Jobs in the Southland

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Nov. 17, 2009

KPCC business analyst Mark Lacter talks about the state of the job market in Southern California.

Susanne Whatley: On Tuesdays we talk about the latest business stories with Mark Lacter. Mark, when it comes to creating jobs, how does the L.A. region fare?

Mark Lacter: Well, here’s a hint Susanne: forget about making the top 10 – or the top 100 for that matter.

Whatley: Top 500?

Lacter: Try 139. This is a survey by the Milken Institute that ranks the best performing and worst performing metro areas by job growth. L.A. beat out Portland, Maine, Jacksonville, Fla., and a few dozen others. Orange County did a little better – 122nd.

Now by best- and worst-performing, the Milken people look at job and wage growth – and obviously, Southern California has taken a beating because of the real estate bubble and the huge drop-off in construction. So in some ways, it’s hard to argue with the rankings – state and local unemployment numbers for October are due out on Friday and it wouldn’t be surprising to see L.A. County hit the 13 percent mark (it was 12.7 percent in September).

Whatley: But 13 percent is not normal employment, right?

Lacter: No it’s not, and it only tells you so much about an economy. Just to take one example, Number 2 on the Milken list is the Texas community of Killeen-Fort Hood, which, sadly, we’ve gotten to know much better in the last week. Killeen is a company town – that company being the U.S. military – and so it’s no surprise that there wasn’t any real estate bubble down there.

Actually, the Milken report shows that four out of the top five metro areas are in Texas, which also isn’t much of surprise since Texas has very low taxes and very limited regulations. In some areas, it’s an anything goes economy, which as we’ve learned might not be that great an economy to have.

Whatley: So what kind of job growth are we seeing locally?

Lacter: Well, health care will be very important. That, and what’s being called the "creative economy." That sounds like Hollywood but it’s more than that.

There’s a new report out that stresses the importance of creative workers we sometimes don’t think about – software publishers and Web designers and computer system designers. These kinds of digital media jobs will see huge growth in the next few years.

Whatley: It seems that we can’t talk about the economy without the state budget getting into the calculations.

Lacter: That’s right – except you wouldn’t expect the governor of New York, David Paterson, to be talking about it. But there he was during an interview last week raising the possibility of the state going into default.

Now it’s one thing to have loose lips – it’s another thing to have loose lips and inaccurate information. The California Constitution makes a default next to impossible because the state is obligated to cover investors before any other sector except for education.

Whatley: You've said before that California has a perfect record of paying investors in full.

Lacter: It does – and that’s why Paterson’s comments were so inflammatory. Let’s also point out that the state has a perfect record of paying investors in full and on time, which is a very big deal considering all the borrowing the state has been doing.

Well, California is still in the red, probably to the tune of several billion dollars more, because not enough tax revenues are coming in. What that means is the continued reliance on those investors, who must be willing to purchase California bonds without being concerned about safety.

So far there’s no shortage of customers, but like any kind of borrowing, when there’s the perception of more risk, you need to pay more. So California is shelling out a lot of money in interest payments – but at least there’s money out there.

Thanks Susanne.

Whatley: Mark Lacter is a contributing writer for Los Angeles Magazine and writes a business blog at LAObserved.com.

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