The city of Los Angeles
has a genuine budget crisis. Unless something is done, its expenses will outstrip revenue by at least $100 million this year and by $200 million or more in 2011. Even so, before Mayor Antonio Villaraigosa and the City Council proceed with a temporary solution that will throw 1,000 city workers out on the street, they ought to take a deep breath and weigh every possible alternative -- twice and, then, twice again.
Layoffs may be the easiest way to close a budget gap, but in this instance, they also may be the most destructive.
The beast now gnawing the heart from our civic finances is, in part, the progeny of the credit markets' collapse and, in even greater part, a consequence of the unemployment created by that disaster. Citywide, unemployment is running better than 12%; in some particularly hard-hit Latino and African American neighborhoods, one in five workers is jobless. Unemployed workers still require city services, but they pay little in the way of taxes, so they drain the city budget.
Those numbers ought to weigh heavily on City Hall's current deliberations because government has been for some time now our most significant local employer. Over the last two decades, the manufacturing, financial-services and aerospace firms that once provided our local middle-class employment base have faded from the scene -- most the victims of consolidation within their own industries. As a result, Los Angeles County's six leading employers now are government entities: L.A. County employs 93,200 workers; the state of California has 30,200; the city of Los Angeles clocks in with 53,471.
If you range across the spectrum of wrenching problems currently afflicting our public finances, it's hard to find one that hasn't been exacerbated by joblessness. The Metropolitan Transportation Authority's operating shortfall, for example, is directly attributable to fewer riders; their numbers have declined because ever-increasing numbers of people don't have jobs to which they can ride the bus or train. The L.A. Zoo's deficit has increased dramatically because ticket sales are down. Is that because people suddenly have decided they hate animals? No, it's because so many of the working families who used to make a family outing of an afternoon in Griffith Park no longer can afford it.
Consider, as well, the economic environment into which the city now proposes to thrust another 1,000 unemployed men and women. The Associated Press currently calculates what it calls a monthly "misery index" by amalgamating unemployment figures with the number of bankruptcies and foreclosed mortgages. California ranks fourth on that scale, and the five hardest-hit counties with populations over 25,000 all are in this state. So where are these 1,000 workers going to go and what, in fact, has been gained, if they simply become long-term public charges? (And anybody who thinks this all is going to be over any time soon is whistling past the graveyard.) This is an economy in which Wal-Mart this week announced it is closing stores -- several in California -- and laying off more than 11,000 of its own wretchedly compensated and chronically maltreated workers.
The mayor has repeatedly said that job retention and creation would be the unrelenting focus of his current term. To that end, he recently named a jobs "czar" and gave him extraordinary power over the city's most important departments. It's difficult to reconcile those laudable efforts with putting 1,000 people out of work. Maybe that's why Chief Deputy Mayor Jay Carson failed to respond to a request for comment Monday. Another senior member of the mayor's team, who asked not to be identified, put it this way: "If we were the federal government, we'd simply print more money and keep everybody working, but we don't have that choice. People are your largest fixed cost in the public sector, and we don't have any choice but to reduce their number."
There is an argument to be made along those lines, and it's clear that the public sector's unintended dominance of local employment is an undesirable and, over the long term, unsustainable condition. In the long term, though, we're all dead anyway -- and we must concern ourselves with the living, who have families to feed and clothe right now. Before the mayor follows the council's budget hawks, led by Bernard C. Parks and Jan Perry, into the rush to push people out of work, he needs to make a much more public case that every alternative -- from departmental consolidation to a top-to-bottom contracting review -- has been undertaken.
Finally, the mayor also might consider what a layoff of this size will do to erode his administration's moral authority. He is, after all, confronting private-sector employers who treat their workers as just another "fixed cost." What happens when he does the same thing?