing. African Americans also are clustered in manufacturing and the building trades.

Now that he has the selection of a new police chief behind him -- a gesture toward maintaining the city's physical security -- Mayor Antonio Villaraigosa faces a more difficult challenge in finding local ways to address the same fear-inducing economic malaise that has created such financial insecurity. As economist Jack Kyser told me Friday, "Los Angeles already has a scary unemployment rate of 12%, and if you lump in the underemployed, it's already at 20%, like the state's."

Like other economic analysts, Kyser believes Villaraigosa's hopes for stimulating local economic recovery took an all-but-unnoticed hit this week when a deal between Italian rail-car manufacturer AnsaldoBreda and the Metropolitan Transportation Authority -- which would have included construction of a state-of-the-art factory in a downtown redevelopment district -- fell apart. The facility, which would have created hundreds of construction and manufacturing jobs, was to have been the anchor of a new, green factory district. Loss of the deal reportedly helped speed the departure of Community Redevelopment Agency head Cecilia V. Estolano. Her departure leaves the mayor's administration with vacancies at the top of the CRA, the Department of Water and Power, the Housing Department and the Department of Building and Safety.

That places particular pressure on Villaraigosa. Alone among America's great cities, Los Angeles encompasses within its political boundaries substantial urban and suburban polities -- and those are the groups this recession has hit the hardest.

As Kyser said: "A jobless recovery has a lot of political implications."

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timothy.rutten@latimes.com

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