Vibrant, Diverse Economy May Soften Strain on County

Thanks to a vibrant and diverse economy that is creating an abundance of low-skilled, entry-level jobs needed by people coming off welfare, Los Angeles County is expected to weather the economic disruptions that will inevitably result from the end of federal funding for public assistance.

And the county’s economy should continue to grow strongly, despite the burdens placed on it, because it enjoys prominence in several industries that are among the fastest growing in the world.

That was the consensus of economic experts Thursday as county officials and private business people tried to assess the consequences of welfare reform for the nation’s largest county, which has 1.8 million of its 9.4 million residents on some form of public assistance.

The optimistic assessment comes in stark contrast to the gloom expressed by county government officials, who fear that the welfare burden will throw the county into bankruptcy. But the county’s vibrant economic health could help cushion the strain created by a crippled government and possible layoffs of government employees, in the same way that Orange County’s strong economy eased the pain of its recent fiscal debacle.

The idea that the county’s economy could ease the blow of a government crisis would not have been thinkable five years ago, when the county was hit with a downturn in defense and aerospace that led to the worst recession in its history. The county lost jobs massively over four years in that downturn, but since 1994 it has been coming back steadily and will add an estimated 87,500 jobs this year, according to the county’s Economic Development Corp.

To be sure, there will be challenges in providing basic job skills to welfare recipients who have never held a job, and in persuading businesses to take a chance on hiring them.

But the county’s economy can pick up the slack by offering unskilled jobs like fabric sorter and garment bundler in apparel manufacturing, cleanup jobs in restaurants and in the area’s thriving tourist industry, and truck loading and warehouse tasks in toys, furniture and food processing, experts said.

“Lots of jobs are there to be filled,� said Wayne Kent Bradshaw, president of Family Savings Bank. “There will be hardships, but jobs are there.�

That’s especially so because Los Angeles County’s economy, which produces $250 billion a year in goods and services, is currently expanding faster than that of the nation--thanks to several booming industries prominent here. Motion pictures and entertainment continue to do well, creating 9,000 jobs this year. International trade is expanding at both seaports and airports. Tourism, health services and business management services--legal, financial and engineering services--all are up.

That growth, which will add an estimated $9 billion worth of output in 1996, forms an important backdrop for efforts to help the poor. With business expanding broadly, existing companies are more likely to hire an extra person or two, and new companies are more likely to form. They also provide an expanding tax base, and can contribute funds to the social service network.

Business and county officials were confident but not complacent. The end of federal funding for public assistance is bound to produce tensions in government that could distract efforts to keep the economy humming.

“Some people will definitely be suffering because they’re not qualified to get jobs,� said County Supervisor Yvonne Brathwaite Burke, who represents districts with high numbers of welfare recipients.

If steps are not taken to help the poor make the transition to daily work, social unrest could detract from the renewed image and spirit of Los Angeles as a strongly expanding economy.

But most business people Thursday were predicting constructive change rather than breakdown as a result of welfare reform. The challenge of moving people into jobs and a fuller life could prove a catalyst for local and state government and for business, said one banker who advises the county.

“We’ve got this economic engine,� said Jack Kyser, chief economist of the Economic Development Corp. Among other factors, he was referring to major construction projects such as the Alameda Corridor--the $1.9-billion high-speed rail and truck line being built from Long Beach and San Pedro to rail yards near downtown--and to the building of the DreamWorks studio facilities at Playa Vista and Glendale.

Both projects could increase demand for unskilled laborers and skilled craft workers.

With the emphasis on industries that could offer entry-level jobs, many experts turned to apparel manufacturing, a business with about 4,000 factories in Los Angeles County, 90% of them with 50 or fewer employees.

It’s an industry under scrutiny these days as federal and state labor officials try to close down illegal sewing shops. But those very efforts help legitimate garment manufacturers by limiting illegal competition.

“Illegal shops can take up to 25% of the business,� said Manuel Burgess, president of Trinity Knitwear, a new company formed with the aid of a loan from the city of Los Angeles’ new Community Development Bank.

With less illegal competition, and help from federal efforts to get major retailers to buy more from U.S. apparel makers, Burgess’ company could have greater opportunities to hire more workers for its well-lighted, air-cooled plants, for which it pays wages based on output that work out to a minimum $6 to $7 per hour.

Of course, companies that pay such wages for the simplest jobs, also pay higher wages for the more skilled--$12.50 per hour for sewing machines operators.

* U.S. ECONOMY SURGES 4.2%: The April-to-June gain prompts response along the presidential campaign trail. D1