Business Update with Mark Lacter

LA still lags rest of nation in job creation

KPCC's business analyst Mark Lacter explains why the Southland continues to trail the nation when it comes to creating jobs.

Mark Lacter: Lots of reasons Steve, but among the most important is that students in L.A. (and California in general) tend to drop out a lot more frequently than in other parts of the country. There's a new report out this week - it shows that California's high school graduation rate is running at about 71 percent (that’s down from 2001) and those numbers compare with the national rate of over 75 percent (which is up from 2001). Wisconsin, by the way, is at 90 percent. Among Latino students, the graduation rate is even lower - about 57 percent in California.

Steve Julian: It's hard enough to get a job with a college degree...

Lacter: Right, and not to belabor the obvious, but without at least a high school diploma your chances of being hired for any decent job are practically zilch. And that’s one of the ongoing concerns among businesspeople: They're not able to find enough qualified workers for their companies. Keep in mind this was a problem well before the recession, but the downturn has made a bad situation worse - both because those education cuts have made public schools a lot less conducive to learning, and because many of the companies coming out of the recession have restructured their operations and there's a much greater reliance on technology - and only people who have very specific skills will be able to work in that environment. IT skills are a good example - either you have those skills or you don't. You can’t fake it.

Julian: What about the skills that are just basic... reading, writing, arithmetic?

Lacter: Steve, business owners talk about applicants who lack reading skills, computational skills - the kind of knowledge that years ago had been assumed to be part of a public school education. (By the way, the study on graduation rates found that folks who have a high school diploma can earn more over their lifetimes than the ones who drop out - and more income means more tax revenue coming into the state) So with an area like L.A. having such a high unemployment rate, it's not surprising to see low graduation rates. It's also not surprising to see the large percentage of underemployed - those are folks who don't make enough money to survive independently. About one-third of all L.A. workers without a high school diploma are considered underemployed. That's a big problem.

Julian: And with that comes a struggle we'll see in November.

Lacter: Yeah, everybody realizes that the schools are in big trouble, and yet there continues to be a disconnect between the needs of state and local governments when it comes to school funding and the reluctance by many voters to pay for that funding. The governor was all set to put an initiative on the November ballot - it would have avoided cutting still more from school budgets by temporarily raising the state sales tax raising the state income tax for the very wealthy. But the plan hasn’t received much support, and it’s still early in the election year.

Julian: That's why he altered his plan.

Lacter: That’s right, in sort of a preemptive maneuver, the governor cut a deal with the California Federation of Teachers, which had been pushing its own tax initiative effort that was much harder on the rich.

Julian: The idea being that if you eliminate one of the competing ballot measures you make it a little easier to get a tax increase approved.

Lacter: Yes, but the bigger point is how difficult it's become to raise taxes in this state - even when it’s aimed at educating kids. The reluctance among some voters didn't just happen - it's come about after years of wasteful spending and what many consider to be the erosion in the quality of education. And if you look at those low graduation rates, it's easy to be cynical about where the money is going. But it's hard to deny that the state desperately needs extra revenue.

Mark Lacter is a contributing writer for Los Angeles Magazine and writes the business blog at LA Observed.com.


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