fragmented economy, stratified society, and the shattered ... · fragmented economy, stratified...

FragmentedEconomy,StratifiedSociety,

andtheShatteredDream

coverphotobyBernieKleina

KfirMordechay

December2011

Fragmented Economy, Stratified Society, and the Shattered Dream December 2011 Civil Rights Project/Proyecto Derechos Civiles

2

Executive Summary AcrossthemassivemegalopolisstretchingfromthenorthernsuburbsofLosAngelesCountythroughthemetropolitancomplexalongthenorthernborderofBajaCaliforniaisadiverseareacontaining24millionpeople,withadisproportionatepercentageofLatinosandAfricanAmericanswhoarefacinganeducationalandeconomicdisaster.AsitbecomesincreasinglyevidentthatrecoveryfromthemostsevereeconomicdownturnsinceTheGreatDepressionwillremainsubdued,andasthedepthofeconomicplungeinTheGreatRecessionbecomesincreasinglyclear,itisessentialtoexaminethegrowingdisparitiesinthelabormarketwhichhaveresultedinawidespreadincreaseineconomicinequalitythroughouttheregionandthestate.Thougheasilydrawnintofocusinthistimeofextremeeconomicslowdown,thechangestotheSouthernCaliforniaeconomyoverthelastfouryearsareonlysymptomsofanalreadyexistingstructuralproblemexacerbatedbytherecession,notcreatedbyit.Furthermore,itisessentialtounderstandthedifferentialeconomicopportunityintheregion,asitprovidesatellingstoryofthechallengeswefacethroughoutthenation.Ifwearetoaddressthestateandthenation’sgrowingeconomicinequalityandemergefromthisrecessionbetterandstronger,itisimperativetogainabetterunderstandingofthehighlydiversifiedlabormarket,andthedifferentialnatureofopportunity.Thisreportshowsthatforseveraldecadestherehasbeenatrendtowardsdifferentialeducationalandemploymentopportunity,andthatthesesocialandeconomicinequalitieshavebeenheavilyrelatedtoracial,ethnic,spatial,andsocialclassdistinctions.Individualsfromthelowestsocialrungs,particularlyLatinos,AfricanAmericans,andthoseinthelowesteducationalranks,notonlybeginwithdifferentopportunitiesandresources,butoftendonothavethepathstomobilityinthequestforsocialandeconomicwell‐being.Thistrendofracialandclassstratificationintermsofemploymentprospects,earnings,andeducationalopportunityhasbeenincreasingforthelast30years.Thefollowingreportrevealsthedepthandscopeoftheproblem,withthehopethatitwillbeinstrumentalinfocusingattentionontheremediesandleadershipneededtomakerealchanges,sothatallgroupscanbenefitfromtheopportunitiesavailablewithinourcommunities.RisingInequalityinCaliforniaIncomeStratification:Thegapbetweenthehavesandhave‐notshassignificantlywidenedinthestate,asthemajorityofthestate’sresidentshaveexperienceddownwardmobility.InCalifornia,thewideninggapininflation‐adjustedincomehasbeenmoreseverethanintheU.S.asawhole.Since1979,high‐wageCaliforniaworkersreportedearningsthatweresubstantiallyhigherthantheircounterparts


3

acrossthenation.However,whilemiddlewageworkershavebarelykeptpacewithinflation,Californiaworkersonthelowestendofthewagedistributionscalehavelostpurchasingpowerastheirinflation‐adjustedwageshavedramaticallydeclinedsince1979.Morespecifically,thedatarevealthat:

• Afteradjustingforinflation,high‐wageCalifornians’hourlyearningsfrom1979‐2006increasedby3.7percentagepointshigherthanthatofsimilarU.S.workers.

• Forworkersatthemiddleofthewagedistribution,wageshavebarelykeptpacewithinflation,andhavebeen3.6%lowerthantypicalmiddle‐wageworkersintheU.S.

• Workersonthelowestendofthewagedistributionscalehavelostpurchasingpowerastheirinflation‐adjustedwageshavedramaticallydeclinedsince1979.California’slow‐wageworkershaveseenadeclineof7.2%inwagessince1979,contributingtoasubstantialdeclineinpurchasingpower.Incomparison,intheU.S.asawhole,low‐wageworkershaveexperiencedgainsof4%.

• Statewidepersonalincomeplunged2.5%in2009,accompanyinganationwidedropof1.7%.

JobStratification:Since1980,bothlow‐wageandhigh‐wagejobshavebeencreatedinthestate,withsubstantiallyfewerjobscreatedinthemiddleoftheincomedistributionofwages.Moreover,California’sjobgrowthwasconsiderablymoreconcentratedateachendoftheearningsdistributionduringthe1990sandearly2000sthanitwasinthe1980s.Keyfindingsfromthisstudyshowthat:

• 70.3%ofjobscreatedinthestatebetween1989and1999hadhourlyearningsineitherthebottomfifthorthetopfifthoftheearningsdistributionscale,showingahigherintensityofeconomicstratificationthanfiguresfromthe1979‐1989timeperiodwhere45.5%ofjobscreatedwereineitherthetopfifthorthebottomfifthofthedistributioninCalifornia.

• Morethanoneinthree(37.1%)jobsaddedinthe1990swereinthe

bottomfifthoftheearningsdistribution,morethantwicetheamountaddedinthe1980s(18.5%).

• Oneinthreejobscreated(33.1%)duringthe1990swasinthetopfifthof

theearningsdistributionscale,comparedto27%duringthe1980s.

• Thetrendfurtherintensifiedintheperiodfrom1999‐2005,whenalmost69%ofalljobscreatedwereineitherthelowestorhighestendofthe


4

earningsdistributionscale.TheGreatRecessionandtheAccelerationofInequality:Technically,TheGreatRecessionisover.Yet,itsaftershockisstillbeingfeltacrossthenation,ascommunitiescontinuetobleedeconomically.TheofficialunemploymentrateinLosAngelesCountywas12.2%inOctober2011,andwouldbesignificantlyhigherhadmanypeoplenotgivenupsearchingforwork.Thispaperinvestigatestheunderemploymentrates,whichprovideamoreaccuratepictureofthebatteredjobmarket.Datarevealthateducationallevelsandracearehighlycorrelatedtounderemploymentrates.

• UnderemploymentratessincetheonsetofTheGreatRecession(2007)

forworkerswithoutahighschooldiplomahaveskyrocketedbyalmost19percentagepoints(18.6%);forthosewithone,theratejumpedmorethan14%(14.4%).ThosewithaBachelor’sdegreesawunderemploymentratesincreaseby6.3%.

• Hispanicshaveseenunderemploymentratesskyrockettojustunder29%

(28.9),16percentagepointshigherthanin2007.AfricanAmericanshaveseentheirratesincreasetoalmost25%(24.8),anincreaseof10.1%since2007,whilewhiteshaveseenanincreaseof8%inunderemploymentrates.

IndustryLosers:Therapiddeclineoftheconstructionandmanufacturingindustriesadverselyimpactsthelifeoutcomesofmanyoftheregion’sresidents,fromlabormarketoutcomes,suchasemployment,economicmobility,andearnings,toabroaderarrayofsocialconsequences.ParticularlytroublingisthatanimmensemajorityofthosewhoworkintheconstructionindustryinLosAngelesCountyareLatino,andmanyofthemcomefromneighborhoodsofconcentratedpoverty.Thesecircumstancesrendermanyjoblessinaneconomicabyss.

• Over59%ofconstructionworkersliveinLosAngelesneighborhoodsofconcentratedpoverty.

• Theethnicmake‐upoftheconstructionworkersinneighborhoodsof

concentratedpovertythroughoutLosAngelesis:88%Latino,4%Black,4%Asian,and3%white.

• ManyLatinosemployedintheconstructionindustryhaveloweducation

levelsandlimitedEnglish,makingitverydifficulttofindemploymentthatrequiresaformaleducation.


5

PolicyRecommendationsThepolicylandscapeisalreadydeeplydividedwithwidelydifferentproposalsaboutwhat,ifanything,shouldbedonetofixtheseverelyfeebleeconomy.Whatthisresearchrevealsisthatthe‘CaliforniaDream’hasbeenerodingforthemajorityofresidentsatanincreasinglyintensepaceforseveraldecadesnow.Policiesthatgeneratemorewidelysharedprosperitywillleadtostrongerandmoresustainableeconomicgrowth.ThisreportrecommendsseveralpoliciestohelpcombatgrowingstratificationinSouthernCalifornia,includingcustomizedjobtraining,governmentinvestmentininfrastructure,targetedtaxcredits,addressingChina’scurrencyrevaluation,andaddressingeducationalinequality.Complacencyislikelytoleadnotonlytoenhancedinequalityandincreasedsocialmarginalization,butalsotoprolongedeconomicstagnationinCaliforniaandthenation.


6

Foreword

SouthernCaliforniaisinseriousdecline.Thefutureofthisgreatinternationalmegalopolis,stretchingfromthenorthernreachesofmetropolitanLosAngelesdownthroughlargeandrapidlygrowingcommunitiesandacrosstheMexicanborder,isunderseverethreat.WearefarawayfromWashington,D.C.anditseemsthatnooneisacknowledgingtheseverityofourfourthyearofwhat,formanynonwhitefamilies,isatruedepression.Infact,boththestateandfederalgovernmentsarecuttingback,firingmorepeople,anddeepeningproblems.Hightechandinternationaltradehaverecovered,thereareTVandmovieshootsalloverLA,andluxurystoresareprospering.Butnothingismendingtheveryhighoveralljoblessrate,morethantwicethe2006level,farworseandmoredamagingtocommunitiesofcolor,highschooldropouts,andtoworkerswithouthighereducation.TheCaliforniaBudgetProjectanalysisshowsthattheaverageinflation‐adjustedincomeofthetop1%ofCalifornia’staxpayersincreasedbyover50%overthepasttwodecades(1987‐2009).Incontrast,theaverageincomeofCaliforniansineachofthebottomfourfifthsofthedistributionlostpurchasingpower,andpeopleinthebottomfifthhaveseenawrenchingdeclineofover19%.TherehasbeenasharpincreaseinCalifornianswhohavegivenuplookingforjobsandarenolongerreportedintheunemploymentstatistics,andmanyotherswantfull‐timejobsbutareworkingpart‐time.ManyCaliforniansareprotestingandtheyhaveeveryrighttodemandabetterfuture.Weshouldthinkveryhard‐‐bothaboutshort‐termassistancetopreventlastingeconomicandsociallossesandaboutthekindofseriouslong‐termeducationaleffortsthatmustbemade.

SouthernCaliforniaisaregionwitharapidlyshrinkingwhiteminorityamongitsyoung,withaneducationalsystemfailingtogivemillionsofnonwhiteyouththeeducationtheyneedtosurviveandflourishinitsfuture.ThegoodjobsforlowskillworkersinmanufacturingarelargelygoneontheU.S.sideoftheborder,withasubstantialnumbertransferredtothefactoriesinNorthernBajaandmanytoAsia.Thegoodconstructionjobs,whichflourishedinthehousingboom,shriveledupinoneofthenation’smostspectacularhousingbusts.LongbeforetheGreatRecession,incomeswerebecomingmoreunequalandopportunitymorelinkedtoeducation,butthatcrisishasnowreachedextraordinarydepthsinmanyLatinoandAfricanAmericancommunities.Everyyear,SouthernCaliforniaisbusyfiringmanythousandsofitsteachersevenwhileitfacesadeclineinaverageeducationallevels,andhugedropoutproblemsseverelydamagethestate’ssocietyandeconomy.Californiaslashesstatefundsforcollege,presentsstudentswithsoaringtuitionincreases,andgreatlyreducescourseofferingsjustasitgetsmuchharderforyoungpeopletofindjobs.Thestatehasbeenlockedincompletepoliticalstasisbyballotpropositionsthatgavetheminorityavetoandbytheunanimousbelief(oftheRepublicanminority)thattherearenohumanneedssufficientlyurgenttojustifyincreasingtaxesonanythinginthestate.Weactuallylettaxesdeclinewhilethe


7

institutionsfosteringhumancapitalandcreatingeconomicmobilitydryup.WhileourmajorinternationalcompetitorsacrossthePacificareinvestingmightilyineducation,wearecrowdingstudentsintohugeclasses,eliminatingservicesthatcanrescueandredirectstudents,andlettingsomeoftheworld’sgreatestpublicuniversitiesdecay.Wearelettingperfectlygoodhousingfallintodisrepairandevenabandonmentbecausewecannotfigureouteitherhowtokeepthefamiliesintheirhomesortoputthemtoanothergooduse.FederalpoliciesaimedatsavingthebanksandWallStreetmaywellhaveblockedanothergreatdepression,butwithoutanymajorinterventionsdirectlyaddressingunemploymentorthehousingdisaster,thesesamepolicieshavedonenothingtoproducearecoveryinCalifornia,oreventomaintaineducationalopportunitiesatthepre‐crisislevel.Federaldollarsslowedthedeclineinpublicservicesfortwoyearsbutitappearswehavenowhitthewallandmaysoonfaceyetanotherroundofcuts.

Therearenopoliciesunderseriousdiscussionthatwouldtrickledowntotheminoritycommunitiesfacingincreasingdespairortotheinstitutionsthatservethem.PoliciesframedbypolicymakerslivinginmuchlessafflictedEastCoastsettingsareinadequateforaddressingthecrisishere.Californiateacherstryingtosavestudentsin“dropoutfactory”highschools,wheremoststudentsdonotgraduateandthusfacelifelongeconomicbarriers,nowhaveclassroomswithmorethan40students.Thoseschoolsfacefiringmanyvaluedcolleagues,chaoticreorganizationsofdecliningstaffs,andthehighbarriersimposedbytestscorerequirementsandexittests,particularlyforstudentsfromdevastatedfamilies.TheObamaadministrationtalksofadditionalrequirementsandaccountabilityforschoolsthatalreadyconfrontimpossibleconditions.

Asyoungpeoplewithouteducationfindfiercecompetitionforjobsthatdonotpayenoughtoliveon,weareclosingopportunitiesforthemtoimprovetheirskills.Iftheydon’tgetadecentjoboriftheyremainjoblessforalongtime,theiralreadylimitedchanceswillsufferfurtherlong‐termharm.Theyseenooneinpoliticalofficewithanyseriousplanstochangetheirsituation.

InprotestsacrossAmericaandinmanycitiesaroundtheworld,wearewitnessingtheirpleas.Weseeyoungpeopleshutoutofcollegeorthelabormarketorboth.Theprotestersaredisappointedinpoliciesthatrescuebanksandbondholders,butdolittleforthenation’sworkersorhomeownerssufferingfromacrisistheydidnotcause.Theyseejobsshippedabroadbutcannotaffordthegoodsproducedbyworkersinothercountries.Fordecades,workers,especiallythosewithoutenougheducationortraining,havebeenridingadownwardescalatorintermsofrealincome.Nowtheyseethatthingscanbecomemuchworse.FortheAfricanAmericancommunities,manyofwhichliveinperpetualrecessionconditions,thisisadepression.ForLatinos,whohavehadhighlevelsofemploymentintraditionallylow‐wagejobs,thesituationisdesperate.Thingsareespeciallygrimformenofallraces,butparticularlyformenofcolor,agreatmanyofwhomcompeteinan


8

unforgivingjobmarketwithoutevenahighschooleducation.Astheyarekeptjoblessforlongerandlongerperiods,theylosetheirconnectionwiththejobmarket,itbecomesharderandharderforthemtoreturntoadecentjoboranyjob,andfamiliessuffer.Someofthispainisgoingtowreckpeople’slifechances.

Inadditiontothosewhohavealreadylostjobs,thereareverylargenumbersofunemployedwhoaresodiscouragedthattheyhavegivenuplooking,andconsequentlytheyarenolongercountedasunemployed.Inadditionhugenumbersareunderemployed—workinglessthanfulltimebecausetheycannotfindfulltimework.InLosAngelesCounty,forexample,inSeptember2011,some25%ofLatinosand34%ofAfricanAmericanswereunderemployed.

Fromthisreport,whichispartofasetofstudies(calledtheLasantiProjectfortheregionencompassingLosAngeles,SanDiegoandTijuana)lookingatopportunityandequityinthehuge150‐mile‐longurbanizedareaofSouthernCaliforniaandgreaterTijuana,itisclearthatthefutureofthisregionbelongstowhatisalreadya75%nonwhitepopulationinSouthernCalifornia’spublicschools,andtothefutureworkersandcitizensoftheregionwhowearefailingtoprepare.Thecostsaremadeclearinthisreport.Inthelongrunitdemandsanintensificationofeducationalandeconomicdevelopmentefforts,bothofwhichsupporttheotherwithaspecialfocusonthosehugegroupsthathavebeenexcludedandarenowpayingterriblecosts.

WhenpartsoftheUnitedStatesexperienceanaturaldisaster,likeflooding,hurricanesortornados,everyoneunderstandsandwantstohelpbecausethesearethingsthatarenotthefaultofthevictims.Theeconomiccrisisthatisdestroyingfamiliesandcommunitiesinourregionisalsonotthefaultofitsvictims.Theyhavenothingtodowiththebankingsystem,manyfallingvictimtotheunregulatedandrecklessgreedofthemortgagefinanceindustry,whichsoldpeoplehomestheycouldnotaffordtoincreasecommissions,soldinvestorsworthlesssecuritiesbasedonthosemortgages,andsentthebilltotheU.S.treasury,crashingtheeconomy.Wheretheunregulatedgreedwasmostextreme,theworkersandthepublicinstitutionsthatservetheirfamiliessufferedthemost.Thisisanemergency,muchworsethanhavingyourhomefloodedoryourroofblownoff,anditistimefordisasterrelief.Homescanberebuiltbutmanylivesdevastatedbythiseconomiccrisiswillneverfullyrecover.

WeneedtodowhatwasdoneduringtheGreatDepression,andevenduringfarlessseriousdeclines,likethe1970spublicserviceemploymentprogramsofPresidentsNixon,Ford,andCarter‐‐weneedtostopwastingtheenergyofpeoplewhocannotfindjobsnomatterhowhardtheytry,putthemtoproductiveuse,andgivethoseexcludedfromopportunitysomeconnections,usefulexperience,andhope.WeneedexpandedJobCorps,conservationcorps,aNeighborhoodYouthCorps,andothergoodwaystousewastedenergyanddiminishinglives.PresidentObama’s


9

jobsbillputtingteachersandpublicsafetyworkersbackonthejobisagoodideaandurgentlyneeded,buteventhatmodeststephasbeenrejectedinCongress.WeneedmuchmoretoreachtheLatino,AfricanAmericanandpoorwhiteworkerswhoseliveshavebeenshatteredbytheGreatRecession.TheresearchontheCarterAdministration’sversionofpublicserviceemploymentshowedthatitreachedadiverseanddisadvantagedpopulation,providedneededpublicservices,andbroughtintothelaborforcemanywhowouldhavebeenotherwiseexcluded.Thisprogramreachedapeakof725,000jobsin1978andwasaccomplishedinresponsetoamuchsmallerrecession.

Unemploymentinsuranceisgoodandnecessaryasalastresort,butitdoesnothingtoeitherincreasejobtraining,employmentexperiencesanddisciplinethatwillbesoimportantwhenjobsreturn.Keepingpeopleonunemploymentforyearsanddoingnothingaboutupgradingtheirskillsorusingtheirenergiesisafailureofvision.

Ifyouarebrownorblack,withapooreducation,andlivinginoneofthedevastated,formerlyboomingcommunitiesoftheInlandEmpireofSouthernCalifornia,thenyouarelivingthroughthefourthyearofaseriousdepressionwithnopositivesignsinsight.Youarelivingnearprosperousandcreativestudioswherefilms,televisionshowsandmusicfortheworldareproduced,perhapsnotfarfromthegeniusesatCaltech,inanareawhere$200,000carspassyoubyonthegreatweboffreeways,butthereseemstobenoexitforyoufromthisdisaster.Theideathatthegovernmentshouldcontinuetaxsubsidiesfortheguysinbigcars,whilecuttingassistancetothosewithoutjobsorhope,isintolerable.EventheexpertspredictingwhatthefutureholdsaftertheGreatRecessionfinallyendsinCaliforniaandrealjobgrowthreturnsyearslater,offerlittlehopeforpeoplewhohavebeenjoblessforalongtimeortoyoungpeoplewhonevergotafirstjobandhavenorealexperience.ForSouthernCalifornia,thisisnotasadstoryaboutthemarginsofoursociety;itisatragicstoryaboutthecenterofourfuturesociety,inourhugeandimmenselyproductiveregion.Nothingismoreimportantthanbreakingtheintractablelinkbetweenbadeducationandbadornojobs,anddoingitassoonaspossible.Weneedurgentactionatalllevelsofgovernmentandwithinourmajorinstitutionstosubstantiallyraisegraduationratesfromhighschoolandcollege—tomakethisafundamentalgoal—andtoputtheworkerswhosetimeandtalentsarenowwastedandatrophyingbacktowork.GaryOrfieldDecember2011


10

TheLasantiProjectDescription

Oneofthelargestandmostcomplexmegalopoliintheworldstretchesthrough150milesofcontinuousurbanization.ItbeginsinthenorthernsuburbsofLosAngeles,continuesthroughthevastcommunitiesofmetroLAtometroSanDiego,andfromtherecrossesintothelargeandrapidlygrowingmetroontheothersideoftheworld’sbusiestborder,thegreaterTijuanaarea.(LasantiisawordinventedtoreflectthecombinationofLosAngeles,SanDiego,andTijuana.)TheCaliforniasidehasoneoftherichestlargeurbansettlementsintheworld,whichprovideshometoone‐fifthofallU.S.Latinos,thelargestblackcommunityintheWestandthesecondlargestAsiancommunityinthenation,andaswellasawhitecommunitythatsoughtandfoundtheCaliforniadreambutnowisonlyasmallandrapidlyshrinkingproportionofitscominggeneration.TheMexicansideisyounger,growingmorerapidlyandoneofthemostprosperouspartsofMexico.CaliforniaisbeingchangedbymigrationfromacrosstheworldbutmostlyfromMexico,CentralAmericaandahandfulofAsiannations.MetroTijuanaisagreatmagnetformigrantsfromacrossMexicoandCentralAmerica.Theborderisfiercelyguardedbutmassivelycrossedandtiesoffamilyandbusinessareubiquitous.Thisvastregionishometotheworld’scenterofmassmediaandfilm,andalsomassiveconflictsoverdrugsdesiredinCaliforniaandsuppliedbyviciousMexicannarcogangs.Bothsectionssharethesameenvironmentandwatersources.TheLasantiProjectisparticularlyinterestedinthedemographictransformationandprofoundinequalitiesandseparationsthatexistalongracial,ethnic,linguistic,andsocialclasslines.It’smostbasicquestionsconcernthestructureofopportunitiesforthecominggenerations.Lasantiisahuge,mutuallydependentandinterrelatedarea,dividedbynationalandmunicipalboundaries,bypolitics,byrace,ethnicityandpoverty,bymedia,bylanguage,bycoastalandinlandlocationsand,sometimes,byfear.Theregionisinaperiodofdramaticchangealongmanydimensions.Trendsshowthatitislikelytobecomemorepolarizedandlessabletorealizeitspromise,especiallyifexistingtrendscontinue.Theresearchbeganinaninterdepartmentaltwo‐quarterseminaratUCLAdedicatedtotryingtounderstandtheregionandthethreatstoitsfuturestemmingfromthefailuretoeffectivelyeducateandemploymostyoungpeopleacrosstheregion.Inaperiodofgeneraleconomiccrisisandslashesingovernment,thesechangeshavegoneveryfarwithoutbeingconfrontedseriously.Toomanypoliciesthatignorethechangingnatureoftheregiononlyservetodeepeninequalities.Weareonapathtoexcludemostofthenextgenerationfromopportunitiestosecurelyenterthemiddleclass,policieswhichwillproduceadeclineinSouthernCalifornia’saverageeducationallevels,whichisvirtuallycertaintoproduceadeclineineconomicsuccess.Thisisapathleadingtodecayanddivision.


11

Theinitialstudy,Divided We Fail: Segregated and Unequal Schools in the Southland,wasissuedinMarch2011.Afterthissecondstudyonemploymentandjobopportunity,athirdstudywillfocusoncollegeaccessintheregion,withlaterstudiesincorporatingthefindingsofthe2010Censusinbothcountriesandlookathealthcareinequalitiesinparticularsectors,attitudesandaspirationsintheregionand,perhaps,alongotherdimensions.Theissuesraisedbythesestudiesarenotaddressedinthepoliticaldebategoingontodayintheregion.Decisionstakentosolvetheimmediatefiscalcrisisortowinthenextelectionareimportantbutalargervisionisessential.Thereareverycostlylong‐termconsequencesofdoingnothingaboutfundamentalstructuralinequities,andtheseareexactlythekindsofissuesuniversitiescanhelpilluminate.TheLasantiprojectstudiestheracialandethnictransformationanddestinyofavastcommunity.Ourgoalistoproduceaseriesofsolid,scholarlyreports,clearlywrittenwithaccuratedatathatmakeevidentthescaleofthetransformationsandthechoicesbeforetheregion.Wehopethesereportsgetcitizensandpolicymakersthinkingintermsofdecadesorgenerationsandfocusingonthemostfundamentalquestion—howcanwemakeagoodandsuccessfultransition(toanequitableandinclusiveregion)inasocietyofconstantlygrowingdiversity?TheLasantiregioniswherethegreatforcesofLatinosociety,whiteEuropean‐Americanhistory,Asiansocieties,andalargeAfricanAmericancommunityallcometogetherfarmoredramaticallythaninanyothergreaturbancomplex.Itcanbecomeatroublesomepuzzleofdeepeningseparationandlostopportunity,oraplacewheretheseforcesunite,whereourinstitutionsrespectanddrawontherichnessofdiversity,andwherewepreparethecominggenerationstobeattheforefrontofcreativityandinnovationforthenationandthehemisphere.Ifitistobeasuccessfulsocietywithastrongmiddleclass,andifitistocontinuetogainineducationandhumancapital,itmustopendoorsthattodayremainshut.ItmusteducateandbringintothemainstreamgroupswhohavebeenlargelyexcludedfromthebestthatCaliforniahastooffer.Thesestudiesareaddressedtothosewhowanttothinkaboutbroadsystemicissuesandbegintocreateaconsciousnessofthechallengesbeforeourregion.Ourhopeistofueldebatesaboutpoliciesthatcouldturnusfromdeepeningseparationanddeclinetowardsfosteringajustandvitalcommunity,amodelforboththeU.S.andMexico.


12

FragmentedEconomy,StratifiedSociety,andtheShatteredDream

KfirMordechay

Introduction

Asweclosethefirstdecadeofthe21stcenturyinthemidstofoneofthelargestrecessionssincetheGreatDepression,thereislittlewonderthatpolicymakersandacademicsareincreasinglyconcernedaboutthenatureanddistributionofopportunityintheUnitedStates.NearlyeveryregionwithintheU.S.hasexperiencedatimeofunprecedentedchangeoverthelastfewyears,andthestateofCaliforniaisnoexception,asithasbeenamongoneofthehardesthitregionsduringthistimeofextremeeconomicslowdown.Whilesomebelieveinthepromisethatwithhardworkeveryindividualcansucceed,othersareconcernedthatoursocietyisbecomingincreasinglyfragmented,leavingmanygroupsandindividualsbehind.Thougheasilydrawntofocusonthistimeofextremeeconomicslowdown,itseemsthechangestotheSouthernCaliforniaeconomyoverthelastthreeyearsareonlysymptomsofanalreadyexistingproblemthathasbeenexacerbatedbytherecession,andnotcreatedbyit.Assuch,webegantowonderabouttheopportunitiesforthevariouspopulationsegmentsinthe“LASANTI”megalopolis,aregionwhichincludesthesixcountiescomprisingtheSouthernCaliforniaregion‐‐LosAngeles,SanDiego,SanBernardino,Riverside,Orange,andVenturacounties‐‐inadditiontotheBajaregionofMexicoontheothersideoftheborder.Toexploretheopportunityquestion,thisreportlooksathoweducationandraceareintricatelylinkedtothejobspeopleobtain,andtheirprospectsformobility.TheexplorationbeginswithexaminingthetrendsofdeindustrializationanditseffectsonwagesandthenatureofworkoverthepastthirtyyearsinCalifornia,madepossiblebythegrowthoftechnology,andintensifiedglobaleconomicintegration,resultinginamajortransformationoftheeconomicstructureofAmericansociety.Next,thereportexaminesSouthernCalifornia'sexplosiverealestateboomthatbeganin2000andculminatedinthehousingmarketbustof2007,alongwiththesubsequentonsetoftheGreatRecessionanditsdevastatingimpactonthemostvulnerablesegmentsoftheregion’spopulation.Lastly,thisstudydiscusseslessonsculledfromtherealityofCalifornia’slabormarketandconsidersgoalsandpoliciesthatcouldhelpproduceamoresecurefuturefortheresidentsoftheSouthernCaliforniaregion.TheBajaregionofMexicoisincludedinthisanalysisofthelabormarketdynamicsoftheSouthCaliforniaregion.Throughoutthisstudy,thereadershouldkeepinmindthattheUnitedStatesandMexicosharemanyinterestsbeyondwhatisdirectlyrelatedtotrade,investment,andotherformsofeconomicactivity.Spatially,


13

theseseparatenationsshareanalmost2,000‐milelongborderandtoagreatextenthaveinterconnectionsthroughtheGulfofMexico.Thetwocountrieshavelinksthroughalonghistoryofmigration,tourism,andfamilialandculturalrelationships.Inadditiontotheirsharedborderandlinkages,economicconditionsinBajaareimportanttotheUnitedStatesbecauseofthearea’sproximitytoCalifornia,investmentinteractions,traderelations,andothersocialandpoliticalfeaturesthatareaffectedbytheeconomicrelationshipbetweenthetworegions.Inexaminingthisinterconnectedregion,thereportwillprimarilyemphasizeindustrialemployment,asthemaquiladora1industryconstitutesasubstantialportionofU.S.‐Mexicotrade.Moreover,whilethischapterwillexaminebothsidesofborder,theprimaryfocuswillbeonSouthernCalifornia.Thisresearchshowsthatforseveraldecadestherehasbeenatrendtowardsdifferentialeducationalandemploymentopportunity,andthatthesesocialandeconomicinequalitieshavebeenheavilyrelatedtoracial,ethnic,spatial,andsocialclassdistinctions.Individualsfromthelowestsocialrungs,particularlyLatinosandAfricanAmericans,notonlybeginwithdifferentopportunitiesandresources,butoftentimesdonothavethepathstomobilityinthequestforsocialandeconomicwell‐being.Thistrendofracialandclassstratification,intermsofemploymentprospects,earnings,andeducationalopportunity,hasbeenincreasingforthelast30years,atleast.Inadditiontothisstratification,boththeconstructionandmanufacturingindustrydeservecarefulattention.Theconstructionindustryisespeciallyimportant,becausethespeculativebuildingofresidentialunitswasthebasisofthelastdecade’seconomicboominCalifornia,anditscollapsehasexposedvulnerablesegmentsofsociety.Themanufacturingindustryalsowarrantscarefulattention,notonlybecauseithasbeencentraltomobilitythroughoutU.S.history,butalsoitsdeclineoverseveraldecadeshashadstrikingimpactsonjobstructureandwagesthroughoutthenation.TherapiddeclineofbothindustriesadverselyimpactsthelifeoutcomesofmanyLASANTIresidents,fromlabormarketoutcomes,suchasemployment,economicmobility,andearnings,toabroaderarrayofsocialconsequences.Thereisastronglinkbetweeneducationandthejobspeopleobtain,andtheirprospectsformobility.Presently,themajorityofstudentscomingoutoftheeducationalsysteminSouthernCaliforniaarefromracialandethnicgroupsfacingseriousproblemsinthelabormarket.Eachyearacrosstheregion,adangerouslyhighpercentageofstudents‐‐disproportionatelyLatinoandAfricanAmerican‐‐aredisappearingfromtheeducationalpipelinebeforegraduatingfromhighschool.

1Thebasicschemeofoperationis:foreign‐ownedfactoriesinwhichimportedpartsareassembledintoproductsforexport,andwhereallproductionpartsareimportedandthefinishedproductsarenotsoldinthedomesticmarket.


14

Withoutadoubt,thisisatragiceducationalfailureofwastedhumanpotentialandextraordinaryeconomicloss.Iftrendsdon’tchange,asubstantialmajorityofpeoplebornintheregionwillbeill‐preparedtocontributetothelaborforceandtheglobaleconomy,andwillcontinuetoexperiencedownwardmobility.ThisexplorationoftheLASANTIregionrevealsacomplexrelationshipbetweenrace,ethnicity,socialclass,gender,geographiclocation,andeducationalopportunity.ThedifferentialeconomicopportunityintheLASANTIregionprovidesatellingstoryofthechallengeswefacethroughoutthenation.Ifwearetoaddressthestate’sandthenation’sgrowingeconomicinequalityandemergefromthisrecessionbetterandstronger,itisimperativetogainathoroughunderstandingofthehighlydiversifiedlabormarketandthedifferentialnatureofopportunity.Inthisreport,datacollectedfromanumberofsourcesaresharedregardingeconomicopportunityintheSouthernCaliforniaregion.Thisresearchbeginsbyinvestigatingthefollowing:

• Thedivergenteconomicfortunesofskilledandunskilledworkerswithinthecontextof30yearsofdeindustrialization.

• Differentialsinincome,andemploymenttrendsfordifferentracialgroupsintheregion.

• Thelaborforceprofileacrossracial,ethnic,gender,age,education,andgeographicboundaries.

• Industryintheregion.• TheconsequencesofNAFTAontheLASANTIregion.• TheeffectsofTheGreatRecessionondifferentsegmentsofthe

population,andthelikelyintensificationofurbaninequalityalongraciallines.

• Regionalfortunesinlandandonthecoast.• Possiblewaystoequalizeopportunity,notonlyforthesakeofsocial

justice,butfortheeconomicdevelopmentoftheentireregion.Itisimportanttonotethatduetolimitationsofthedata,someinformationispresentedatthestatelevel,whilesomeispresentedatthecountylevel.Ultimately,thegoalistotellastoryofthedynamicsofopportunityinthismassivelychangingmegalopolis.ThisreportwillprovideanoverviewofemploymentandincomeinformationintheSouthernCaliforniaregionoverthelast30years,usingsummarystatisticsfromthe1990and2000U.S.Census,alongwiththeongoingAmericanCommunitySurvey,reportsissuedbytheCaliforniaBudgetProject,TheEconomicPolicyInstitute,TheBrookingsInstitution,andotherresearch,withanemphasisonthelastdecadeinparticular.Whatdidthelabormarketlooklikepriortotherecession?HowhastherecessionimpactedemploymentandincomeopportunitiesinSouthernCalifornia?Whatdoes


15

thelabormarketlooklikeamongdifferentracialandethnicgroups?Ordifferentages?Orgenders?Mostimportantly,whatcanweexpectforthedynamiclabormarketwhentheeconomyfinallyrecovers?TheNotsoGoldenState:WageandJobGrowthStratificationinCalifornia

Sincethelate1970s,Californiahasexperiencedexceptionallyhighratesofjobgrowth.Inthe1980s,itwasdefenseindustrythatfueledtheeconomicboomofthestate;inthe1990sitwasthedot‐comindustry;andinthe2000sitwasthered‐hothousingmarket.Unfortunately,however,sincethe1970sthejobgrowthofthisregionhasbeenconcentratedinlow‐wageandhigh‐wagejobs,whileveryfew“in‐between”ormiddlejobshavebeencreated.Asaresult,wageandincomedistribution2haswidenedtremendouslybetweenlow‐wageandhigh‐wageoccupations.Withtheincreaseofglobalmarketintegration,thelast30yearshavechangedtheCaliforniajobstructuredramatically.Thegrowthintechnologicalinnovationhaschangedthenatureofworkinalmosteveryoccupation,resultingintheconsequentloweringofdemandformiddle‐skilledworkers.Since1980,bothlow‐wageandhigh‐wagejobshavebeencreated,withsubstantiallyfewerjobscreatedinthemiddleoftheincomedistributionofwages.Moreover,California’sjobgrowthwasconsiderablymoreconcentratedateachendoftheearningsdistributionduringthe1990sandearly2000sthaninthe1980s.3TheCaliforniaBudgetProject,athinktankinSacramento,hascalculatedCalifornia’sjobgrowthsince1979byearnings.Ascanbeseeninfigure1below,morethanoneoffourjobscreatedinCaliforniabetween1979‐2005(26.9%)hadhourlyearningsinthebottomfifthofwagedistribution,while28.1%ofjobscreatedhadhourlyearningsinthetopfifth.Thisaccountedfor55%(approximately3millionjobs)ofalljobscreatedduringthistimeperiodinCalifornia.Incontrast,California’sshareofjobgrowthinthemiddleofthewagedistributionwasmuchweakerthangrowthattheendofthedistribution.Californiaaddedfewerthan350,000jobs(6%)inthesecondfifthoftheearningdistributionduringthesame26‐yeartimeperiod.Also,just14.0%(800,000jobs)ofthejobgrowthtookplaceinthethirdfifthoftheearningsdistribution.

2Incomedistributionisthewayinwhichincomeisdividedamongthemembersoftheeconomy.Aperfectlyequalincomedistributionwouldmeaneveryoneinthecountryhasexactlythesameincome.3CaliforniaBudgetProject.“AGenerationofWideningInequality:TheStateofWorkingCalifornia1979‐2006.”Retrievedfromhttp://www.cbp.org/pdfs/2007/0708_swc.pdf


16

Figure1:California’sJobGrowthbyEarnings19792005

Source:CaliforniaBudgetProjectThejobgrowthbywagedistributionwasevenmorestratifiedduringthe1990sthaninthe1980s.Afull70.3%ofjobscreatedbetween1989and1999hadhourlyearningsineitherthebottomfifthorthetopfifthofthedistribution.Thisreflectsthefactthatforseveraldecadesnow,themiddlelevelmobilityjobshavebeendisappearingfromCalifornia.Thefiguresbetween1989and1999expressahigherintensityofsocialandeconomicstratificationthanfiguresfromthe1979‐1989timeperiodwhere45.5%ofjobscreatedwereineitherthetopfifthorthebottomfifthofthedistribution.Morethanoneinthree(37.1%)jobsaddedinthe1990swereinthebottomfifthoftheearningsdistribution,morethantwicetheamountaddedinthe1980s(18.5%).Inaddition,oneinthreejobscreated(33.1%)duringthe1990swasinthetopfifthoftheearningsdistributionscale,comparedto27%duringthe1980s.Intheperiodfrom1999‐2005,almost69%ofalljobscreatedwereineitherthelowestorhighestendoftheearningsdistributionscale.Asseeninfigure2below,afull43.1%ofnewjobscreatedwereonthelowestend,while25.5%ofthejobscreatedwereatthehighestendoftheearningdistributionscale.ThetrendinCaliforniaofincreasingpolarizationofthetypesofjobsthatareavailablelargelyreflectsthedeclineofmanufacturingjobsforseveraldecades.


17

Figure2:California’sJobGrowthbyEarningsQuintiles19992005

Source:CaliforniaBudgetProjectFromManufacturingtoService:TheShrivelingMiddleClassThefast‐risingtrendofinequalityinCaliforniathathasbeenmarkedbypolarizedjobgrowthanddrasticallyunequalincomegainslargelyreflectsthedeclineofmanufacturingjobsandthecreationofaserviceandtechnologyeconomy.WithoutunderstandingthedeindustrializationofAmerica,itisdifficulttounderstandtherestructuringoftheeconomythathasbeentakingplace.Formanydecades,manufacturingwasasourceof“middlewage”andstable,unionizedjobsformanyAmericans,particularlyforthosewithoutacollegeeducation.4TheLosAngelesareaisatellingcaseofacitythatwasonceoneofthemanufacturingcentersintheUnitedStates.Thecitywasfoundedin1781,wasasmallagriculturaltownformuchofitshistory,anddidnotreallyexperiencealandboomandurbansprawluntilafterWorldWarIIwhenitbecamethecenterofthedefenseindustryandautoindustryontheWestCoast.5Thisdurablemanufacturingepicenterwasquicklylost,followingasimilarfateoftheMid‐Western“Rustbelt.”In1970,oneinfiveLosAngelinoswereemployedindurablemanufacturing.However,thousandsofwellpayingunionizedjobsinthemanufacturingsectorsuchasauto,steel,glass,andrubber,begantodisappearatarapidratethroughoutthe1970sand

4CenterforContinuingStudyoftheCaliforniaEconomy.“OpportunitiesandfortheCaliforniaEconomy.”Retrievedfromhttp://www.ccsce.com/PDF/California‐Green‐‐Opportunties‐and‐Challenges.pdf5LawrenceBobo,etal.,PristamicMetropolis:InequalityinLosAngeles.(NewYork:RusselSageFoundation,2000.),11.


18

1980s.6TheimmensemajorityofCalifornia’smanufacturingjoblossessince1979occurredinmiddlewageoccupationsorjobswithearningsinthesecondthroughfourthfifthsofthewagedistribution.CaliforniaBudgetProjectanalysisofCensusDatashowsthat98.3%ofthemanufacturingjobslostduringthisperiodhadtypicalhourlyearningsinthemiddleofthedistribution(appendixA,figure1).Theseveredeclineofmanufacturingjobssince1979meansthatmiddlemobilityjobshavealmostallbutdisappeared.Thejobsthathavereplacedmanufacturinghavemostlybeenintheservicesector,whichincludesjobssuchassalespersons,cashiers,foodpreparation,andothertypesofserviceworkers.Thesejobstendtobeinthetypicalhourlyearningsatthebottomfifthoftheincomedistributionscale.7UnevenWageGainsinCaliforniaSincethe1970s,thegapbetweenthehavesandhave‐notshassignificantlywidenedinurbanAmerica.Infactin2007,beforetherecession,thetop1%ofearnerstookhome23.5%oftotalincomeearnedinthenation,thehighestsharesince1928.8InCalifornia,thewideninggapininflation‐adjustedincomehasbeenmoreseverethanintheU.S.asawhole.Since1979,high‐wageCalifornianworkersearnedsubstantiallymorethantheircounterpartsinthenationasawhole(figure3).Afteradjustingforinflation,theirhourlyearningsfrom1979‐2006increasedby3.7percentagepointsmorethanthatofsimilarU.S.workers.ForCaliforniaworkersatthemiddleofthewagedistribution,wageshavebarelykeptpacewithinflation,andhavebeen3.6%lowerthantypicalmiddle‐wageworkersintheU.S.California’slow‐wageworkershaveseenadeclineof7.2%inwagessince1979,contributingtoasubstantialdeclineinpurchasingpowerwhereasintheU.S.asawhole,low‐wageworkershaveexperiencedgainsof4%.9Thesedatasuggestthatthestratificationbetweenlow‐wageandhigh‐wageworkersinCaliforniaismoreextremethanintheUnitedStates.Whilethelast30yearshavebeendifficultforCalifornia’slow‐wageandmiddle‐wageworkers,onlythoseonthetop20thpercentileofthedistributionscalehaveseensubstantialgainstotheirpurchasingpower.10Inaddition,recentfiguresreleasedbytheCommerceDepartmentindicatedthatpersonalincome11inCaliforniafelllastyearforthefirsttimesincetheGreatDepression.The2.5%dropinpersonalincomethroughoutthestateworksoutto$1,527fewerdollarsforeveryman,womanandchildinCalifornia,whichismoreextremethanthenational 6Ibid.,54‐55.7CaliforniaBudgetProject.“AGenerationofWideningInequality:TheStateofWorkingCalifornia1979‐2006.”Retrievedfromhttp://www.cbp.org/pdfs/2007/0708_swc.pdf8TheEconomist.AsJobsFadeAway,May8,2010.Retrievedfromhttp://www.economist.com/node/160609399Purchasingpoweristhequantitiesofgoodsandservicesthatcanbepurchasedwithagivenamountofmoney.10CaliforniaBudgetProject.“AGenerationofWideningInequality:TheStateofWorkingCalifornia1979‐2006.”Retrievedfromhttp://www.cbp.org/pdfs/2007/0708_swc.pdf11Personalincomeincludeswagesandsalaries,healthandpensionbenefits,rents,dividendsandinterest,federalpaymentssuchasunemploymentandSocialSecurity,andjustabouteveryformofwealthexceptstocksalesandothercapitalgains.


19

declineof1.7%($1,028percapita).12Bycontrast,from2009to2010,wagesgrewby8.7%inSantaClaraCounty,thestateshigh‐techhub.13ThesedatasuggestdivergentfortunesandthatinequalityinCaliforniaislikelytowidenevenfurther.Figure3:WageGainsinCaliforniaandtheU.S.between19792006

Source:CaliforniaBudgetProject(AnalysisofCurrentPopulationSurveydata)

IncomePolarizationbyRaceIncomeiswhattheaveragefamilyusestoproduceandreproducedailylifeintheformoffood,shelter,clothing,andothernecessities.Incomecanalsoserveadeterminantofassetaccumulationsuchashomeownership,stocks,bonds,andotherfinancialholdings,whichtranslateintoincreasedopportunities.Thenearabsenceofassetownershiphasextremeconsequencesforeconomicandsocialwell‐beingandfortheabilityoffamiliestoplanforfuturesocialmobility‐‐tosecuretheirquestforwell‐beinginwhateverformisdesired,suchasputtingachildthroughcollege,startingabusiness,findingmaterialcomfort,andsoon.14Muchpastresearchonincomedifferencesisflawedbyinsufficientattentiontohowincomecreateswealth.Wealthcanbedefinedaswhatoneownsminuswhatoneowes.Therefore,whenexploringdifferencesinincomeoneshouldkeepinmindhowincomepotentiallycreateswealthaccumulation,aswealthissurelyoneofthepowerfulinstrumentsofperpetuatingintergenerationalinequality.Recent2009

12TomeAbate,“PersonalIncomeFalls2.5%inCalifornia,”SanFranciscoChronicleOnlineBusinessReport,March26,2010.13EdwardGlaeser,“TheInformationEconomyPowersWageIncreases,”Economix(blog),NewYorkTimes,October26th,2010.14NeilSmelser,WilliamJuliusWilson,andFaithMitchell,AmericaBecoming:RacialTrendsandTheirConsequences,Volume2(Washington,DC:NationalAcademyPress,2001),222‐230.


20

datacompiledbythePewResearchCenterrevealedadramaticracialwealthgapthroughoutthenation,whichismorestarkthantheracialincomegap.ThedatashowsthewealthgapbetweenwhitesandminoritiessignificantlywidenedduringtheGreatRecession,andfurther,thatthewealthgapisthewidestithasbeensincethegovernmentbeganpublishingsuchstatisticsbyrace/ethnicity.15ThePewstudylookedatwealthnumbersbetween2005andthetechnicalendoftheGreatRecessionin2009.Itfoundthattheracialwealthgapexplodedinthattimeperiod,asblacksandLatinossuffereddramaticblowsfromthecollapsedhousingmarket.Medianwealth,thatisthenetvalueofyourassetsversusyourdebts,fellby66percentamongLatinohouseholdsand53percentamongblackhouseholds,whileitfelljust16percentamongwhitehouseholds.16Still,whiletherecessionworsenedtheracialwealthgap,thetrendhasbeenheadedinthatdirectionoverthepast25years.Incomelevelsshowsignificantdifferentiationwhenexaminedacrossracialandgeographiclines.AsianandwhitefamilyincomesaresubstantiallyhigherthanthoseforAfricanAmericansandHispanics.In2000,atthetimeinformationonincomewascollectedinthelastU.S.Census,Hispanicshadthelowestmedianfamilyincome17ofanymajorracialandethnicgroupintheLASANTIregion.DataillustratesthatinLosAngelesCounty,forexample,whiteshadafamilyincome($69,396)morethantwiceashighasthenumberforLatinos($33,363),andsignificantlyhigherthanAfricanAmericans($37,190)(appendixA,table1).Similardataispresentedregardingmedianhouseholdincome18intheLASANTIregion.AsimilarpatterntothatformedianfamilyincomeisevidentacrossdifferentracialandethnicgroupsinLosAngelesCounty:Asiansandwhiteswiththehighestincomelevels($47,631,and$53,978,respectively),followedbyhouseholdsheadedbyindividualsidentifiedwithTwoorMoreRaces($36,292,);andAfricanAmericansandLatinoshavethelowestincomelevels(rangingfrom$31,905to$33,820)(appendix1,table2).Thesamegeneralpercapitaincomepatternheldasthatforfamilyandhouseholdmedianincomes.Table1belowlistspercapitaincome19ratesforthetotal 15RakeshKochhar,RichardFryandPaulTaylor,WealthGapsRisetoRecordHighsBetweenWhites,Blacks,HispanicsTwentytoOne(Washington,DC:PewResearchCenter,SocialandDemographicTrends.,July26,2011)16Ibid.17TheCenterforComparativeStudiesinRaceandEthnicityatStanfordUniversityhasparaphrasedthedefinitionoffamilyincomefromtheU.S.DepartmentofCommerce:“familyincomeincludesincomeofallfamilymembers15yearsandolderrelatedtothehouseholder.”18TheCenterforComparativeStudiesinRaceandEthnicityatStanfordUniversityhasparaphrasedthedefinitionofhouseholdincomefromU.S.DepartmentofCommerce:“Householdincomeincludesincomeofallindividuals15yearsandolderinthehousehold,regardlessofwhethertheyarerelatedtothehouseholder.Becausemanyhouseholdsconsistofonlyoneperson,averagehouseholdincomeisusuallylessthanaveragefamilyincome.”19TheCenterforComparativeStudiesinRaceandEthnicityatStanfordUniversityhasparaphrasedthedefinitionofpercapitaincomefromU.S.DepartmentofCommerce:“Percapitaincomeisthemeanincome


21

populationoftheLASANTIregionandeachracialgroup.WhitesandAsiansinLosAngelesCountymaintainthehighestpercapitaincomelevels($35,785and$20,595,respectively);followingthemareAfricanAmericans($17,341),individualsthatidentifiedwithTwoorMoreRaces($14,782),andLatinos($11,100),whohavethelowestpercapitaincomelevels.Table1:CountyPerCapitaIncome(inUSDollars),byRace,200020

County LatinoAfricanAmerican Asian White

LosAngeles 11,100 17,341 20,595 35,785Riverside 10,717 15,301 18,589 24,999SanBernardino 11,395 14,822 19,557 22,033SanDiego 11,738 16,770 19,039 30,150Ventura 12,424 21,934 26,188 32,074Orange 12,122 22,322 21,137 35,739Source:CenterforComparativeStudiesinRaceandEthnicity,StanfordUniversity;2000CensusAnotherwaytoexaminepercapitaincomedifferencesacrossthedifferentracialandethnicgroupsistoconsiderthechangethathasoccurredoveraperiodoftime.Figure4clearlyrevealsthatpercapitaincomedifferentialhasintensifiedfrom1990to2000inCalifornia,asmeasuredbytheCensussurveys.AccordingtoademographicreportpublishedbytheCenterforComparativeStudiesinRaceandEthnicityatStanfordUniversity,whitessawasignificantincreaseinpercapitaincomeinCalifornia(66.6%),comparedwithwhitesintheUnitedStatesasawhole(58.2%).Asians/PacificIslandersexperiencedlessofanincreaseinCalifornia(59.2%),butthesameincreaseaswhitesnationally(58.2%).ParticularlystrikingistherelativelylowincreaseinpercapitaincomeforAfricanAmericans(50.7%)andespeciallyforLatinos(37.3%)inCalifornia,comparedtobothwhitesandAsian/PacificIslandersinCalifornia,andotherAfricanAmericansandLatinosthroughouttheUnitedStates.ThesestarkdifferencesinpercapitaincomechangesinCaliforniapresentdisturbingevidencethatincomeinequalityisintensifyinginthestatemuchmorethaninthenationaswhole,alongracialandethnicgroupdistinctions.

computedforeveryman,woman,andchildinaparticulargroup;derivedbydividingthetotalincomeofaparticulargroupbythetotalpopulationinthatgroup.” 20Twoormoreracescategoryrepresentsasmallpercentageofthewhole,andduetothesmallsizeofthepopulation,thecategorywasdeleted.


22

Figure4:PercentageChangeinPerCapitaIncomefrom1990to2000,byRace21

Source:CenterforComparativeStudiesinRaceandEthnicity,StanfordUniversity,1990;2000Census

EmploymentinSouthernCalifornia:20002007Thefirstdecadeofthe21stCenturyhashaditsshareofeconomicupsanddowns,astheUnitedStatesbothbeganandendedthedecadeintwoseparaterecessions(2001;2007‐2009).ThestateofCaliforniawashithardbothtimes,duetoCalifornia’ssubstantialconnectiontothecollapsedindustriesdeemedresponsibleforthedownturns‐‐thedotcomindustry(2001)andthehousingmarket(2007).AccordingtoareportreleasedbytheCaliforniaBudgetProjectin2007,thestateofCaliforniaexperiencedonlyamodestrecoveryaftertherecessionearlierinthedecade,emphasizingalargerconcernabouthowCaliforniawillfareafterthedevastationofthecurrentrecession.Employmentlevelsdeclinedbetween2000and2006,withonly70%ofworking‐ageCaliforniansemployedin2006,comparedto71.9%in2000,alossof440,000employedpersons.22Thestateemploymentratebottomedoutin2003,and,afterbeginningtorise,fellflatbetween2005and2006.23TheSouthernCaliforniaregionfaredslightlybetterthanNorthernCaliforniainthefirsthalfofthedecade,withemploymentdeclinesinthegreater

21Incomechangeisnotadjustedforinflation.22LaborDay2007:California’sWorkersFaceaMixofPromisingandTroublingTrends(California:CaliforniaBudgetProject,February2007).Retrievedfrom<http://www.cbp.org/pdfs/2007/0708_laborday.pdf>23CaliforniaBudgetProject.“LaborDay2007:California’sWorkersFaceaMixofPromisingandTroublingTrends”.Retrievedfromhttp://www.cbp.org/pdfs/2007/0708_laborday.pdf


23

BayAreaforfourstraightyearsbetween2000and2004.24WhiletheNorthernCaliforniaeconomyremainedweak,economicgrowthinSouthernCaliforniaingeneral“wasimpressivein2004,comparedtotheNorthernhalfofthestate.”Itwasin2004thatSouthernCalifornia,andLosAngelesCountyspecifically,begantoexperiencejobcreationforthefirsttimesince2001.Theregioncontinuedtogrowforthenextfewyears,aseconomicgrowthinSouthernCaliforniawasstrong,andevendeemed“impressive”in2006,thatis,untilasharpdeclineineconomicgrowthin2007.25Despitearecessionintheearlypartofthisdecade,employmentintheSouthernCaliforniaregionwassteady,particularlybetween2004and2007,withjobcreationandeconomicgrowthcommonamongeachofthesixcountiesintheLASANTIregion.InLosAngelesCounty,forexample,“theunemploymentratefellto4.7%in2006,thelowestrateinover20years.”26Eachofthesixcountiesexperiencedjobgrowthbetween2004and2007andlowunemploymentratesthroughoutthebeginninghalfofthedecade,withanaverageunemploymentrateof4.16%acrossthecountiesin2006.Thisstandsinstarkcontrasttothecurrentaverageunemploymentrateof12.16%,27anincreaseof8%inonlythreeyears,andover8%higherthantheaverageunemploymentrateofthesixcountiesin2000,whichaveragedlessthan4%(3.95).However,tobetterunderstandemploymentandopportunityinthisregion,wewillexplorethelaborforceparticipationrate,thatis,theworkingagepopulation,typically16‐64,whoareemployedorunemployedbutlookingforajob.IntheUnitedStates,therateisgenerallyaround67‐68%.28LaborForceParticipationThelaborforceparticipationrateisdefinedasthepercentageoftheworking‐agepopulationwhoreportthemselvesaseitherworkingorlookingforwork.ThisfigureispublishedmonthlybytheBureauofLaborStatistics(BLS)andisconsideredtobethemostprominentmeasureofthesupplyofworkerstotheeconomy.29UsingdatafromtheU.S.CensusBureau’sAmericanCommunitySurvey(ACS)andtheStateofCalifornia’sEmploymentDevelopmentDepartment(EDD),thecivilianlaborforceparticipationrate30forthesix‐countyLASANTIregionwas 24SanFranciscoEconomicForecast(California:CaliforniaDepartmentofTransportation,2005).Retrievedfrom<http://www.dot.ca.gov/hq/tpp/offices/ote/socio‐economic_files/2005/San_Francisco_Forecast.pdf>25Ibid.26Ibid.27Averageunemploymentof6CountiesasofApril22,2010.28CaliforniaEmploymentDevelopmentDepartment.Retrievedhttp://www.edd.ca.gov/About_EDD/Quick_Statistics.htm29StephanieAaronsonetal.,TheRecentDeclineinLaborForceParticipationanditsImplicationsforPotentialLaborSupply(Washington,DC:TheBrookingsInstitute,March2006).PreliminaryDraft.30AccordingtotheAmericanCommunitySurvey(ACS),“Thelaborforceparticipationraterepresentstheproportionofthepopulationthatisinthelaborforce.Forexample,ifthereare100peopleinthepopulation16yearsandover,and64ofthemareinthelaborforce,thenthelaborforceparticipationrateforthepopulation16yearsandoverwouldbe64percent.”Theactuallaborforceincludedthosewhoareemployedand


24

explored.In2000,theaveragelaborforceparticipationrateforthesixcountieswas61.6%,31ofwhich77%ofmenwereparticipating,and63%ofwomen.32ThehighestworkforceparticipationrateswerefoundinOrangeCounty(65.5%)andVenturaCounty(65.4%),whereasthelowestparticipationrateswerefoundinSanBernardinoandRiversideCounties,59.4%,and58%,respectively.BothLosAngelesandSanDiegocountieshoveredaround61%,withaworkforceparticipationrateof60.5%inLACounty,and60.9%inSanDiego.Allrates,withtheexceptionofOrangeandVenturacounties,weresignificantlylowerthantheaverageworkforceparticipationrateintheUnitedStates.Duringthissametimeperiod(2000),theaverageworkforceparticipationratewashighestamongtheworkingagepopulation25‐54,withthelowestparticipationratefoundamong16‐19yearolds,33at74.8%and43.0%respectively(appendixA,table3).Thehighestlaborforceparticipationratesamongallages,16‐64,werefoundinOrangeandVenturaCounties,whereasSanBernardinoandRiversidehadthelowestratesofparticipationamongallagecategories,thoughnotfarbehindLosAngelesCounty,whichhadthelowestworkforceparticipationrateamong16‐19yearolds(38.2%)ofallthecounties.Althoughthegrowingimportanceofaneducationmayexplainlowworkforceparticipationamongteenagers,immigrantpopulationsmayalsoplayarole,particularlythosewithlowereducationlevelsandskillsthatworkinoccupationssimilartothoseinwhichteenagersarelikelytowork,34althoughthisiscalledintoquestion.35Also,duringtimesofeconomiccontraction,olderworkerswithmoreexperienceorskillsmaylookforworkinsectorsthathavehistoricallyemployedteenagers.36Theworkforceparticipationratesfoundearlierinthedecadeweresimilartothosereportedmid‐decade(2005‐2007)(appendixA,table4).Itisimportanttonotethattheagecategorieswerereporteddifferentlyonthe2000survey,whichincludedtheagecategoryof25‐54,whereasthe2005‐2007ACSfurtherdividedthecategoryinto25‐44and45‐54yearolds,makingitdifficulttocompareinformationacrossthedatasets.Withthat,theaverageworkforceparticipationfoundamongthesixcountieswas64.7%,withOrangeCountyandVenturaCounty,again,reportingthe unemployedbutactivelylookingforajob.Individualswhoarenotworkingandnotlookingforajobarenotcountedinthelaborforcenumber. 31U.S.CensusBureau,Census2000SummaryFile3,MatricesP43andPCT35.32EmploymentStatusatSixSouthernCaliforniaCounties,2000,2004,&2007(Source–U.S.CensusBureauandAmericanCommunitySurvey).33AccordingtotheAmericanCommunitySurvey(ACS),theageclassificationisbasedontheageofthepersonincompleteyearsatthetimeofinterview.Bothageanddateofbirthareusedincombinationtocalculatethemostaccurateageatthetimeoftheinterview.34StevenA.CamarotaandKarenJensenius,ADroughtofSummerJobs:ImmigrationandtheLongTermDeclineinEmploymentAmongU.S.BornTeenagers(Washington,DC:CenterforImmigrationStudies,May2010).35HeidiShierholz,CISAnalysisofImmigration’sImpactonYouthEmploymentOmitsKeyFacts(Washington,DC:EconomicPolicyInstitute,May12,2010).36MarleneA.LeeandMarkMather,U.S.LaborForceTrends(WashingtonDC:PopulationReferenceBureau,June2008).


25

highestratesofemployment.Thelowestlevelofemploymentisfoundamong16‐19yearoldsoverall,andLosAngelesCountyhasthelowestworkforceparticipationrateamongthisagegroupat34.1,or9%lowerthanthehighestcounty(Ventura),andnearly6%lowerthantheaveragerateamongthesixcounties.Thehighestparticipationratesarefoundamongthe25‐44agegroup,withanaverageparticipationrateof79.5%withinthesixcounties.The45‐54agegroupreportedanaverageparticipationrateof78.9%,onlyslightlylowerthanthepreviousgroup,andhigherthanallothergroups.Again,thehighestrateswerefoundinOrangeandVenturaCounties,withSanDiegoCountytrailingOrangeandVenturabyonly1%,atan81%workforceparticipationrateamong25‐44yearolds.DifferentialEmploymentbyRace/Gender.AccordingtoCensusdata,37thelaborforceparticipationrateinthesixcountiesishighestamongwhiteandAsianmales,25‐54yearsold.In2000,thelaborforceparticipationrateofwhitemaleswas84%,comparedto63%forAfricanAmericanmales,71%forHispanicorLatinomales,and77%forAsianmales,amongthesixcounties.Assuch,amongmales,thelaborforceparticipationrateamong25‐54year‐oldswaslowestamongAfricanAmericans.TheemploymentrateofAsiansintheSouthernCaliforniaregionwasonlyslightlylowerthanwhites,witha77%and64%employmentrateamongtheAsianmaleandfemalepopulations,respectively.WiththeexceptionofAfricanAmerican(63%)andAmericanIndianmen(69%),malesinallrace/ethnicitygroupsareemployedataratehigherthan70%,withwhitemalesbeingtheonlygroupwithaworkforceparticipationratehigherthan80%averagedamongthesixcounties.Theemploymentstoryin2000heldtrueforwhitefemalesaswell,astheywereemployedathigherrates(71%)thananyotherfemalesbyrace.Thereisalsoasignificantgapbetweenfemaleswiththehighestratesofemployment(whites,71%)andthosewiththelowestrateofemployment(Hispanic/Latino,52%),anearly20%difference.38Thisisalsotrueformen,astheemploymentrateamongwhitemenis21%higherthanthatofAfricanAmericanmales.Similartothetrendsfoundamongmales,withtheexceptionofHispanic/Latinofemales,allotherraceshaveanemploymentratebetween60and70%,withwhitefemalesbeingslightlyabove.Ofallgroups,AfricanAmericanfemalesaretheonlygroupemployedathigherratesthantheirmalecounterparts,at65%,comparedto63%formales.

38AccordingtoastudyreleasedbythePopulationReferenceBureautitledU.S.LaborTrends,“foreign‐bornwomenarelesslikelytowork,particularlyiftheyhaveyoungchildren.ThelowparticipationratesofHispanicwomenmaybeattributedtoacombinationoffactors—thehighproportionofforeign‐borninthispopulation,lowereducationlevelsamongHispanicwomen,andfamilystructure.”Retrievedfromhttp://www.prb.org/pdf08/63.2uslabor.pdf


26

Figure5:LaborForceParticipationbyRaceandEthnicityinCombinedCounties,200039

Source:BureauofLaborStatisticsFurther,accordingtodatafromtheU.S.CensusBureau,thecombinedemploymentratesin2000fortheLASANTIregionwerethesameastheratesfoundinCalifornia,thoughthestudygoesontostatethat“itwasadifferentstorywhen[comparing]thecombinedemploymentratestotheUSAratesformalepopulation.”Assuch,theyfound“theUSAemploymentratewas4%higherthanthecombinedrate”fortheLASANTIregion,whichspeakstothefindingsofBoboet.al(2000)aboutthepersistenceofinequalityinSouthernCalifornia,andinLosAngelesCountyspecifically.“PovertyhasbeenmoreprevalentlydistributedinLosAngelesthanintheUnitedStatesasawhole.”40Poverty,adirectresultofdisproportionatelabormarketaccess,showedmarkedincreaseinLosAngelesCountybetween1990at16.7%and1995at22.7%,a6%increaseinonly5years,andsignificantlyhigherthanthepovertyratefoundintheUnitedStates,at12.8%in1990and13.8%in1995.41Theemploymentstatusofvariousracialandethnicgroupswassimilarbeforeandafter2000.A1994studylookingatinequalityinLosAngelesreportedthattheemploymentratebyrace/ethnicityinLosAngeleswas68%forwhites,67%forBlacks,65%forAsians,and66%forLatinos.42Thoughtheparticipationrateamongwhitesissignificantlylowerthantheratesfoundusingthe2000Censusdata,anddonotappeartobesignificantlyhigherthanthoseofHispanic/Latinos,Blacks,orAsians,itisimportantnotethatunemploymentratesareincludedinthe

39Someotherracescategoryrepresentsasmallpercentageofthewhole,andduetothesmallsizeofthepopulation,thecategorywasdeleted. 40Bobo16.41Ibid.,18.42Ibid.,9.


27

laborforceparticipationrateaswell.Assuch,whileAfricanAmericanshada67%employmentrate,comparedto68%forwhites,15%ofAfricanAmericans,asopposedto10%ofwhiteswereunemployed.ThisisalsothecaseforLatinoswho,althoughemployedat66%,hadanunemploymentrateof16%inthe1994study.Asiansweretheonlygroupatthattimetohaveanunemploymentratebelow10%,at7%,thoughaslightlylowerlaborforceparticipationratethantheothergroups.Tobetterunderstanddifferentialaccesstothelabormarket,andthevaryingemployment/unemploymentratesamongdifferentracialandethnicgroups,itwouldbeimperativetoexplorethefactorsthatcontributetolabormarketaccess,orlackthereof,infurtherdetail.ParticipationbyEducation.Theworkforceparticipationrateamongthosewithlessthanahighschooldiplomatrailedsignificantlybehindtheparticipationratesamongtheotherthreecategoriesforeducationalattainment,ascanbeenintable2.Forexample,thoseindividualswithlessthanahighschooldiplomahadanaverageworkforceparticipationrateamongthesixcountiesof66%,whichis8.2%lowerthanthosewithaHighSchoolDiplomaorequivalent,andmorethan17%lowerthantheaverageworkforceparticipationrateamongthosewithabachelor’sdegreeorhigher,withanaveragerateof83.4%foundamongthesixcounties.Withineachofthecounties,therewaslittlevariationintheworkforceparticipationrateamongthosewithabachelor’sdegree,rangingfrom82%inSanBernardinotoahighof84.7%inLosAngelesCounty.Theemploymenttrendsamongthosewithvariouslevelsofeducationalattainmentholdtruewithineachcategory,witharangeofapproximately2%betweenthehighestandlowestparticipationratesamongthecounties.Forexample,theworkforceparticipationrateamongthosewhohaveatleastsomecollegeoranAssociate’sDegreeishighestinVenturaCounty(80.2%),rangingfrom77‐to‐79%amongthefourmiddlecounties,toalowof77.5%inSanBernardino,adifferenceof2.7%betweenthehighestandlowestratedcounties.Again,thistrendrepeatsitselfineachofthecategories,showingthelargestdifferencesbetweencategories,signifyingthedeepdisparityinworkforceparticipationamongthoseleastandmosteducated.


28

Table2:LaborForceParticipationbyEducationalAttainment,20052007Source:USCensusBureau,AmericanCommunitySurvey2005‐2007ParticipationbyRaceandEthnicity.Accordingtothe2005‐2007AmericanCommunitySurvey(ACS),theworkforceparticipationratewashighestforbothAfricanAmericansandparticularlyHispanicsineachofthesixcounties,whichisillustratedintable3.ThehighparticipationrateforHispanicsislargelybecauseimmigrantmenaremorelikelythantheirU.S.‐borncounterpartstobeworkingorlookingforwork,astheyoftenmigrateforworkopportunities.43Ifalargenumberofnewworkersenterthelaborforcebutonlyasmallfractionbecomesemployed,thentheincreaseinthenumberofunemployedworkerscanputupwardpressureonthelaborparticipationrate.Ineachofthesixcounties,withtheexceptiontoLosAngelesCounty,bothAfricanAmericansandHispanicshadthehighestrateofpeoplewhowereeitherworkingorlookingforwork.

43BureauofLaborStatistics,“Foreign‐BornWorkers,TheirCharacteristicsin2009.”NewsRelease,March19,2010.

LaborForceParticipationbyEducationalAttainment,2005‐2007

LessthanHS

HighSchoolor

EquivalentSome

College/AABachelor's

Degree

LosAngeles 66.20% 73.4 78.3 84.7

SanDiego 64.70% 74 78.7 84.2

Ventura 70.40% 76.7 80.2 83.5

OrangeCounty 71.40% 76.8 79 82.8

Riverside 58.90% 71.7 76 83.1

SanBernardino 64.50% 73 77.5 82


29

Table3:LaborForceParticipationbyRaceandEthnicity,20052007

White AsianAfrican

American

HispanicofLatino

Origin(ofanyrace)

LosAngeles 64.0% 61.3% 59.6% 66.8%SanDiego 65.6% 62.4% 66.3% 67.0%Ventura 66.2% 67.5% 71.6% 68.9%OrangeCounty 66.7% 61.9% 69.2% 72.0%Riverside 60.4% 63.7% 63.9% 66.5%SanBernardino 62.4% 62.0% 61.7% 64.4%Source:USCensusBureau,AmericanCommunitySurvey2005‐2007

RaceandEducationalAttainmentinLASANTI.Itisimportanttokeepthelinkbetweeneducationandraceinmindthroughoutthisanalysis,aseducationalopportunityhashistoricallybeenAmericans’principalmechanismforupwardmobility.44Asdiscussedearlier,attainmentofdifferentlevelsofeducationisastrongindicatorofemploymentprospectsandhasvariedovertimebetweendifferentracialandethnicgroupsinCalifornia,servingasakeycomponentofdifferentialincomesandeconomicstability.Using2000U.S.Censusdata,theCenterforComparativeStudiesinRaceandEthnicityatStanfordUniversitycollecteddataoneducationalattainmentacrossdifferentethnicandracialgroupsintheLASANTIregion.In2000,over89%ofLosAngelesCounty’swhitepopulation,age25andolder,hadcompletedhighschool.ForAsiansthenumberwasjustunder82%,andforAfricanAmericansjustover79%.Particularlystriking,notonlyinLosAngelesCounty,butineachofthecountiesintheLASANTIregion,isthelowlevelofeducationforLatinos.InLosAngelesCounty,forexample,only42%oftheLatinopopulationcompletedhighschool,andlessthan7%hadaBachelor’sDegreeatthetimeoftheU.S.decennialsurvey.ForwhitesandAsiansthenumberissignificantlyhigheratalmost38and42%,respectively.Astable4illustrates,thetrendisconsistentineachofthesixcounties;thatis,whitesandAsians/PacificIslandershavethehighesteducationalattainmentrates,whileLatinosandindividualsidentifiedastwoormoreraceshavethelowestrates,andblackshaveratesinbetween.ThisdatarevealsthatAfricanAmericangroups,thosethatidentifyastwoormoreraces,andLatinogroupshavedrasticallydivergentlabormarketprospects.

44MargaretWeir,IncomePolarizationandCalifornia’sSocialContract(California:UniversityofCaliforniaInstituteforLaborandEmployment,2002).


30

Sharpdivisionsinwell‐beingbyeducationlevelsuggestaneedforpolicymakerstoaddresseducationalopportunityforallsegmentsonthepopulation.ParticipationbyGender.Thelaborforceparticipationrateofmenhasbeendecreasingsincethe1950s,whilefemaleshaveseenaremarkableincrease.45Thisdeclinehasresultedfromvariouscomplexfactors,rangingfromthebirthcontrolpilltomanyotherfactorscontributingtowomenchoosingtoinvestinadvancingtheircareers.Dataindicatethatthelaborforceparticipationrateissignificantlyhigherformalesineachofthesixcounties.Unemployment.Thoughtheworkforceparticipationrateamongvariousgroupswithinthesix‐countyLASANTIregionhasbeenhighlighted,itisimportanttonoteunemploymentlevelsaswell.Asyoucanseeinfigure6below,thetrendinunemploymentissimilaracrossthesixcitiesoverthelastdecade;whenonecityexperiencesanincreaseinunemployment,theothersdoaswell.However,throughoutthedecade,thelevelofunemploymentremainsthelowestinOrangecity,whereasthehighestlevelsofunemploymentaregenerallyfoundinRiversideandSanBernardino,orthecityofLosAngeles.Forexample,in2005,theunemploymentratewas3.6%inOrange,comparedto4.6%inthecityofRiverside,6.5%inSanBernardino,and5.3%inLosAngeles,adifferenceof1%,2.9%,and1.7%,respectively.Regardlessofthelevelofunemployment,thistrendholdstrue.In2000,whenunemploymentreachedoneofitslowestlevelsindecades,theunemploymentrateinOrangewasamere3.3%,thatis2%lowerthantheunemploymentrateinRiverside(5.3%),3.5%lowerthanSanBernardino(6.8%),and2.8%lowerthantheunemploymentrateinthecityofLosAngeles(6.1%)atthetime.Thesharpincreaseinunemploymentbeganin2008,whereasinyearsprior,theaverageunemploymentrateamongthesixcountiesremainedunder6%(withtheexceptionof2001).ThoughOrangeexperiencedthelowestlevelsofunemploymentthroughoutthedecade,SanDiegoremainedinclosesecondasitexperiencedunemploymentlevelsonlyslightlyhigherthanthatofthecityofOrange.Forexample,in2000theunemploymentrateforSanDiego(4%)was0.7%higherthanOrangecity’sunemploymentrateof3.3%.Thisstoryremainedconsistentthroughoutthedecade,asthedifferenceinunemploymentratesbetweenthetwocitiesrangedfrom0.6%in2001to1%in2007,withthehighestdifferencein2009,whenSanDiego’s

45BureauofLaborStatistics,ChangesinMen’sandWomen’sLaborForceParticipationRates,January10,2007.Retrievedfromhttp://www.bls.gov/opub/ted/2007/jan/wk2/art03.htm.


31

Table4:EducationAttainmentbyRaceandEthnicityinSixCounties,2000

Source:CenterforComparativeStudiesinRaceandEthnicity,StanfordUniversity;2000Census

Race/Education

County

Los

AngelesOrange Riverside

SanBernardino

SanDiego

Ventura

WhiteAloneHighSchoolDiploma 89.4 92.8 86.8 85.7 93.2 92.6Bachelor’sDegree 37.7 37.6 20.7 19.2 36.1 33.3Graduate/ProfessionalDegree 14.6 13 7.6 7.2 13.9 12Asian/PacificIslanderHighSchoolDiploma 82.2 81.2 82.5 84.4 81.4 87.8Bachelor’sDegree 42.4 40.9 36.7 42 36 46.3Graduate/ProfessionalDegree 12.1 12.4 11 11.5 10.4 15.1LatinoHighSchoolDiploma 42.1 45.1 47.1 51.8 53.5 47.6Bachelor’sDegree 6.8 8.5 5.8 6.4 10.7 7.6Graduate/ProfessionalDegree 2.3 2.8 2 2 3.7 2.5AfricanAmericanHighSchoolDiploma 79.3 88.1 82.2 81.7 86.1 88.4Bachelor’sDegree 17.8 27.6 15.1 14.8 16.3 27.1Graduate/ProfessionalDegree 5.5 9.5 5.1 4.5 5.5 8.5TwoormoreRaces

HighSchoolDiploma 65 72.5 71.3 69.8 75.4 75.8Bachelor’sDegree 20.1 24.5 13.3 14.7 21.5 21Graduate/ProfessionalDegree 6.8 8.6 4.6 5.2 6.8 7.4


32

unemploymentratewas9%,or1.4%higherthanOrange(7.6%).TheunemploymentrateofOxnard(Ventura)isgenerallyfoundinthemiddleofthesixcities.SanBernardinoandRiversidebothemergedwiththehighestunemploymentratesin2009,jumpingsignificantlyto16.1%and12.6%,4%and.5%higherthanLosAngeles.Figure6:LASANTIUnemploymentRates,2000to201046

Source:BureauofLaborStatistics

AnOverviewofIndustryinSouthernCaliforniaManufacturingIna2007reportreleasedbytheLAEDC,aSouthernCaliforniabasedeconomicdevelopmentorganization,LosAngelesCountywasidentifiedasthenation’slargestmanufacturingcenter;andthestateofCalifornialeadsthewayamongallstatesinmanufacturingemployment.Thenationaltrendofageneraldeclineinmanufacturinghassignificantimplicationsfortheregion,asLACountynotonlyleadsthewayinmanufacturingemployment,buttheentireLASANTIregionrepresentsthe“thirdlargest‘state’afterCalifornia(1,505,000jobs)andTexas(926,000jobs)”with911,000manufacturingjobs.Amongtheothercountiesinthe

46UnemploymentratesforthelaborforcearefromtheBureauofLaborStatistics(BLS)monthlyunemploymentratesandarenotseasonallyadjusted.TheFiguresareforthemonthofMarchineachoftheyears.March2010BLSunemploymentratesforthelaborforcearepreliminaryfigures.


33

region,OrangeCountyranked18th,RiversideandSanBernardinoranked16th,andSanDiegowasranked19thamongtopmanufacturingcenters.47TheLASANTIregion,thestateofCalifornia,andthenationasawholehaveexperiencedasignificantdeclineinmanufacturingsince1990.ThoughtheLAEDCreportindicatesthatseveralcountiesintheregionexperiencedsomegrowthinmanufacturinginthelate1990s,since2000theregionhasexperiencedongoingloss,withmorethan3,000,000manufacturingjobslostacrossthenation,withseveralhundredthousandmanufacturingjobslostinthestate.Theoneexceptiontothistrend,priortotherecession,wasRiverside/SanBernardinoCounties(combined)thatremainedstable,andactuallygrewthemanufacturingsectorby3000jobsbetween2005and2006.48However,thisisanexceptiontotherule,asmostoftheLASANTIregionhasexperiencedasignificantlossinthemanufacturingindustryoverall.DatafromtheU.S.CensusBureau’s1997and2002EconomicCensusillustrateindustrygrowthinsixmajorindustriesinLosAngelesCountybetween1997and2002.LACountyjobgrowthduringthistimeperiodisrepresentativeofthetrendsintheotherLASANTIcounties,thereforeonechart‐‐LosAngelesCounty‐‐isprovidedasanexample.Between1997and2002,LosAngelesCountylost91,363manufacturingjobs,or14.6%ofthemanufacturingjobsinthecounty.Fourofthesixcountieslostmanufacturingjobs,includingSanDiegoCountyat1,743jobsor1.5%,VenturaCounty,whichlost438manufacturingjobs,andOrangeCounty,whichlost17,767manufacturingjobsbetween1997and2002.Asindicatedabove,bothSanBernardinoandRiversideCountiesremainedstableduringthistime,adding2,117,and8,291manufacturingjobs,respectively.Thedataindicateanothertrendinemployment.Since1997(theyearinwhichdataisavailable),theregionexperiencedsignificantgrowthinseveralsectorsincludingretail,privateeducation,andhealthcare.Thoughretailhasbeenhardhitintherecession(2007‐2010),theretailsectorshowedsignificantgrowthbetween1997and2002,whentheLASANTIregiongained95,333retailjobs,withLACountyleadingthewayat35,277jobsgainedbetween1997and2002.

47J.Kyser,ManufacturinginSouthernCalifornia(LosAngeles,CA:LosAngelesEconomicDevelopmentCorporation,2007),2.48Ibid.


34

Table5:Whileallindustrysectorshaveexperiencedsignificantlossduringthelastthreeyearsoftherecession,twoareascontinuetogrowdespitetheeconomicslowdown.Whileeducationandhealthcareandsocialassistancesectorsaretheonlysectorsthathavegrownduringtherecession,bothgrewsignificantlypriortotherecessionaswell.Between1997and2002,theLASANTIregiongained13,240educationjobsandanevenmoresubstantialincreaseinthehealthcareandsocialassistancesector,withmorethan402,234jobsgainedbetween1997and2002.LosAngelesCountyledtheway,gaining213,797healthcarejobs,foraregionaltotalof472,705jobsinthehealthcareandsocialassistancesectorin2002.NAFTAandU.S.MexicoTradeRelations.Asdiscussedearlier,theLASANTIregion,thestateofCalifornia,andthenationasawholehaveexperiencedadramaticdeclineinmanufacturingsince1990.Atthesametime,however,theBajaregioninMexicohasexperiencedagradualexpansioninmanufacturingsince1990.TheUnitedStatesandMexicohavestronganddeepeconomictiesthroughtheNorthAmericanFreeTradeAgreement(NAFTA),whichcameintoforceonJanuary1,1994.TheeffectsofNAFTAhavebeenasourceofintensedebate,asithasputlow‐wageworkersintheU.S.indirectcompetitionwithworkersinMexico.AccordingtoanEconomicPolicyInstituteanalysisofNAFTA,“workers'shareofthegainsfromrisingproductivityfellandtheproportionofincomeandwealthgoingtothoseattheverytopoftheeconomicpyramidgrew.”49AlthoughAmericanswerepromisedthattheagreementwouldcreatealargenumberofnewgoodjobs,theopposite 49JeffFaux,CarlosSalas,andRobertE.Scott,RevisitingNAFTA:StillnotWorkingforNorthAmerica’sWorkers(Washington,DC:TheEconomicPolicyInstitute,September28,2006).

ChangeinEmploymentbySector,No.ofJobs:1997to2002

Manufacturing Retail Education

HealthCare&Social

Services

Professional,Scientific,and

technicalservices

WholesaleTrade

LosAngelesCounty ‐91,363 35,277 6,799 213,797 126,415 8,998

OrangeCounty ‐17,767 16,767 2,343 49,749 29,896 2,493

Riverside 8,291 12,168 810 25,009 4,597 6,685

SanBernardino 2,117 5,989 958 34,764 4,932 6,849

SanDiego ‐1,743 19,341 1,878 65,675 41,557 4,468

Ventura ‐438 5791 452 13,240 3,849 4,662DataSource:USCensusBureau,1997and2002EconomicCensus


35

happened,whereoveramillionjobsthatwouldotherwisehavebeencreatedwerelost,andwageswerepressureddownwardforavastnumberofworkers,particularlythosewithlessthanacollegeeducation.50NAFTA'sperverseeffectonthewagedistributionandonthesteadilydecliningdemandforlesseducatedworkersistroubling,withCalifornialeadingthewaywiththemostnetmanufacturingjoblossesasaresultofNAFTA.51Intermsoftotaltrade,MexicoistheUnitedStates’third‐largesttradingpartner(behindCanadaandChina),whiletheUnitedStatesranksfirstamongtradingpartnersforMexico.Mexico’sexportorientedmanufacturingplantsarehighlyconnectedtoU.S.‐Mexicotradeinvariouslabor‐intensiveindustriessuchelectronicgoods,andautomotiveandsoftwareparts.52Foreignownedmanufacturingindustries,ormaquiladoras,accountforasignificantportionofMexico’stradewiththeUnitedStates.Themaquiladorasintroducedaradicalcost‐savingalternativeforrustbeltcompaniesthatotherwisemightnothaveconsideredamove,andareoftentimesonlyseveralfreewayexistsfromtheborder,makingbusinesscheaperthanoperatinganoceanawayfromthepointofproduction.TheU.S.‐MexicoborderregionbyfarhasthehighestconcentrationofboththemaquiladoraassemblyplantsandMexicanworkers.From1990to2001,thenumberofmaquiladorasdramaticallyexpandedfrom640to1,235.Figure7illustratesthetrendinthenumberofmaquiladorasduringBaja’sindustrialboom.Figure7:NumberofMaquiladorasinBajaCalifornia

50Ibid.51RobertE.Scott,TheHighPriceof‘Free’(Washington,DC:TheEconomicPolicyInstitute,November17,2003).52M.AngelesVillarreal,U.S.MexicoEconomicRelations:Trends,Issues,andImplications(Washington,DC:CongressionalResearchService,March31,2010).


36

Source:Datafrom1990to2001,ConsejoNacionaldelaIndustriaMaquiladorayManufactureradeExportación(NationalCounciloftheMaquiladoraandExportManufacturing)


37

EmploymentandIndustryin“TheGreatRecession”ANoteabout“TheGreatRecession”AccordingtotheNationalBureauofEconomicResearch(NBER),53theUnitedStateshadbeeninarecessionfromDecember2007toJune2009.Throughoutthissection,thereportwillrefertotherecenteconomicrecession(2007‐2009),as“TheGreatRecession.”Thisrecessionwasparticularlydrasticinitseffects,duetoboththedepthandlengthofdestructioninthelabormarket.Californiahaslostmorejobsatafasterrateinthepasttwoyearsthanduringanypriorrecessionforwhichdataisavailable.54AccordingtoarecentreportreleasedbytheUnitedWayofGreaterLosAngeles(2010),“between2008and2009alljobgrowthfromtheprevious9yearshadbeenwipedout”inLosAngelesCounty.55ItisimportanttonotethatthestateofCaliforniaisnottheonlystateimpactedbytheeconomicslowdown,noristheUnitedStatestheonlycountrygrapplingwitheconomicstress.However,itisalsoessentialtorecognizethatsomecountriesandstateswillunequallybearthebruntofthesetougheconomictimes,andCaliforniaisoneofthoseregions.ThisissaidtohighlighttheextremeimportanceofunderstandingtheeducationalandemploymentopportunitiesavailabletothedifferentgroupsintheSouthernCaliforniaarea,andhowthoseopportunitieshavebeenimpactedbytherecession.Mostimportantly,itisimperativetounderstandthenatureofopportunityifwearetorecoverandemergefromthistimeabetterandstrongerregionforall.TheCaliforniaeconomyhasbeenhitparticularlyhardduringtherecessionastheproblemsthatgrewfrommortgageandlendingspreadandcontinuedtoweakentheeconomyin2009.InNovember2009,thestateofCaliforniareachedanunemploymentrateof12.3%,morethan2%higherthanthenationalunemploymentrate(10%),andmorethana4%increase(8.3%)fromNovember2008.56IndividualcountieswithintheSouthernCaliforniaregionboastedsomeofthehighestunemploymentratesinthenation:11of17metroareasreportingajoblessrateofatleast15%werelocatedintheStateofCalifornia.57Further,of49

53September,2010.StatementoftheNBERBusinessCycleDatingCommitteeontheDeterminationoftheDatesofTurningPointsintheU.S.Economycanbeaccessedonwww.nber.org.TheNBERusesabroadvarietyofstatisticalmeasurestodefinewhatitdescribesasa"significantdecline"ineconomicactivity–takinginoutput,incomes,payrollsandproduction.Whilemanyeconomistsviewthisannouncementasprematuretoconcludethatthebottomingoutisover,onSeptember20,2010,theNBERdeterminedthatatroughinbusinessactivityoccurredintheU.S.economyinJune2009,markingtheendoftherecession.TheNBERcommitteedecidedthatanyfuturedownturnoftheeconomywouldbeanewrecessionandnotacontinuationoftherecessionthatbeganinDecember2007.54CaliforniaBudgetProject.“InTheMidstofTheGreatRecession:TheStateofWorkingCalifornia2009”.Retrievedfromhttp://www.cbp.org/pdfs/2009/090906_labor_day.pdf55“LACounty10YearsLater:ATaleofTwoCitiesOneFuture,”TheUnitedWay,February2010. 56“CaliforniaLaborMarketReview,”EmploymentDevelopmentDepartment,November2009.Retrievedfromhttp://www.calmis.ca.gov/file/lfmonth/calmr.pdf57U.S.DepartmentofLabor.MetropolitanAreaEmploymentandUnemployment.(BureauofLaborStatistics,SEPTEMBER2010).Retrievedfromhttp://www.bls.gov/news.release/metro.nr0.htm


38

metroareaswithapopulationofatleast1‐million,theRiverside‐SanBernardino‐Ontarioarearecordedthesecondhighestunemploymentrateinthenation,at14.2%,secondonlytotheDetroitMetropolitanarea(15.3%).58Theunemploymentrateineachofthesixcountiesrecordeddouble‐digitfigures,withtheexceptionofOrangeCountyat9.4%.AsofNovember2009,theunemploymentrateforeachcountywasasfollows:LosAngelesCounty12.2%,VenturaCountyat11.1%,andSanDiegoCountyat10.3%,foranaverageunemploymentrateof11.4%amongthesixcounties,a6%increaseintheaverageunemploymentratesince2007,andanevenmoresignificantincreaseof7.5%since2000.

AMoreComprehensiveMeasure:UnderstandingUnderemploymentManyanalystswonderiftheunemploymentrateisthebestmeasureoflabormarketdistress,asitcapturesanarrowportionofthoseengagedintheworkforce.Alongwithactivejobseekers,thereareothersaffectedbythedownturnwhogouncountedintheofficialrate.AccordingtotheBureauofLaborStatistics(BLS),unemploymentisdefinedaspersonsinthelaborforcewhodonotcurrentlyhaveajobbutareactivelylookingforwork,whereasunderemploymentincludesnotonlyindividualswhoarenotcurrentlyemployedandareactivelyseekingemploymentandhavelookedforworkintheprior4‐weeksbutalsoinvoluntarypart‐timeworkersand/orthose“marginallyattachedworkers”whowantandareavailableforajobbutarenotactivelylooking.59Unfortunately,mostorganizationsdonotcollectunderemploymentdata,makingitdifficulttoreportonthetruenatureoftheemploymentsituation.Itisouropinionthattheunderemploymentrateisamorecomprehensiveandaccuratemeasureoflaborutilization.Thoughlimitedinabilitytoreportunderemploymentdata,afeworganizationssuchastheEconomicPolicyInstituteandtheLosAngelesEconomicRoundtable,reportedthisrateduringtherecessionandpriortotheeconomicdownturn.Forexample,asofAugust2011,theU‐6measureofunderemploymentforthestateofCaliforniawas21.8%,thehighestpercentagefromanystatealongwithNevada.60ThisfigureismuchhigherthantheofficialCaliforniaunemploymentrateof12%.Whenexaminingtheunderemployment,theburdenfallsunevenlyacrossthelaborforceanddifferentsegmentsofthepopulation.Therelationshipbetweenunderemploymentandeducationalattainmentandcertainracialgroupsisparticularlystriking.

58Ibid. 59U.S.DepartmentofLabor.LocalAreaUnemploymentStatistics.(BureauofLaborStatistics,December 2010). Retrievedfromhttp://www.bls.gov/lau/stalt.htm.60BLS.Note:Personsmarginallyattachedtothelaborforcearethosewhocurrentlyareneitherworkingnorlookingforworkbutindicatethattheywantandareavailableforajobandhavelookedforworksometimeinthepast12months.Discouragedworkers,asubsetofthemarginallyattached,havegivenajob‐marketrelatedreasonfornotcurrentlylookingforwork.Personsemployedparttimeforeconomicreasonsarethosewhowantandareavailableforfull‐timeworkbuthavehadtosettleforapart‐timeschedule.


39

EducationPays Datashowsthateducationallevelsarehighlycorrelatednotonlytoincomelevelsandtotallifeearnings,61buttounderemploymentratesaswell.Theaveragerateofunderemploymentforthosewithouthighschooldiplomasrarelydipsbelow18%ineventhebestoftimes;forcollegegraduates,therateofunemploymenthasn'trisenabove12%intheworstoftimes.Forindividualswithoutahighschooldiploma,inonlysixyearssince1994havetheyseenunderemploymentratesbelow20%.Thedatainfigure8speakclearly;thosewithnocollegeeducation,especiallyhighschooldropouts,aremostvulnerabletomasslayoffsduringeconomicdownturnsandhavesignificantlyhigherunderemploymentratesduringthebesteconomictimes.WhilenearlyallsegmentsofsocietyhaveseenincreasesinunderemploymentduringTheGreatRecession,individualswithformallevelsofeducationwerelesslikelytolosetheirjobs.InCalifornia,forworkerswithoutahighschooldiploma,underemploymenthasskyrocketedalmost19percentagepoints(18.6%)since2007;forthosewithone,theratejumpedmorethan14%(14.4%).Thosewithabachelor’sdegreesawunderemploymentratesincreaseby6.3%.Theeducatednotonlyfarebetterduringeconomicdownturns,butarelikelytobefavoredbyfuturejobgrowthaswell.(ForLACounty,seeappendixA,figure4.)Figure8:UnderemploymentbyCaliforniabyEducationalAttainment,1994200962

Source:EconomicPolicyInstitute 61JenniferCheesemanandEricC.Newburger,TheBigPayoff:EducationalAttainmentandSyntheticEstimatesofWorkLifeEarnings(Washington,DC:U.S.CensusBureauReport,July2002).Reportstatesthatoveranadult'sworkinglifeintheUnitedStates,highschoolgraduatescanexpecttoearn$1.2milliononaverage;thosewithabachelor'sdegree,$2.1million;andpeoplewithamaster'sdegree,$2.5million. 62EconomicPolicyInstitutein‐houseanalysisusingCPSdata.1994,theCensusredesignedtheCPSandintroducedcomputer‐assistedinterviewingtechniques.


40

YoungandUnemployed:OfftheChartsSincethestartofTheGreatRecessioninDecember2007,youngadultshaveattainedthehighestnationalunemploymentrateonrecord(since1948).63Thedataillustratedinfigure9(below)expressatroublingrealityforCalifornia.Forthoseaged16‐24theeffectsofTheGreatRecessionhavebeendevastating,withanunderemploymentrateof35%.Manyoftheseyoungpeoplehavebecomeidle,neitherworkingnorinschool.Thisrealityisdeeplyalarming,asrecentstudiescitedinTheWallStreetJournal(October3,2009)haverevealed,therearelong‐termcareerbenefitstoworkingasteenagers:thosewhodonotworkasteenagershavelowerlong‐termwagesandaremorelikelytoloosetheirjobsevenafter10years.(SeealsoappendixA,table5.)Figure9:UnderemploymentinCaliforniabyAge,1994200964

Source:EconomicPolicyInstituteTheWideningGapbetweenRacesDisparitiesinunemploymentrateswhenexaminingdifferentracialsubgroupswerepresentbeforeTheGreatRecession.Thedatabelowinfigure10revealthatsince 63KathrynAnneEdwardsandAlexanderHertel‐Fernandez,TheKidsAren’tAlright—ALaborMarketAnalysisofYoungWorkers(Washington,DC:TheEconomicPolicyInstitute,April7,2010). 64EconomicPolicyInstitutein‐houseanalysisusingCPSdata.1994,theCensusredesignedtheCPSandintroducedcomputer‐assistedinterviewingtechniques.


41

1994HispanicsandAfricanAmericanshaveseenhigherlevelsofunderemploymentthanwhitesandAsians.WhileallracialgroupsinCaliforniahavebeenseverelyaffectedbytherecession,theeffectshavebeenunequal.Hispanicshaveseenunderemploymentratesskyrockettojustunder29%(28.9),16percentagepointshigherthanin2007.AfricanAmericanshaveseentheirratesincreasetoalmost25%(24.8),anincreaseof10.1%since2007.Whiteshaveseenanincreaseof8%inunderemploymentrates,whileAsiangroupshaveseenanincreaseofjustunder10%(9.7%).AcrossCalifornia,thesurgeinunderemploymenthascutacrossallraciallines,yetithasintensifiedgapstheexistedbeforetherecession.Forexample,in2007Hispanicshadanunderemploymentrateof12.6%,whilewhiteshadarateof7.8%,adifferenceof4.8%.However,in2009Hispanicssawunderemploymentreach28.9,whilewhitessawunderemploymentincreaseto15.8%,adifferenceofmorethan13%.ThewideningoftheemploymentgapbetweenHispanics/blacksandwhites/Asiansissobering.(SeeappendixA,figure3forLACounty.)Figure10:UnderemploymentinCaliforniabyRace,1994200965

Source:EconomicPolicyInstituteAsdiscussedearlier,college‐educatedindividualshavethelowestunemploymentandunderemploymentrates,andthosewithoutahighschooldiplomahavethehighest.Althoughracialgapsinemploymentarestrikinglyclearwhenexaminingthelabormarketbyrace,thatracialstratificationinthelabormarketismostintenseamongsttheleasteducatedinCalifornia(figure11).LookingatAfricanAmericanswithoutahigh‐schooldiploma,unemploymentisabove30%(31.6%),whileforHispanicstherateisthelowestat14%.Whiteswithoutahighschool 65EconomicPolicyInstitutein‐houseanalysisusingCPSdata.1994,theCensusredesignedtheCPSandintroducedcomputer‐assistedinterviewingtechniques.


42

diplomahadanunemploymentrateofalmost19%(18.8%),whileAsianshadarateofjustabove15%(15.2%).Ascanbeseeninfigure11below,allracegroupsbenefitfromhighereducation.InCalifornia,aseducationlevelsincrease,theracialgapinemploymentnarrows.Forwhiteswithabachelor’sdegreeunemploymentwasat3.6%,whileforHispanicgroupsthefigurewas4.1%,followedbyAsianswitharateof4.3%,andAfricanAmericanswitharateof5.9%.Today,inthetwenty‐firstcentury,racestillmatters.AwidebodyofresearchhasconsistentlyshownthatracialdiscriminationinthelaborexperienceofAfricanAmericansissystematic,irrespectiveoftheirsocialclassoreducationalposition.66Moreover,racialdisparitiesarevisibleinunemploymentratesevenwhenwecompareracialsubgroupswiththesamelevelofeducation.Thus,moreneedstobedonetoensurethatnonwhiteshaveequalemploymentopportunitiesinthelabormarket.Figure11:UnderemploymentinCaliforniabyRaceandEthnicity2007200967

Source:ThePopulationReferenceBureauTheGenderRoleInCaliforniafrom1994until2007,underemploymentrateswereslightlyhigherforfemalesthanformales.Since2007,TheGreatRecessionhastakenahugetollonworkingfamilies.Themajorityofjobslostwerelostbymen,mainlybecauseofthemaleconcentrationinboththeconstructionandmanufacturingindustries,bothofwhichhaveseensubstantialdeclinessincethebeginningofTheGreatRecession.Nevertheless,inCalifornia,femaleslostasignificantnumberofjobsduringthis 66XavierdeSouzaBriggs,TheGeographyofOpportunity(Washington,DC:BrookingsInstitutionPress,48). 67CalculationsdonebyThePopulationReferenceBureauusingtheCurrentPopulationSurvey(AnnualSocialandEconomicSupplement)from2007‐2009.Theseestimatesarebasedonthree‐yearaveragessotheydon'treflectthemostrecentunemploymentfigures.


43

recessionaswell.Whilemaleshaveseenanincreaseofover12%(12.2%)inunderemploymentratessince2007,femaleshaveseenanincreaseof10%agepoints.TheunderemploymentratedoesnotinitselfcapturethesignificantimpacttherecessionhashadonwomeninCalifornia.TheCaliforniaBudgetProjectreleasedareportontheimpactofTheGreatRecessiononwomen,statingthatin2009,California’ssinglemotherswerenearlytwiceaslikelyasmarriedmenandwomen–tobeunemployed,andtheiraverageweeklyhoursofworkdeclinedmorethanatanypointsince1990,diminishingtheirtotalearnings.Ontheotherhand,marriedwomenhaveincreasinglybecomethesoleincomeearnerfortheirfamiliesastheirhusbandslosttheirjobs.68(SeeappendixA,figure2,forUnderemploymentinCaliforniabyGender,1994‐2009).FromaStratifiedStatetoaMoreStratifiedCountyAlthoughtheentireSouthernCaliforniaregionhasbeenaffectedbythe“GreatRecession,”theeffectshavenotfallenequallyoneveryone.Usinganin‐houseanalysisofthemonthlycurrentpopulationsurvey(CPS),theEconomicRoundtable,anonprofit,publicpolicyresearchorganization,hasreleasedunderemploymentratesforsub‐populationsinLosAngelesCounty.Unfortunately,duetothelimitedavailabilityofunderemploymentrates,thisinformationisonlyreportedforLACounty.ThesamplesizefortheCPSisconsiderablysmallerthanthesamplefortheAmericanCommunity(ACS)anddecennialCensus,andthereforecannotbeaccuratelyusedforotherSouthernCaliforniacounties.Nevertheless,theSouthernCaliforniaregion,andinthiscase,LosAngelesCounty,specifically,hasbeenhardhitinallareasacrossrace,ethnicity,age,gender,andeducationalattainment.Tables6and7showthat,asofNovember2009,underemploymentinLosAngelesCountywasmoreextremethanintheStateofCaliforniaasawhole,andalsomorespecificallyforthemanysub‐populations.Thetablesshowthat,sincethebeginningofTheGreatRecession,underemployedhasmorethandoubledforeachofthesub‐populations.UnderemploymentforLatinosandAfricanAmericansisalarming,asthegapbetweentheseracialminoritiesandwhiteshasdrasticallywidenedsinceDecember2007.ForLatinos,underemploymentatthebeginningofthedownturnwas11.6%,anditnowstandsatover30%,63%greaterthantheunderemploymentforwhites.ForAfricanAmericans,underemploymenthasincreasedfrom11.1%to25.3%,35%higherthanforwhites.Forwhites,underemploymenthasincreasedfrom8.4%to18.7%,adramaticincreaseaswell.

68TheCaliforniaBudgetProject,HowtheOtherHalfFared:TheImpactofTheGreatRecessiononWomen.Retrievedfromhttp://www.cbp.org/pdfs/2010/100511_womens_press_release.pdf


44

Table6:Unemployment/UnderemploymentinCaliforniaandLosAngelesCountybyEducationalAttainment69

California LosAngelesCounty

UnemploymentUnder‐

employment UnemploymentUnder‐

employmentLaborForceEducationalAttainment Dec‐07 Nov‐09 Dec‐07 Nov‐09 Dec‐07 Nov‐09 Dec‐07 Nov‐09

BADegreeorhigher 2.7% 6.2% 5.0% 11.0% 3.9% 7.5% 6.8% 13.0%SomeCollegeorAADegree 3.9% 10.6% 7.2% 18.5% 4.9% 10.3% 8.3% 20.4%HSGraduate 6.2% 12.7% 10.9% 24.6% 4.8% 13.6% 8.8% 26.0%

LessthanHSDiploma 7.4% 16.4% 15.7% 34.4% 6.4% 12.1% 13.7% 33.5%

TotalLaborForce 5.9% 12.2% 10.2% 21.8% 5.5% 12.2% 9.8% 24.4%Source:LosAngelesEconomicRoundtableTable7:Unemployment/UnderemploymentinCaliforniaandLosAngelesCountybyRace/Ethnicity

California LosAngelesCounty



employmentLaborForceRace/Ethnicity Dec‐07 Nov‐09 Dec‐07 Nov‐09 Dec‐07 Nov‐09 Dec‐07 Nov‐09

Asian 5.0% 9.6% 7.8% 18.1% 3.8% 8.2% 6.5% 15.5%

White 4.0% 10.2% 8.0% 16.8% 4.5% 11.8% 8.4% 18.7%

Latino 7.1% 15.0% 13.4% 29.2% 5.7% 14.3% 11.6% 30.4%

AfricanAmerican 10.6% 13.7% 14.2% 25.6% 7.8% 12.6% 11.1% 25.3%

TotalLaborForce 5.9% 12.2% 10.2% 21.8% 5.5% 12.2% 9.8% 24.4%Source:LosAngelesEconomicRoundtableLargeportionsofAfricanAmericansandLatinoshavebeenwithoutjobsduringThe 69Unemployment(table6and7)ratesforthelaborforcearefromtheBureauofLaborStatistics(BLS)andarenotseasonallyadjusted.November2009BLSunemploymentratesforthelaborforcearepreliminaryfigures.Unemploymentandunder‐employmentfiguresforsubpopulationsarederivedfromtheEconomicRoundtable'sanalysisofCurrentPopulationSurvey(CPS)dataandusea3‐monthmovingaverage.Unemploymentandunderemploymentbreakoutsbyeducationalattainmentincludespersonsage25yearsorolder.


45

GreatRecession.UnderemploymentratesforLatinosandAfricanAmericansaremorethan25%,whichis4%higherthantheoverallunderemploymentratesinLosAngelesCountyasofNovember2009.Thecurrentrecessionhasfurthercompoundedemploymentstratificationacrossraciallines,asLatinosandAfricanAmericansarethemostvulnerableracialandethnicgroupsduringtheeconomicdownturn.Disproportionateunderemploymentoutcomesbecomeevidentwhenexaminedbyeducationalattainment.TheunderemploymentdataforLACountyisparticularlystrikingforthosepersonswithoutanycollegeeducation.Forpeoplewithoutahighschooldiploma,underemploymenthasskyrocketedfrom13.7%inDecember2007,to33.5%asofNovember2009.Forpersonswithahighschooldiploma,underemploymenthasincreasedfrom8.8%to26%duringthesametimeperiod.Forthosethathavesomecollegeoranassociate’sdegreehaveseenanincreasefrom8.3%to20.4%.Lastly,thosewithaBAdegreeorhigherhaveseenanincreasefrom6.8%to13%.Figure12clearlyexpressesthedistinctstratificationofunderemploymentbylevelsofeducationinthestateofCaliforniaasawhole.Figure12:UnderemploymentbyEducationalAttainmentinCalifornia,December2007December2009

Source:LosAngelesEconomicRoundtableEducationalAttainment:ACentralDeterminantTheimpactofTheGreatRecessionhasbeenfeltbyallsegmentsoftheworkforce,


46

fromtheleasteducatedtothemosteducatedworkers.Nevertheless,educatedpeoplewerelesslikelytolosetheirjobsduringTheGreatRecession.Thelargeproportionoflesseducatedworkerswhoareunemployedandunderemployedduringthiseconomicdownturnissobering.Table8belowshowsthatfromDecember2007untilNovember2009,underemploymentforthosewithoutahighschooldiplomahasgoneupby145%,muchhigherthanthesamepopulationinCalifornia.Forthosewithahighschooldiploma,underemploymenthasshotup195%duringthissametimeperiod.Less‐educatedworkersareamajorityofthelaborforceinLACounty’sservicesector,constructionandmaintenanceoccupations,andproductionandtransportationoccupations,andclosetoamajoritythroughoutCalifornia.Althoughtheseoccupationsareessentialintheday‐to‐dayfunctionsandsustainabilityofregionaleconomy,thelesseducatedarethemostvulnerabletolabormarketdislocationduringperiodsofeconomicdownturn.70Table8:ChangeinUnderemploymentRatesbyEducationalAttainmentofLaborForce,LosAngelesandCalifornia Dec2007‐Nov2009 Dec2007‐Nov2009 California LosAngelesCountyLessthanaHighSchoolDiploma

+89% +145%

HighSchoolDiploma +183% +195%SomeCollegeorAADegree

+110% +145%

B.A.DegreeorHigher +92% +91%Source:TheLosAngelesEconomicRoundtableAsnotedearlier,thefindingsofthisresearchindicatethattheunderemploymentrateforthosewithoutapost‐secondarylevelofeducation,aswellasLatinosandAfricanAmericans,issobering.TheseextraordinaryhighratesoflaborunderutilizationamongthesegroupsofpeoplewouldhavetobeclassifiedassymbolicofaTrueGreatDepression,whilewhiteworkersandthosewithhigherlevelsofformaleducationareexperiencingunderemploymentratesthatarerepresentativeofasevererecession.Averageworkweekandeducationalattainment.TheAveragehoursworkedhasdecreasedoverallintheStateofCalifornia.71However,whenexaminingthebreakdownofaverageweeklyhoursworkedbydifferentgroupsofworkers,the

70DanielFlaming,MichaelMatsunaga,PatrickBurnsEbbingTidesoftheGoldenState.(LosAngeles:TheEconomicRoundtable,February2009). 71CaliforniaBudgetProject.IntheMidstofTheGreatRecession:TheStateofWorkingCaliforniain2009.Retrievedfromhttp://www.cbp.org/pdfs/2009/090906_labor_day.pdf


47

contrastingoutcomesacrosstheworkforcearemadeclear.Graph13showstheaveragehoursworkedinLACountysince1990byeducationalattainment.ItshowsthatthetrendinLACountyhasbeen:thehighertheformaleducationoftheworker,thehighertheaverageofweeklyhoursworked.WhathasstayedconsistentisthedeclineofworkhoursinthefirstyearofTheGreatRecessionforthosepersonswithoutaBAdegree,particularlyforpersonswithoutahighschooldiploma,andforthosewithahighschooldiploma.Incontrast,theaverageworkweekforthemosteducatedworkersremainedrelativelystableduringthefirstyearofTheGreatRecession.Figure13:AverageHoursWorkedperWeek,byEducationalAttainmentinCalifornia19902008

Source:LosAngelesEconomicRoundtableThistrendisdeeplyalarming,asnotonlyaretheleasteducatedworkersmorelikelytobeunemployedorlosetheirjobthanothersegmentsofworkers,buttheyalsoaveragetheshortestworkweekandexperiencethegreatestdeclineinworkhoursduringeconomicdownturns.Thebreakdownofemploymentoutcomesandaverageworkweekclearlyshowsthevulnerabilityofspecificsub‐populationstocompleteemploymentdislocationormarginalizationwithinthelaborforce.Thedestructiveoutcomesofrecessionsandlossofjobsarepotentiallydevastating,particularlyforgroupsofpeoplemostvulnerable‐‐thatis,certainminoritygroupsandthosewithlow‐levelsofformaleducation.IndustriesinTheGreatRecession:WinnersandLosersSincethefinancialcrisishitin2007,eachcountyintheSouthernCaliforniaregionhashadauniqueindustrystory,assomesectorsandsomecountieshavebeenhit


48

harderthanothers.However,thereisalsoacommontrend:thebiggestindustry“losers”amongeachofthesixcountiesareconstruction,manufacturing,andretailtrade,withtheexceptionofOrangeCounty,whoseFinanceandInsurancesectorledthewayforthatcountywithalossof16.9%in2009.Itisimportanttonote,again,thatalthoughmanufacturinghasdeclinedsignificantlyduringtherecession,ithadbeenexperiencingconsiderablelosspriortotherecession,astheeconomyshiftedawayfromtheindustry.Onanothernote,however,thehealthandprivateeducationsectorshavecontinuedtogrowthroughoutthestateandintheLASANTIregion.Forexample,healthandeducation‐‐theonlyindustrytogrowinthestatebetweenNovember2008and2009‐‐grewby1.1%,or18,900jobsinthestateofCalifornia.Incontrast,construction,oneofthehardesthitindustries,lostmorethan118,000jobs,decliningby16.1%throughoutthestate.72Theindustriesthathavebeenexperiencingthemostlossduringtherecession‐‐construction,manufacturing,andretailtrade,haveexperiencedadeclineof14.42%,14.9%,and12.02%,respectively,amongthesixcounties.ItisimportanttonotethatRiversideandSanBernardinoarecombinedandaccountforonecountyinthesecalculations.Whilenearlyallcountieshaveexperienceddoubledigitlossesinthesethreesectors(asindicatedinTable9below),VenturaCountyservedastheoutlierwithasubstantiallysmallerjoblossthantheothercounties,withanannuallossof2.9%inconstruction,2.6%inmanufacturing,and2.7%inretailtradein2009.LosAngelesCounty,ontheotherhand,experiencedtremendouslossineachofthesesectors,withadeclineof38.8%inmanufacturing,25.1%inretail,and20.1%inconstruction.OrangeCountyhasexperiencedslightlylesslossinmanufacturingandretailtradethantheothercounties;however,OrangeCountyhasexperiencedamajordeclineinitsFinancialandInsurancesector,withalossof16.9%overthelastyear.SanDiegoCountyfaredslightlybetterthantheothers,withalossinmanufacturingandretailtradeof6.5%and8.0%,respectively.Table9:IndustryGrowthbyCounty,2009 72CaliforniaLaborMarketReview,Calfornia:CaliforniaEmploymentDevelopmentDepartment,November2009).Retrievedfromhttp://www.calmis.ca.gov/file/lfmonth/calmr.pdf

IndustryGrowthByCounty,2009

Construction Manufacturing RetailTrade HealthPrivate

Education

LosAngelesCounty ‐20.10% ‐38.80% ‐25.10% 8.7% 7.9%

OrangeCounty ‐15.80% ‐9.90% ‐8.80% 2.4% 0.2%

Riverside/SanBernardino ‐20.10% ‐17.00% ‐15.50% 2.6% 1.4%

SanDiego ‐13.20% ‐6.50% ‐8.00% 2.5% 1.4%

Ventura ‐2.90% ‐2.60% ‐2.70% 0.5% 0.0%


49

Source:LosAngelesEconomicDevelopmentCorporation,2009‐2010Mid‐YearForecastFinally,thoughtheRiverside‐SanBernardinoareahasexperiencedlesslossthanLACounty,theLAEDCreportsthatthiscountywill“experiencealongeranddeeperrecessionthantherestofSouthernCalifornia,”attributedtoasurgeinforeclosuresandplummetinghomevalues.73Asamajorityofthejoblossineachofthecountiesduringthisrecessionhasbeenconcentratedinconstructionandmanufacturing,theseindustriesrequirespecialattention.Construction:Fromboomtobust.Asdiscussedearlier,speculativebuildingofresidentialunitswasthebasisoflastdecade’seconomicboominCalifornia,untilthehousingmarketcollapsedinthestate.Thetroubledhousingmarketledtoadeepdeclineinconstructionemploymentduringtherecession,thoughjobsintheconstructionindustryhavebeeninsteadydeclinesince2004‐2005,asindicatedbythedecliningnumberofresidentialandcommercialbuildingpermitsissued.74Duringthistimeofeconomicslowdown,constructionintheSouthernCaliforniaregionhasbeenthehardesthitbothacrossthestate,andspecificallyintheLASANTIregion.WiththeexceptionofthemanufacturingindustryinLosAngelesCountythatexperiencedadeclineof38.80%,constructionexperiencedthehighest(double‐digit)declines.Thiswasthecaseinallcounties,exceptVenturaCounty,whichexperiencedbothlimitedindustrylossandgainduringthistimeperiod.ExcludingVenturaCounty,theregionhasexperiencedanaveragedeclineof17.3%intheconstructionsectoroverall.ThedepressedconstructionindustryisparticularlyalarmingasitemploysalargenumberofLatinos.AccordingtoareportreleasedbytheEconomicroundtable,“ConcentratedPovertyinLosAngeles,”individualsemployedintheconstructionindustrytendtoliveinareasofconcentratedpoverty.TheseareareasinLosAngelesCountywhereatleast40%oftheresidentslivebelowthepovertyline(accordingtotheCensus).Theethnicmake‐upoftheconstructionworkersinneighborhoodsofconcentratedpovertyare:88%Latino,4%Black,4%Asian,andwhitesmakeup3%ofconstructionworkerslivingintheseneighborhoods.75TheimmensemajorityofthosethatworkintheconstructionindustryinLosAngelesCountyareLatino,andmanyofthemcomefromneighborhoodsofconcentratedpoverty.Thecollapseoftheindustryhasmajorsocialimplicationsfortheseneighborhoods,asover59%ofconstructionworkersinLosAngelesneighborhoods

73Ibid.,41. 74ConstructionResearchIndustryBoard.Retrievedfromhttps://www.agentmac.com/website/cities_data.php75MichaelMatsunaga,ConcentratedPovertyinLosAngeles(LosAngeles:TheEconomicRoundtable,February2008).


50

ofconcentratedpoverty,donothaveaHSDiploma.76Onecanonlyassumethatitwillbeverydifficultfordisplacedconstructionworkerstofindemploymentthatrequiresaformaleducation.TheconstructionindustryhasalwaysbeenasectorwherethelackofEnglishlanguageiscommonformanyoftheworkers,makingitdifficulttomakeadjustmentsacrossindustries.Asdiscussedearlier,theconstructionindustryhasbeeninsteadydeclinesince2004‐2005.However,sinceTheGreatRecession,thestoryofSouthernCalifornia’shousingmarketwasoneofaccelerateddeteriorationasthefalloutfromthesub‐primecrisisof2007gavewaytothefinancialcrisisof2008‐2009andtheworstnationalrecessionsincetheGreatDepression.Sinceallhomebuildingandremodelingworksrequireadvancebuildingpermits,housingactivitycanbemonitoredbylookingatthenumberofbuildingpermitsissuedwithinaperiodoftime(usuallymonthlyorannually).HomebuildingpermitsintheLASANTIregionhavebeenindeclinesince2004asillustratedinfigure14.IntheLosAngelesfivecountyregionduring2008,atotalof27,067newresidentialconstructionpermitswereissued,adeclineof46%comparedwith2007anddownby70%from2000.Figure14:TotalHomebuildingPermits

Source:ConstructionIndustryResearchBoardInLosAngelesCounty,totalresidentialconstructiondroppedto13,886unitsin2008,adeclineof32%fromtheprioryearanddownby48%from2004.Duringthe

76Ibid.


51

firstfivemonthsof2009,thenumberofpermitsissuedfornewhomeswasdownby55%comparedwiththesametimeperiodin2008.77Only5,610totalpermitswereissuedinLosAngelesCountyin2009,aseveredeclinefrompre‐recessionlevels.AccordingtoaLAEDCreport,theCountyhasa“largeoversupplyofapartmentsandcondostodealwithbeforeanysignificantrecoveryinhomebuildingcangetstarted.”78SanBernardinoRiversideCounty:Thegrowthengineisnowgone.SanBernardino‐RiversideCountyhassufferedmightilyfromtheGreatRecession.Ascanbeseeninfigure14,oftotalbuildingpermitsissued,beginningin2000,SanBernardino‐RiversideCountybeganexperiencinganunprecedentedhousingboom.Atthepeakofthehousingmarketin2006,theconstructionindustryemployedmorethan10%oftheInlandEmpire'slaborforce.Thecollapseoftheconstructionindustryisthereasontheareahasoneofthehighestunemploymentratesinthenation,secondonlytotheDetroitMetro‐Area.79In2009,areportbytheInlandEmpireOutlook,anewsletteranalyzingeconomicandpoliticaltrendsintheregion,statedthatsincetheregionhasbeenhitbythesub‐primemortgagecrisisanditsaftermathwithsuchseverity,someeconomistssuggestthatnotonlyhastheareanothitbottomyet,butalsounemploymentlevelsintheInlandEmpiremightnotreturntonormalcyforpossiblyadecade.80Thisanalysisisalarming,astheInlandEmpire’sreturntofullemploymentwillrequireafundamentalstructuraladjustmentintheregion’seconomicbase,particularlysincejobsintheconstructionindustrywillreturnslowlyifatall.AccordingtotheLAEDC,housingactivityinRiverside‐SanBernardinowillcontinuetocontractthroughout2011andinto2012,duetoapersistentlyhighlevelofmortgageforeclosures.81Figure15illustratesthedeepemploymentholecausedbythehousingcollapseinthismetroarea.Asmentionedearlier,Latinos,includingmanyimmigrants,areheavilyrepresentedintheconstructionindustryinCaliforniaandregion.Althougheconomicdatadoesnotsingleouttherecession’seffectsonimmigrants,constructionemploymenthasdroppedby20.5%in2009,byfarthehardesthitindustryintheSanBernardino‐Riversidearea.82Recentresearchhasfoundthatfrom2000to2007,thenumberofimmigrantsinSanBernardino‐Riversideareagrew55%,from490,946to761,629.Incontrast,althoughbeingfarlargerat3.5million,theimmigrantpopulationinthe 77LosAngelesCountyEconomicDevelopmentCorporation,MidyearEconomicForecastandIndustryOutlook,July2009.78LosAngelesCountyEconomicDevelopmentCorporation,MidyearEconomicForecastandIndustryOutlook,February2010.79“UnemploymentinTheGreatRecession”InlandEmpireOutlookEconomicAnalysis,November26,2009.80Ibid.81LosAngelesCountyEconomicDevelopmentCorporation,MidyearEconomicForecastandIndustryOutlook,July2011. 82Ibid.


52

LosAngeles‐LongBeachareaonlygrewbyjust161,000,or4.6%,duringthesameperiod.83AshundredsofthousandsofimmigrantsflockedtotheregionchasingmainlyconstructionandservicejobsandthechancetoownahomeinRiversideandSanBernardinocounties,theregion'sLatinopopulationskyrocketed;andasaresultthemetropolitanregionhadseenthelargestincreaseinLatinopopulationinthenationduringthelastdecade,accordingtoastudyreleasedbytheBrookingsFigure15:TotalEmployees,inThousands84

Source:BureauofLaborStatisticsInstitute.85Latinoswereabout25%ofRiversideCounty'spopulationaccordingto1990censusdata,forexample,andby2007,thenumberhadskyrocketedto43%.86ImmigrantsandLatinoswhohavelostjobsfromthedepressedconstructionindustrywillcertainlyfinditdifficulttolandnewjobs,becausemanylackformaleducationandEnglishskills.

DeclineofManufacturing:TheSwiftAcceleration.Asdiscussedbefore,thoughthemanufacturingsectorhasbeenhardhitduringtherecession,therehasbeenageneraldeclineinthisindustryforthepastseveraldecades.WithLosAngelesandSanBernardino‐RiversideCountiesreportingdouble‐digitlossinthissectorin2009,‐38.8%and‐17%,respectively,theimpactiswidelyfelt.OfparticularconcernisthelargenumberofAfricanAmericansemployedinthemanufacturing

83AnnaGormanandRichConnell,“LatinosWhoFlockedtotheOnce‐BurgeoningInlandEmpireareHard‐HitinEconomicDownturn,”TheLosAngelesTimes,August02,2009.84DataisforRiverside‐SanBernardino‐Riverside,CA.EmploymentdataforthelaborforcearefromtheBureauofLaborStatistics(BLS)monthlydataarenotseasonallyadjusted.TheFiguresareforthemonthofJuneineachoftheyears.June2011BLSdataforthelaborforcearepreliminaryfigures.85TheBrookingsInstitute,MetropolitanDemographics:ADecadeontheFrontLinesofChange(Washington,DC:TheBrookingsInstitute,March2006)86ShelbyGrad,“InlandEmpireHadNation'sLargestInfluxofLatinosinLastDecade,StudyFinds,”LosAngelesTimes,May9,2010.


53

sector.AccordingtoareportpublishedbytheUCBerkeleyLaborCenter,threesectors,“manufacturing,retailtrade,healthcareandsocialassistanceemployapproximately40%ofallBlackworkers.”87BothmanufacturingandretailhaveexperiencedtremendouslossinSouthernCalifornia.Aswithconstruction,thereareconcernsaboutwhatwillhappentodisplacedworkerswhomaybepoorlysuitedtotransfertogrowingfieldssuchaseducationandhealthcare.

Manufacturingemploymenthasbeenindeclineforseveraldecadesrepresentingastructuralshiftintheeconomythathasbeentakingplacesincethe1970s,atleast.BothSanDiegoandOrangeCountyhaveseenaslideofmanufacturingemploymentin2009of9.8%and10%,respectively.Theaccelerationofmanufacturingjoblossesiscontinuingtotakeplaceascompanieshaveusedthedownturntoaggressivelymakecutstheyhadbeenreluctanttomakebefore.DuringTheGreatRecessionoutsourcingabroadhasincreaseddramatically.AsRobertReich,formersecretaryoflaborunderPresidentClintonsaidinarecentarticlepublishedbytheWallStreetJournal,“CompanieshavediscoveredthatnewsoftwareandcomputertechnologieshavemademanyworkersinAsiaandLatinAmericaalmostasproductiveasAmericans,andthattheInternetallowsfarmoreworktobeefficientlymovedtoanothercountrywithoutlossofcontrol.”88Thelikelihood,therefore,isthatmanyjobsthathavebeenoutsourcedduringtherecessionwillneverreturn.

SinceTheGreatRecessionbeganattheendof2007,industrygrowthhasbeennegativelyimpactedinnearlyallsectorsacrosstheStateofCaliforniaandintheSouthernCaliforniaregioninparticular.TheindustrylossiswidespreadandacontributingfactorastowhythisisoneofthelargesteconomicdownturnssinceTheGreatDepression.“TheFederalReserve’sreadingsshowthat86%ofindustrieshavecutbackproductionsinceNovember[2008],themostwidespreadreductioninthe42yearstheFedhastrackedthisfigure.”89AccordingtotheLosAngelesEconomicDevelopmentCorporation(LAEDC),“problemsthatoriginatedinhousingandmortgagefinancespreadtotherestoftheeconomy,leavingveryfewindustries[inCalifornia]untouched.”90Inthissamereport,theLAEDCfindsthatallthirteenmetroareasinCaliforniahaveseensignificantemploymentdeclines91overthelastseveralyears.MaquiladoraBust.From2001to2002,themaquiladoraindustrysufferedtheworsteconomicdownturninitshistory,mainlybecauseofthe2001recessionand

87StevenC.Pitts,UCBerkeleyLaborCenter,JobQualityandBlackWorkers(California:UCBerkeleyLaborCenter,May2008,23)88RobertReich,“TheJobsPictureStillLooksBleak,”TheWallStreetJournal,April12,2010.89C.Isidore,“TheGreatRecession,”CNNMoney,25March2009,<http://money.cnn.com/2009/03/25/news/economy/depression_comparisons/index.htm> 90LosAngelesCountyEconomicDevelopmentCorporation,MidyearEconomicForecastandIndustryOutlook,July2009,18.91Ibid.22.


54

China’sentryintotheWorldTradeOrganization.IntheBajaregionofMexico,thenumberofmaquiladoraswentfrom1,235in2001to943in2002,a24%decrease92.Asillustratedinfigure15,thedownturncontinuedthrough2004,untilthenumberofmaquiladorasfinallybegantoincreasein2005.Figure16:NumberofMaquiladoras20012009

Source:Datafrom2001to2006,ConsejoNacionaldelaIndustriaMaquiladorayManufactureradeExportación.Datafrom2007to2009,INEGI,EstadísticaMensualdelProgramadelaIndustriaManufacturera,MaquiladoraydeServiciosdeExportación(NationalCounciloftheMaquiladoraandExportManufacturing). Mexico’sdependencyontheU.S.economyismadeclearbythefactthatover80%ofitsexportsaredestinedfortheUnitedStates.93Asaresult,anychangeinU.S.demandforMexico’smanufacturedgoodscanhavestrongeconomicconsequencesthroughoutthecountry’sindustrialsectors.TherecentrecessionintheglobaleconomyhascausedadeclineinU.S.‐Mexicomanufacturingtrade.AccordingtoInstitutoNacionaldeEstadísticayGeografía(TheNationalInstituteofStatisticsandGeographyorINEGI)data,thenumberofmaquiladoraswentdownfrom1,038inDecemberof2007to983inNovemberof2009,anindicatorthatTheGreatRecessionhasimpactedMexico’smanufacturingindustry.94WhenexaminingthedeclineofmaquiladoraoperationsthroughouttheBajaRegion,INEGIdataillustratethatthegreatestabsolutechangefrom2007to2009,four‐

92ConsejoNacionaldelaIndustriaMaquiladorayManufactureradeExportación,CNIMME(2010),EstablecimientosenActivoporEntidadFederativa.http://www.cnime.org.mx/93M.AngelesVillarreal,U.S.MexicoEconomicRelations:Trends,Issues,andImplications(Washington,DC:CongressionalResearchService,March31,2010). 94INEGI,EstadísticaMensualdelProgramadelaIndustriaManufacturera,MaquiladoraydeServiciosdeExportación.


55

fifthsofthetotalchange,wasregisteredintheMunicipalityofTijuana.Figure16(below)showsthatthemaquiladorasdeclinedbysevenpercentagepointsduringtherecession,whiletheothermunicipalitiesinBajasawadeclinerangingfrom1to5percentagepoints.ThebustoftheindustrycouldmeanthathundredsofthousandsofMexicancitizenswillcontinuetorisktheirlivescrossingthebordertotheUnitedStatesseekingjobopportunity,asNAFTAandthemaquiladorasdonotdeliveronpromisesmadetoMexicanworkers.95Figure16:NumberofMaquiladorasinBajaCalifornia,byMunicipality96

2007 2008 200920072009AbsoluteChange

20072009PercentageChange

Total 1,038 1,022 983 ‐55 ‐5%Ensenada 105 100 100 ‐5 ‐5%Mexicali 167 165 162 ‐5 ‐3%Tecate 135 135 134 ‐1 ‐1%Tijuana 631 622 587 ‐44 ‐7%

Source:INEGI,EstadísticaMensualdelProgramadelaIndustriaManufacturera,Maquiladora y de Servicios de Exportación (Monthly Statistics Program of the Manufacturing, Maquiladora and Export Services)RegionalFortunes:InlandandCoastalDivide.ThusfarthisanalysishasexaminedthelabormarketdynamicsatthecountylevelintheSouthernCaliforniaRegion.Steppingback,agrowinggeographicaldividewithinthesesixcountiesandwithinthestate,isolatinglabormarketprospectsofthoselivinginlandfromthoseonthecoast,isseen.AccordingtoareportreleasedbyTheCaliforniaBudgetProject(CBP),from1990‐2005California’sjobsdramaticallyshiftedinland,largelyreflectingdemographicshiftsofthepopulation.Thenumberofjobsininlandcountiesincreasedbyalmost46%between1990and2005,almostfivetimestheincreaseinjobsincoastalcounties.97Duringthis15‐yeartimeperiod,California’sInlandcountiescontributedtomorethanhalf(54.4%)ofthestate’sjobgrowth,althoughjustoneinfiveCaliforniajobs(19.9%)waslocatedinlandin1990.AccordingtotheCBP,“morethanhalfofthestate’sjobgrowthintrade,transportation,andutilities(62.5%);publicadministration(58.2%);andnaturalresources,mining,andconstruction(52.0%)tookplaceininlandcounties.”AlthoughCaliforniahaslosthundredsofthousandsofmanufacturingjobsinrecentdecades,duringthis15yeartimeperiod,theinlandcountiessawdramaticincreases

95Ibid.962007and2008datacorrespondstoDecember;2009,toNovember. 97TheCaliforniaBudgetProject.InTheMidstoftheGreatRecession.Retrievedfromhttp://www.cbp.org/pdfs/2009/090906_labor_day.pdf


56

inthenumberofmanufacturingjobsofnearly50,000(19.4%),reachingatotalofmorethan300,000jobsby2005.Incontrast,manufacturingjobsdramaticallydeclinedincoastalcounties,withthedisappearanceofclosetohalfamillionjobs(30%)duringthesameperiod.ThegreatestgainsininlandmanufacturingjobswereseeninSanBernardinoCounty,whichadded23,500jobs(53.6%),andinRiversideCounty,whichadded18,400jobs(55.3%).98BothSanBernardinoandRiversidecountieswereparticularlyhardhitduringTheGreatRecessionastheyexperienceddramaticdeclinesinmanufacturing,construction,andretail.Withthecollapseofmanyofthesectorsthatflourishedininlandcounties,manyforecastthatwhilethecoastalareasbegintorecover,theinlandcountiesarelikelytobeinarutforsometime,whichislikelytoleadtogreaterinequalitybetweenresidents.99Nowthatthecenterforeconomicactivity,construction,hascollapsed,onehastowonderaboutthefutureprospectsoftheinlandregions.TheCenterfortheContinuingStudyofCaliforniaprojectsthatnewindustryinCaliforniawillprimarilydevelopinthecoastalregions.Thatis,technologicalinnovation,foreigntrade,andhigh‐techInternet‐basedindustriesareprimarilycoastalregioneconomicengines.100Theinland‐coastaldivideinthestateislikelytohavesignificantracial,demographic,andsocialconsequences,asournationalidealswillsurelybeputtotest.ThePlagueofLongtermUnemployment:TheJobPoorDesert.Thenationfacesanunprecedentednumberoflong‐termunemployed,themostsevereformofunemployment.101InJuly2011thenumberhadreached6.2million;44.4%ofunemployedpersonshadbeenjoblessfor27weeksormore,thehighestnumbersincedatabegantobecollectedin1948.102Beyondtheobvioushumantollsuchaspersonal,financialandhealthcarehardships,aswellasthelossoftheirunemploymentinsurancebenefits,thelong‐termunemployednotonlytakelongertofindwork,buttheirskillsandjobnetworkserode,andemployerstendtoeitherbeskepticalofgapsintheirresumes,oroftheirworkethic.Long‐termunemploymenthasdevastatedoldermeninparticular,asthenumberoflong‐termunemployedmenincreasesprogressivelywithage.103InCalifornia,fromJanuary2009toJanuary2010,long‐termunemploymentjumpedastriking148%.Thelong‐termunemployedarenowthelargestgroupoftheCalifornia’sjobless,totaling36.4%ofallthoseunemployed.104AccordingtoastudyreleasedbytheBrookingsInstitutionandreportedinTheEconomist(May1,2010),theunprecedented 98Ibid.99Car i Tuna , “California'sDividedFortunes,”TheWallStreetJournal,RealEstate,February2,2010.100TheCenterfortheContinuingStudyofCalifornia,TheFutureoftheCaliforniaEconomyisontheCoast,February2007.101Thosejoblessfor27weeksandover.102U.S.DepartmentofLabor.EmploymentSituationSummary.(BureauofLaborStatistics,July,2011).Retrievedfromhttp://www.bls.gov/news.release/empsit.nr0.htm. 103AndreaOrr,OlderMenFaceLongerJobSearches(Washington,DC:EconomicPolicyInstitute,June17,2010).104MaryAnnMilbourn,“Calif.Long‐TermJoblessJumps148%,”TheOrangeCountyRegister,March17,2010.


57

numberoflong‐termunemployedcouldcausealabormarketrecoverytotaketwiceaslongastherecoveryafterthe1982recession,anunpleasantprospect.A2010studybytheJohnJ.HeldrichCenterforWorkforceDevelopmentatRutgersUniversity,documentedthehostofsocialandpsychologicalailmentsthattoooftenaccompanysevereeconomicshocks.Amongthosethathavebeenunemployedforatleastsevenmonths:63percentweresufferingfromsleeploss,52percentsaidrelationshipswithfamilymembershavebecomestrained,46percenthaveexperiencedalossofcontactwithfriends,and14percenthaddevelopedasubstancedependency.105Asjobsremainscarce,manymorewillpeoplewillexperiencethisgrowingisolationandwithdrawalfrommainstreamsociety.Unemploymentbenefitshavenotonlybeenalifelinetothelong‐termunemployedinthisrecession,butalsoavaluablefiscalstimuluswhichputsmoneybackintotheeconomyandhelpscreatejobsduringrecessions.Currently,CongresshasextendedunemploymentbenefitsinCaliforniaforuptoamaximumof99weeks.106Yetinthemonthsahead,millionsthroughoutthenationandstatewillexhausttheirunemploymentbenefitsasunemploymentinsuranceextensionsaresettophaseoutafter99weeks.ThisisnotonlyadevastatingprospectformanyAmericanfamiliesbutalsolimitsthepossibilityofasustainedeconomicrecoveryasconsumerdemandisdampenedbecauseoflessspending.TillvonWachter,aneconomistatColumbiaUniversity,hasshownevidencethatprovidingunemploymentinsurancehelpskeepjoblessworkersinthelaborforce,dramaticallyimprovingthelikelihoodofthemreturningtoworkoncethejobmarketimproves.Incontrast,manydiscouragedworkerswholoseunemploymentbenefitsapplyforpermanentSocialSecuritydisability,foodstamps,andoftenMedicarebenefitsaswell,foralifetime,withouteverreenteringthelaborforceorpayingtaxes.Therefore,accordingtovonWacher,providingandextendingunemploymentbenefitsarethefiscallyresponsiblethingtodo.107TheTrendLooksBleakWithtaxrevenuedecliningasaresultoftheeconomicdownturnandbudgetreserveslargelyexhausted,Californiahasmadespendingcutsthathavedramaticallyaffectedfamiliesthroughreducednecessaryservices.Thesecuts,inturn,haveexacerbatedthestate’seconomicwoesbecausefamiliesandbusinesseshavelesstospend,dampeningtherecoverybyreducingoveralleconomicactivity.Whenstatescutspending,masslayoffsandhiringfreezestakeplace,contractswith 105DebbieBorie‐Holtz,CarlVanHorn,andCliffZukin,“NoEndinSight:TheAgonyofProlongedUnemployment”(RutgersUniversity,May2010).106EmploymentDevelopmentDepartment(EDD).FederalUnemploymentExtensions.Retrievedfromhttp://www.edd.ca.gov/unemployment/Federal_Unemployment_Insurance_Extensions.htm 107AndreaOrr,ExtendingUnemploymentInsuranceIstheFiscallyResponsibleThingtoDo(WashingtonDC:EconomicPolicyInstitute,May28,2010).


58

vendorsarecanceled,paymentstobusinessandnonprofitsthatprovideservicestolocalcommunitiesarereduced,andbenefitpaymentsarecuttoindividuals.Thesestepsremovedemandfromtheeconomy,creatingaviciouscyclethatslowsanddepressestherecovery.108

GivenhowmanyCaliforniansarecurrentlyunemployedorunderemployed,it'sdifficulttoseewherewewillgetsufficientdemandtosupportasustainedeconomicrecovery.AccordingtotheUCLAAndersonEconomicforecastforCalifornia,thestatewillcontinuetoseeahighrateofunemployment,coupledwithongoingparalysisinthejobmarket,withacontinueddepressedconstructionindustrythroughout2012,atleast.Overalllevelsofconsumptionwillremainsluggish,asconsumerconfidenceispredictedtoincreaseonlyslightlyinthecomingyear.109Complicatingmattersisthelong‐termimplicationsofthosewhohavebeenlaidoffduringtherecession.AccordingtoaworkingpaperbyseveraleconomistsatColombiaUniversitywhotrackedthelong‐termearningsofthosewholosttheirjobsintherecessionof1982,itwasfoundthat,onaverage,mostworkerswholosttheirjobsdidnotrecovertheirformerearningpower.Even15to20yearslater,mostworkersdidnotreturntotheiroldincomelevels.Onaverage,workers’earningsrangedfrom15%to20%lessthantheywouldhavebeenhadtheynotlosttheirjobs.110

Construction.Permitswereissuedtobuild44,601newhomes,apartments,condominiumsandtownhousesstatewidein2010,up23percentfrom2009,butdown31percentfrom2008,whichhadheldthedistinctionforthesecond‐lowesttotalonrecordwith64,962permitsissued.Recordsbeganbeingkeptinthestatein1954withthelowestannualtotalsetin2009with36,421permitsissued.111

ConstructionemploymentinCaliforniawillnotstartaddingasignificantnumberofbuildingpermitsuntil2013,accordingtoforecasters,whichisoneofthereasonsthestate'sunemploymentrateislikelytostayabove10%untilthemiddleofthatyear.Constructionemploymentwon’treachpre‐recessionlevelsuntilatleast2021.112.

Manufacturing.Themanufacturingindustry,heightenedtoprominenceduringthe19thcenturyandadominantindustryintheearly20thcentury,hasexperienced

108.NicholasJohnson,PhilOliff,andEricaWilliams,AtLeast45StatesHaveImposedCutsThatHurtVulnerableResidentsandtheEconomy(California:CenteronBudgetandPolicyPriorities,May25,2010).109TheUCLAAndersonForecastForTheNationAndCalifornia.20101stQuarter‐20124thQuarter.110TillvonWachter,“Long‐TermEarningsLossesduetoMassLayoffsDuringthe1982Recession:AnAnalysisUsingU.S.AdministrativeDatafrom1974to2004,”(NewYork,:ColombiaUniversity,April2009).Notethatpaperispreliminary. 111CaliforniaBuildingResearchAssociation.Retrievedfromhttp://www.cbia.org/go/cbia/newsroom/press‐releases/its‐official‐2010‐is‐second‐lowest‐year‐on‐record‐for‐homebuilding‐in‐california/112AlanaSemuels,“Californiatosufferhousingshift,UCLAforecasterssay,”TheLosAngelesTimes,June15,2011.


59

significantdeclineinthelastseveraldecades,beginninginthe1950s.Therefore,thedeclineinmanufacturingemploymentduringtheGreatRecessionsimplyintensifiedthetrendofthelasthalf‐century.ManufacturinginCaliforniahasexperiencedwidespreadjoblossesacrossvarioussub‐sectorsduringandpriortotheGreatRecession.AccordingtotheUCLAAndersonForecast,theindustrywillexperiencemodestgrowththrough2013,mainlycomingfromdurablemanufacturinggoodssuchcomputersandelectronics.113ThehopeisthatmoneyfromthestimuluspackageforenergytechnologywillbegintobedistributedtofirmsacrossCalifornia,whothencanbegintohireworkers.ManufacturinghasseendramaticdeclinesnowforseveraldecadesinCalifornia.Astheindustrybeginstorecoverfromtheeconomicdownturn,manufacturingwillseeonlysmallgainsthrough2013,asmanyoftheoutsourcedjobsarenotcomingback.TheKeystoGrowthinCaliforniaThepersistentlackofjobgrowth,nowalmosttwoyearsintotherecovery,leadsmanytowonder:willjobsevercomeback?Ofthe1.3millionjobslostthroughoutthestateduringtheGreatRecession,350,000wererelatedtothehousingindustry.Thisleftalargeshareofunemployedwhocouldnotfindajobinthefieldtheyhadpreviouslyworkedin,creatingastructuraljobcrisis.Suchstructuralchangesinthelabormarketscantakesevenyearstoadjust114,andthereforenotmuchjobgrowthisexpectedforatleastanotheryear.Withthatbeingsaid,theoveralloutlookforthesecondhalfof2011isbleak;asthefirstquarterlyreportfor2011fromtheUCLAAndersonForecastcallsfor“slowgrowthandstressinthelabormarkets”115for2011.Employmentgrowthwillnotpushtheunemploymentratebelowdouble‐digitsuntilthesecondquarterof2013.Lastly,unemploymentwillcontinuetobetheunderlyingandmostpressingissueinCaliforniathroughouttheyear,astherateisprojectedtohoveraround12percent116astheso‐called“missingworkers”startlookingforworkoncejobgrowthresumes.117EventhoughtheCaliforniaeconomyisexpectedtogrowslowlyin2011and2012,theunemploymentratewillonlydecreasemarginally,asthecontractionoftheCaliforniaeconomyissimplynotgoingtobeabletoproduceenoughjobsrequiredtoabsorbthenewworkerswhowillenterthelaborforceoverthenextcoupleofyears.Expectdoubledigitunemployedtopersistforperhapstwomoreyears,evenoncethejoblayoffscease.118ThedriverstorecoveryfromTheGreatRecessionwillbeeducation,healthcare,exports,technology,andconstructiontosomeextent.119 113TheUCLAAndersonForecastfortheNationandCalifornia.20111stQuarter‐20134thQuarter.114Ibid.115Ibid. 116Ibid.117AndreaOrr,“Missing”WorkersReturn(Washington,DC:EconomicPolicyInstitute,May11,2010).Themissinglaborforceismadeupofthosegroupsofpeoplenotcurrentlycountedasunemployedbecausetheyhaveeitherbecomediscouragedatpoorjobprospects,orstoppedlookingforwork.118TheUCLAAndersonForecastfortheNationandCalifornia.20111stQuarter‐20134thQuarter.119Ibid.


60

ConclusionUnderstandingtheAmericanDreamUnderstandingthecentralideologyoftheAmericanDreamisessentialtounderstandingtheseverechallengesthatthisdreamcurrentlyfaces.“TheAmericanDream,”aphrasefirstcoinedbyHistorianJamesTruslowAdamsin1931,hasoftenbeenunderstoodasafundamentalbeliefthatcitizensofeverysocialrankfeelthattheycanachieveabetter,richer,andhappierlife,astheydefineit‐‐whethermaterialorotherwise.120In1993,formerU.S.presidentBillClinton,inanaddresstotheDemocraticLeadershipCouncil,spokeoftheAmericanDreamasfollows:

“TheAmericanDreamthatwewereallraisedonisasimpleyetpowerfulone‐‐if youworkhardandplaybytherulesyoushouldbegivenachancetogoasfarasyourGod‐givenabilitieswilltakeyou.”121

ThisisnotuniquelyanAmericanDream;it’saglobaldream.YetitisassociatedwiththeUnitedStates‐‐thelandofopportunityandpossibility.Todaythisdreamisfizzlingasanationalideal,astheaverageAmericannolongerbelievesinthepromisethatshapedthisgreatnation,whichwasuniqueinthesensethatnoothernationhadanofficialnationaldreamsoembeddedinitsculture.Fordecades,itwasCaliforniathatepitomizedtheAmericanDreamwithitseconomicstrengths,artisticcreativity,andambitiousspirit.Thisdreamiswhatmakesthisstateattractiveandmagnetictopeoplefromallcornersoftheworld.Thesearetoughtimesforthedream,andeventoughertimesfortheCaliforniaDream.WhileCaliforniabusinessesseemtobehiringagain‐‐proliferatingpayrollsby28,800netpositionsinJune2011andallowingthestatetooutpacethenationinjobgrowth‐‐twoeconomiesaredevelopingwithinCalifornia,oneformorehighlyeducatedworkerslivingonthecoast,andoneforinlandworkerswithlessformaleducation.WithgrowthconcentratedinaffluentareassuchasSiliconValleyandinhigh‐payingfieldssuchasprofessionalandtechnologicalservices,blue‐collartradessuchasconstructionandtruckingcontinuedtoshedworkers.Thisdividesuggeststhatthestateisundergoinganunevenrecovery.122Itisnowonderwhytherehasbeenasharpriseinthepublicspessimism,reflectiveinarecentsurveyaskingCaliforniansaboutthegeneraldirectionofthestate,only19%ofalladultspolledsaidCaliforniawasheadedintherightdirection.123Althoughthissurveywastaken 120JimCullen,TheAmericanDream:AShortHistoryofanIdeathatShapedaNation(USA:OxfordUniversityPressU.S.,2004).121JenniferHochschild,FacingUptotheAmericanDream:Race,Class,andtheSouloftheNation(Princeton,NJ:PrincetonUniversityPress,1995),18. 122AlanaSemuels,“Californiajobmarketisrebounding,butunevenly,”TheLosAngelesTimes,July23,2011.123PublicPolicyInstituteofCalifornia.GeneralDirectionofThingsinCalifornia.January2010.


61

inthemidstofTheGreatRecession,thefindingsofthisresearchshowthattheCaliforniaDreamhasbeendeterioratingsinceatleastthe1970sinseveralrespects:

1. Wagesoverallhavedeclinedandstagnatedsincethe1970s2. Virtualdisappearanceofmiddlemobilityjobshasstratifiedjobsinthelow

endofthewagescaleandthehighend.3. Racialandeducationaldisparitiesinemploymentprospectshavebecome

intensified.4. Opportunityformobilityhasbecomedeeplyfragmentedfordifferent

segmentsofthepopulation.

Aswelookintopossibleremediestosolvethiscurrentjobcrisis,itisimportanttoalsorecognizethelong‐termtrendsofemployment,jobgrowth,andincomegains.WhileTheGreatRecessionhasintensifiedracialandclassstratification,therewereunderlyingpatternsofdifferentialemploymentopportunityandincomegainsfordifferentgroupsofpeoplepriortotherecession.Asthedataillustratedinthischaptermadeclear,the‘CaliforniaDream’hasbeenerodingatanincreasinglyintensepaceforseveraldecades.ItisofgreatimportancetoexaminetheissuesandopinionsthatCalifornianshavebeenandarecurrentlygrapplingwithtobetterunderstandhowtomoveforwardwithconcertedandcoordinatedefforts.ShorttermPolicyTheUnitedStatesiscurrentlyexperiencingthesharpestriseinunemploymentandthelongestrecessionsincetheGreatDepressioninthe1930s.Thenationisinaviciouscyclewhereconsumerswillnotbuymorebecausetheyareafraidoflosingtheirjobsand/ortheirpayisdropping,whichinturniscausingemployerstoslowdowntheirhiringandinmanycaseslayoffmoreoftheirworkers.Asdiscussedearlier,thiseconomicdownturnisevenmoreintenseinCalifornia.Itisdevastatinglives,impoverishingentirecommunities,andisdoinggreatdamagetoagenerationofchildrenandfamilies,creatinglonglastingsocialtrauma.Therefore,theimmediatekeyprioritymustbetocreatejobssothattheresidentsofCaliforniacanbeputbacktowork.Thesejobsshouldinclude:investmentsinthe“green”economyandcommunityimprovement‐‐paintingandrepairinglocalschools,communitycenters,libraries,roads,andmuchmore.Recently,theAmericanSocietyofCivilEngineersidentifiedmorethan$2.2trillioninpublicinfrastructureneedsthroughoutthenation.124Investinginthenation’scrumblinginfrastructurewillcreatejobsandstimulatetheeconomy,andtheinvestmentwouldbelasting.Thismustbedonethroughanimmediatejobcreationprogramonalargescale.Ourpolicyrecommendationsinclude: 124AmericanSocietyofCivilEngineers,2009ReportCardforAmerica’sInfrastructure(Washington,DC:AmericanSocietyofCivilEngineers,May,2009).


62

1. CustomizedJobTrainingProgramsToprepareworkerstotakeadvantageofnewandincreasingjobopportunitiesinhighgrowth,highdemandvitalsectorsoftheAmericanandCaliforniaeconomy.Theseprogramsmustbeaccountableandmusthaveagoaloftangiblejobskilldevelopment.

2. GovernmentInvestmentRecreateWorksProjectsAdministration(WPA)125andCivilianConservationCorps,twoofthemostsuccessfuljobsprogramsoftheNewDeal.126

3. PayrollTaxExemption Exemptthefirst$20,000ofincomefrompayrolltaxesforthenexttwoyears.ThiswillputcashdirectlyintoAmerican'spockets,creatingconsumerdemandandboostingconsumerspending.127

4. TaxCredits

Offerajobcreationtaxcredittosmallbusinessesthathireworkerswhohavebeenunemployedforanextensiveperiodoraddsignificanthoursofworktothosealreadyemployed(forexample,makingapart‐timeworkerfull‐time).Thistaxcreditcouldrefundemployersanywherefrom10%‐15%ofwagespaidtonewlyhiredworkers.

5. China’sCurrencyManipulation

SinceChinaenteredTheWorldTradeOrganization(WTO)in2001,theextraordinarygrowthofU.S‐ChinatraderelationshashadadramaticeffectonU.S.workersandthestructureoftheeconomy.AccordingtoareportpublishedbytheEconomicPolicyInstitute(EPI),thegrowingtradedeficitwithChinahaseliminated2.4millionjobsintheUnitedStatesbetween2001and2008.128China’smanipulationofitscurrency,theyuan,isresponsibleforatleast1millionoftheselostjobs.TheEPIhassuggestedthatCongressaddressChina’scurrencyrevaluationbyimposingacurrencymanipulationadjustmenttariffthatwouldraisetheeffectiveexchangerate,balancingthetwocountries’traderelationship.129

Thecollapseofthehousingmarket,andthepanicthatlaterrattledthefinancial

125TheWPA(WorksProjectsAdministration)wasthelargestandmostambitiousNewDealagency,employingmillionsofunskilledworkerstocarryoutpublicworksprojectssuchasconstructionofpublicbuildingsandroads.126RobertReich,“SixStepstoCreateJobs,”MoneyNews,July14th,2011.127Ibid. 128RobertE.Scott,U.S.JobsDependonChinaRevaluingitsCurrencyNow(Washington,DC:EconomicPolicyInstitute,June23,2010).129Ibid.


63

markets,hashittheCaliforniaeconomyhard.Businessesexpectingadeclineindemandandlimitedaccesstocreditbegantoruthlesslycuttheirworkforce,reduceinventories,andhaltplannedexpansions.AssuggestedbytheEconomicPolicyInstitute(EPI),onlylargescaleandcomprehensiveFederalandStateinterventioncanspurjobgrowthintheimmediatefuture.Unlesssuchapolicyisimmediateandsufficient,wecanexpectthenumberofunemployedtocontinuetoremainatadouble‐digitratewellinto2012,aspredictedbytheUCLAAndersonForecast.Whilethesepolicymeasureswillrequiremorepublicspendingintheshortterm,unlesswegettheeconomymoving,thelong‐termdeficitproblemwillonlygrowworse.LongtermPolicyTheUnitedStatesisanationbasedontheideathataperson'sbirthdoesnotdeterminehisorherdestiny,andthathardworkisallittakestoimproveone’ssituation.Nevertheless,forseveraldecadesnow,workingAmericanshavebeenfeelingsqueezed,astheyhavebecomeconsumedwiththeday‐to‐dayfinancialstruggles.TheevidenceonsocialmobilityishardlyencouragingtothosewhocarrythebeliefthatallAmericanshaveachancetopullthemselvesupbytheirbootstraps.AccordingtoresearchconductedbyTheEconomist(December,2004)oninequalityandsocial‐mobility,inequalityandclassstratificationisgrowingatlevelsnotseensincetheGildedAge.Diminishedsocialmobilityislinkednotjusttorecessionsthathitthemarketeverydecadeorsobuttojobstructureanddifferentialeducationalopportunity.Socialandeconomicpolicymustaddressthedeclineofmiddlemobilityjobs.Withmanufacturingnotonlyleavingthestate,butalsothenation,jobsinthemiddleoftheearningsdistributionscalearedifficulttocomeby.Asaresult,workersarestratifiedineitherthebottomendoftheearningsdistributionscale,oratthehighend,whichrequireshighlevelsofformaleducation.Withveryfewmiddlemobilityjobs,thejobstructurehasbecomesymbolicofacastesystemratherthanameritocracy.Thisisastructuralissueratherthanashort‐termissue,andpolicymakersmustimplementstrategiesthatprovidearealisticpathofupwardmobility.Veryfewdisputetheimportanceofeducationandthegovernment’sroleinassuringminimumstandardsofeducationforthegoodofsocietyandtheeconomy.Increasingly,educationisbecomingacentralaspectofopportunity.Educationhasclearlybecomeevenmoreintenselyrelatedtoeconomicstability,asincomesandjobqualityhavedeclinedforpeoplewithlessthanacollegeeducation,whilethoseforpeoplewithhighereducationhaverisensignificantly.130RecentresearchfromtheBrookingsInstitutionhasshownthatcollegeeducationstronglyaffects 130GaryOrfield,MetropolitanSchoolDesegregation:ImpactsonMetropolitanSociety19951996.Cambridge:HarvardEducationPress,July1996)


64

Americans’prospectsforclimbinguptheincomeladder.Thestudyuseddatafromthelastfourdecadestoshowthatadultswhohavedegreesfromtwo‐yearorfour‐yearcollegeshavesignificantlyhigherfamilyincomesthandoadultswhohaveonlyahighschooldiplomaorarehighschooldropouts.Inaddition,incomehasincreasedsteadilyoverthesametimeperiodforindividualswithacollegedegreewhileremainingstagnantordecliningforindividualswithahighschooleducationorless.131InCalifornia,thisisevenmorethecase,asarecentstudyusingcensusdatahasshownthatthewagesofcollegegraduatesareabout90%higherthanthewagesofworkerswithonlyahighschooldiploma,andthatthevalueofacollegedegreehasgrownrapidlyoverthepastquartercenturyatleast.132Therefore,policymakersmustensurethatmoreandmoreschoolswillprovidestudentswithpathstocollege.ToomanyschoolsinCaliforniaarefailingtoprovidetheadequateeducationfortheirstudentsthatwillbeessentialformeetingthedemandsofthelabormarketinthecomingyears.Thebenefitsofaneducationareimmense,notonlyfortheindividual,butfortheregionasawhole.InareportreleasedbytheCaliforniaDropoutResearchProject,itwasestimatedthatovertheirlifetime,onecohortofdropoutsinCaliforniaresultsintotallosses133worthover$46billion.134Theeconomicbenefitsofnotonlyraisingthedismalhighschoolgraduationrateintheregion,butalsoinvestinginpostsecondaryeducation,aresizable.ThePublicPolicyInstituteofCalifornia(PPIC)releasedarecentstudyonCalifornia’sshortfallinitssupplyofcollege‐educatedworkers.ThePPICprojectsthatby2025,41%ofjobsinCaliforniawillrequireacollegedegree.135ImprovingtheeducationalattainmentofCalifornia’syoungadultsisessentialfortheStateofCalifornia.NotonlywouldthisallowtheadultstosucceedinCalifornia’sincreasinglyhigh‐skilledeconomy,butitwouldalso,withoutadoubt,benefitthestatethroughincreasedtaxrevenuesandthesocialandeconomicmobilitythattendstohappenwithhigherlevelsofeducation.136Researchoneconomicmobilityshowsthatindividualsfrompoorandlow‐incomefamilieswhoearnacollegedegreearemuchmorelikelytomoveuptheincomescalethanpeersintheirowngenerationwithoutadegree.137Perhapsmostimportant,raisingtheeducationalattainmentlevelofthestate’sresidentswillfostergreatereconomicgrowthforyearstocome.Thefollowingpolicyrecommendationswouldbemosteffectiveinaddressingthiseducationalcrisis:

131RonHaskins,HarryHolzer,andRobertLerman,PromotingEconomicMobilitybyIncreasingPostsecondaryEducation(Washington,DC:BrookingsInstitution,May2009).132HansJohnsonandRiaSengupta,ClosingtheGap:MeetingCalifornia’sNeedforCollegeGraduates(California:PublicPolicyInstituteofCaliforniaJuly2009).133Figurerepresentslifetimeconsequencesforonecohortofdropoutsatage20,suchascrime,netfiscalcosts,netearnings,andexternalities..134CliveR.BelfieldandHenryM.Levin,TheEconomicLossesfromHighSchoolDropoutsinCalifornia,(SantaBarbara,CA:CaliforniaDropoutResearchProject,August2007).135JohnsonandSengupta.136Ibid.137Haskins,Holzer,andLerman.


65

1. AddressEducationalInequality

Thoughcomplex,educationalinequalityisamajorcontributingfactortothegrowinginequalityinthelabormarket.Creatingpolicytoaddresseducationalinequality,inconjunctionwithlaborandothersocialpolicy,providesamorecomprehensivestrategytoensurewecreateaworkforcereadytomeetthedemandsofthemarket.Particularly,reducingracialandethnicgapsinschoolperformanceandachievementwillhelpCaliforniameetthedemandsforworkerswithtechnicalandscientificknowledge.

2. IncreaseCollegeEnrollmentGradualincreasesincollegeenrollmentratesfromCalifornia’scurrentleveltothenationalaverage,a20%improvementintransferrates,andanimprovementincompletionratesatCSUwould,together,reducetheskillsgapbyone‐halfby2025.138

3. MoreOutreachPrograms

Createmorecollege‐promotingoutreachprograms,particularlyinurbanschoolsandneighborhoods,wheretheycanincreaseawarenessoftheimportanceofcollegeandfinancialaidavailability.

4.AlternativetoCollegePrograms

Createprogramsthatserveasanalternativetocollege,whichwillincludepostsecondarytrainingandworkforceskillsdevelopment.

5.CollegeRelatedGoals HighSchoolsacrossthestatemustfocusoncollegerelatedgoalsratherthan

currenteducationalpolicies,suchashighstakestestsforstudentsandtest‐drivenaccountabilityforschools.

Withoutthinkingaheadtowardthelong‐termimplicationsofnotacting,Californiaislikelytobecomeincreasinglystratifiedbyrace,socialclass,andeducationalattainment,allofwhichintersectinwaysthisstudyhasdiscussed.Thestateisalsounlikelytomeetthedemandofbusinessthatwillincreasinglyneedhighlyskilledworkers.ThefindingsofthePPICreportindicatethatmodestgainsincollegeattendance,slightincreasesincommunitycollegetransferandcompletionrates,couldleadtosignificantgainsinthenumberofcollegegraduatesinthestate.139ThefuturethatliesaheaddemandscoordinatedandstrategiceffortstoaddressthecurrenteconomicissuesofCalifornia.Particularlyintimesofunprecedentedbudgetcuts,itisimportanttothinkaboutthesocialimplicationsofdoingnothing.

138JohnsonandSengupta. 139Ibid.


66

Shortchangingeducationforshort‐termbudgetfixescouldseriouslyshortchangeCalifornia’ssocialandeconomicfuture.Complacencyislikelytoleadtonotonlyenhancedinequalityandincreasedsocialmarginalization,butalsotoprolongedeconomicstagnationinCaliforniaandthenation.


67

AppendixA:

SupplementalTablesFigureA1:ManufacturingJobLossbyEarningsQuintiles19792005

Source:CaliforniaBudgetProjectTableA1:CountyMedianFamilyIncome(inUSDollars),byRace,2000


LosAngeles 33,363 37,190 54,108 69,396Riverside 36,289 42,482 58,443 56,195SanBernardino 38,070 38,750 58,750 53,495SanDiego 33,993 39,913 56,764 63,330Ventura 44,575 55,075 75,720 74,967Orange 41,010 54,181 61,785 78,354Source:CenterforComparativeStudiesinRaceandEthnicityStanfordUniversity;2000Census


68

TableA2:CountyMedianHouseholdIncome(inUSDollars),byRace,2000


LosAngeles 33,820 31,905 47,631 53,978Riverside 36,469 38,644 50,923 46,729SanBernardino 38,068 35,730 54,704 45,555SanDiego 34,555 36,389 51,981 52,089Ventura 46,404 51,382 71,851 64,568Orange 44,676 49,972 58,501 65,160Source:CenterforComparativeStudiesinRaceandEthnicityStanfordUniversity;2000CensusTableA3:LaborForceParticipationRatebyAge,2000

1619 2024 2554 5559 6064LosAngeles 38.2 67.7 72.70% 64.7 47.4SanDiego 42.8 61.6 75.40% 67.4 48.4Ventura 46.8 74.9 78.20% 71.5 51.7OrangeCounty 45.3 72.4 77.70% 71.3 53.2Riverside 43.3 70.9 73.30% 61.9 43.5SanBernardino 41.6 65.6 71.40% 63.3 42.4Source:USCensusBureauTableA4:LaborForceParticipationRatebyAge,20052007

1619 2024 2544 4554 5564LosAngeles 34.10% 71.2 79.7 77.6 62.1SanDiego 41.00% 76.8 81 79.9 63.7Ventura 43.10% 76.5 82 82.1 66.1OrangeCounty 39.30% 75.9 81.1 81.5 67Riverside 40.60% 74.2 75.4 74.9 56.4SanBernardino 42.40% 75.2 77.8 77.2 56.6Source:USCensusBureau


69

FigureA2:UnderemploymentinCaliforniabyGender,19942009140

Source:EconomicPolicyInstitute

140EconomicPolicyInstitutein‐houseanalysisusingCPSdata.1994,theCensusredesignedtheCPSandintroducedcomputer‐assistedinterviewingtechniques.


70

FigureA3:UnderemploymentinLACountybyRace141


141ThemetroareavariablechangedinApril,2004,sotheremaybeaslightdifferenceinthedatabeforeandOurdatadonothavethemetrovariablefor1995white,black,Hispanic,andAsianaremutuallyexclusivecategories.Theunderemploymentrateiscalculatedasthe(unemployed+marginallyattached+parttimeforeconomicreasons.


71

FigureA4:UnderemploymentinLACountybyEducationalAttainment142


TableA5:Unemployment/UnderemploymentinCA/LACountybyAgeandGenderCalifornia LosAngelesCounty



employmentLaborForce Dec‐07 Nov‐09 Dec‐07 Nov‐09 Dec‐07 Nov‐09 Dec‐07 Nov‐09

55andover 3.8% 9.4% 7.6% 18.2% 3.7% 9.6% 7.2% 21.7%45to54 4.5% 9.3% 8.3% 18.4% 5.1% 10.2% 9.3% 22.2%35to44 4.2% 10.3% 7.8% 18.9% 4.3% 9.9% 8.8% 19.8%

Age25to34 5.3% 11.7% 10.2% 21.8% 5.7% 11.8% 10.0% 22.8%Female 5.7% 11.0% 10.3% 20.9% 5.0% 11.4% 10.5% 24.0%

Sex Male 5.5% 12.8% 10.2% 22.6% 5.4% 13.6% 9.3% 24.6%

TotalLaborForce 5.9% 12.2% 10.2% 21.8% 5.5% 12.2% 9.8% 24.4%Source:LosAngelesEconomicRoundtable

142Datadoesnothavethemetrovariablefor1995.Theunderemploymentrateiscalculatedasthe(unemployed+marginallyattached+parttimeforeconomicreasons.

fragmented economy, stratified society, and the shattered ... · fragmented economy, stratified...

Documents