http://www.dailybreeze.com/business/art ... 74571.html

Today is Wednesday, December 14, 2005
Originally published Wednesday, December 14, 2005
Updated Tuesday, December 13, 2005
L.A. study points to immigrant side effects
A Milken report says the city is resilient, but the mainly unskilled work force will demand a lot of attention.
By Muhammed El-Hasan
Daily Breeze

Battered in the 1990s by the aerospace slump and consolidation of local banks, the Los Angeles economy has bounced back with a more diversified and resilient character.

However, the city faces other challenges that could stifle the area's ability to compete in the global economy, according to a study to be released today by the Milken Institute, a Santa Monica-based economic think tank.



"The city of Los Angeles is a city of tremendous resilience, best described as an economy with a core in large business and a future in small business," the Los Angeles Economy Project says. "At the same time, the city also remains polarized between high-end and low-end jobs. It suffers from a labor force that is disproportionately unskilled."

With less manufacturing work done in Los Angeles compared to two decades ago, low-skilled immigrant and native-born workers have fewer opportunities to earn enough money to become part of the middle class, said Kevin Klowden, an economist who co-authored the study.

"Not only is it a bad thing for a large percentage of the people who have no ability to move up economically, but it means larger employers don't have access to the work force talent they need," Klowden said.

This is especially true since even traditionally low-skilled professions involving manufacturing and logistics require greater use of technology.

Solving the problem of unskilled workers requires focusing "training efforts on industries with the greatest prospects for growth, stability and decent wages," the study says.

Traditional work force training often focuses on educating the maximum number of workers "with some sort of general skills" that meet needs from five, 10 or 20 years ago, Klowden said.

Teaching English to immigrant workers also would help them take the next step to greater professional skills, he said.

In the Harbor Area, a lack of high-tech businesses also represents a problem. The Harbor Area "remains a stronghold of the 'old' economy, with automobile and fabricated-metal industries generating a good portion of the jobs held by the area's mainly low-skilled immigrant work force," the study says.

Community colleges can help train Harbor Area workers. This could attract "knowledge-based" employers by supplying skilled employees, Klowden said. Eliminating government red tape also would help, he said.

Lack of available land represents another problem facing the Harbor Area, said Jack Kyser, chief economist at the Los Angeles County Economic Development Corp.

"Any sizable piece of land that comes up, it either goes to a logistics center or it goes to a retail development," Kyser said.

The Milken study says that Los Angeles should help small businesses unable to secure loans to expand and hire employees. Such help may require that the city provide financial guarantees to lenders in case the businesses default.

The study also recommends that the city help employers and workers in the so-called "underground" economy to become legal by getting registered and paying taxes.

This would expand the tax base and limit competition from underground businesses that drive down wages, the study says.

The city can achieve this by reducing business fees, streamlining city processes, and offering amnesties to such companies, Klowden said.

"The issue of illegal immigrants is out of the city's hands," Klowden said. "But the issue of getting the employers who are not in the formal economy to move in is something the city can deal with."