Los Angeles was home to 4.0 million people and 1.9 million workers were employed in establishments within city boundaries in 2005. This large metropolitan economy is made up of many diverse geographic and industrial elements. Despite what appears to be a large and robust economy, the workers and employers in Los Angeles still have challenges to overcome. In 2005 the unemployment rate for the City of Los Angeles was 5.8 percent; 111,600 people who wanted a job could not find one. Further, according to the 2000 U.S. Census, 24 percent of city residents worked at jobs that did not pay a living wage.
An examination of Los Angeles County’s recent economic history shows a region undergoing extensive change (Figure 1). Over the last 15 years, Los Angeles’ economy has endured two national recessions and the dismantling of aerospace, one of its key economic sectors. The first recession lasted from July 1990 to March 1991 for the nation overall, but in Southern California was a period of economic contraction that lasted nearly 5 years as the Cold-War era aerospace industrial sector was decimated (note the “Decline of Aerospace” in Figure 1). Net job loss for the county ended in 1994, largely because of service sector growth, including local government, health care, education, retail trade and restaurants, helping to stimulate economic expansion within the county through the year 2000. However, a second national recession occurred from March through November 2001, and since then the number of employer-reported jobs in Los Angeles has again fallen to levels below the high-water line of 1990.
Los Angeles County’s population continued to grow during this 15-year period of economic stagnation and change, from 5.9 million working-age residents in 1990 to 6.5 million in 2004. Yet where do these growing numbers of residents work if the official count of reported jobs was either stagnant or declining? Recent research suggests that roughly 16 percent of Los Angeles’s jobs are in the growing “off-the-books,” informal sector of the economy. (See the dashed line “Number of Employed Residents, Self-Reported” in Figure 1.) LA residents themselves reported working more than local employers reported hiring them, a gap that has widened significantly during the last 15 years and indicates rising informality.
Given this recent economic history, the City of Los Angeles is challenged to achieve long-term economic growth that includes a significant increase in the number of “on-the-books,” good paying jobs that offer opportunities for economic progress to workers and their families. Clearly, the City of Los Angeles is a desirable home for a steadily growing residential population, a diverse industrial economy and a hopeful, energized labor force of almost two million workers. Civic leaders and the region’s varied stakeholders are called upon to guide development of this economy in a way that provides sustaining jobs for those that want to work. Indeed, the long-term viability of the city and region depends upon having a large workforce of economically self-sufficient residents who live, work, and pay taxes that maintain the parks, schools, roads, bridges, health services, libraries, and other infrastructure that make up our shared “quality of life.”
This paper profiles the current state of Los Angeles’ workforce and workforce training system, identifying areas of strength and need, all drawn from the LA Economy Project. It concludes with detailed recommendations for urgently needed workforce investments. We recommend, for example, that the city enact programs for new job creation, effective worker training, and policies that bring existing-yet-unreported (and thus untaxed) jobs back into the formal economy. This paper can serve to inform public debate and policy discussions, and help prepare civic leaders and stakeholders to the growth in sustainable employment that Los Angeles urgently needs.