LABOR – Shortage of Skilled Workers Puts Squeeze on Business

There are some places in L.A. County where the unemployment rate is 2.7 percent and there are some places where it’s 11.5 percent. But no matter what the location, L.A. employers countywide face the same predicament: Not enough qualified workers. In the South Bay, Westside, and San Gabriel Valley hot spots where unemployment rates have dipped below 4 percent jobs are being created faster than new qualified workers can be found. And in the county’s cold spots Compton, Huntington Park and elsewhere newly created openings are going unfilled despite double-digit joblessness. “CEOs of small and mid-sized businesses used to complain to me about crime and about taxes,” said Rockard Delgadillo, L.A. deputy mayor of economic development. “Now the only complaint I hear is that they can’t find any entry-level employee with rudimentary English and math skills.” And it’s not just on the low end of the worker-skill spectrum where L.A. employers are left empty-handed. Booming high-growth businesses in technology, aerospace and new media are unable to find workers to accommodate their expansions. “Almost every business in the South Bay in virtually every sector is expanding. But what we’re hearing is that workforce is the No. 1 issue for businesses here. For example, you simply can’t find an airplane mechanic anymore,” said Joe Aro, executive director of the South Bay Economic Development Partnership. National dilemma The disconnect between the needs of businesses and skills of workers is not limited to Los Angeles. It is a national problem, as illustrated by the House passage last week of legislation that would repeal the longstanding earnings limit on Social Security. Such reforms are aimed at encouraging retirement-age workers to stay on the job. Meanwhile, other potential pools of workers are those coming off welfare, immigrants and graduates of the local school system. While many of them lack the skills L.A. employers require, a multitude of public and private organizations, programs, and institutions have launched efforts to prepare these people for jobs. Those efforts, however, have met with mixed results. “There is no easy, quick-fix solution,” said Thomas Tseng, research director with the Community Development Technology Center. “There are many job training programs in Los Angeles, but a lot of the people in these neighborhoods have been isolated from the social networks, education and opportunities. Some lack even the most basic skills to interact with people in an office or factory.” And that is crimping business expansion plans. “We needed to hire about 50 people last year, but when we placed ads in the paper, the results were zero,” said Lloyd Medal, vice president with Veriflex Inc., a furniture manufacturer in Irwindale. “In most cases, we were just looking for hardworking people, but we either got no response or responses from people who are not suitable for the jobs.” Medal ultimately had to rely on the San Gabriel Valley Economic Partnership and a number of job-training organizations to find his workers from the surrounding communities. Indeed, the San Gabriel Valley is among the L.A. areas being most affected by the labor shortage, along with the Mid-Cities area. Epicenters of growth Of the 108 major business expansions and relocations in L.A. County in 1999 (those involving a construction permit or lease value of $1 million or more), 38 of them were in the high-growth areas of the San Gabriel Valley and Mid-Cities predominantly in the City of Industry, Santa Fe Springs and La Mirada, according to the Los Angeles County Economic Development Corp. “Those are the few areas where there is still land available for development and for new firms to come into,” said Jack Kyser, chief economist with the EDC. Perhaps not surprisingly, many of the cities adjacent to these hotbeds of economic activity such as West Covina, Downey, and Diamond Bar show very low unemployment rates. “Unemployment is so low at this point that the average applicant has difficulty filling out an application form,” said Aro of the South Bay Economic Development Partnership. “Employers tell us, ‘Give us people with basic English skills, basic computational and problem-solving skills.'” Among some of the major expansions in the South Bay last year were Cisco Systems in Long Beach, Exodus Communications Inc., Infonet Services Corp., and Sierra Systems Consultants Inc. in El Segundo. Rate still higher than U.S. The state Employment Development Department estimates that unemployment rates in many South Bay and Westside cities are in the 2 percent to 3 percent range, whereas parts of South Central and East Los Angeles are showing rates of 10 percent and higher. Overall, L.A. County’s seasonally adjusted unemployment rate dropped to 5.5 percent in January, a level not seen since July 1990. This is still noticeably higher than the 4.7 percent rate for California, and the 4.0 percent U.S. joblessness rate. “Unemployment (in inner-city L.A.) has dropped, but not as significantly as in certain parts of the county,” said David Eder, empowerment zone program coordinator with the city’s Community Development Department. “We’re still seeing the same kind of barriers to economic advancement as before: a higher rate of foreign-born residents, a higher poverty rate, the worst schools in the county. Many of the unemployed in these areas simply do not have the skill set that employers are looking for.”