Los Angeles City Council President Herb Wesson made headlines earlier this month by declaring that Los Angeles lacks a strategy to attract jobs. He pledged to rectify the situation by creating a special committee focused on job growth — a move applauded by business leaders who frequently find themselves at odds with the council.
Few would find reason to fault an effort to bring more jobs to L.A. But the devil, of course, is in the details — and Wesson would be wise to heed the lessons of the past.
While vows to increase employment are de rigueur for elected officials, the last full-scale attempt to harness the power of local government to create jobs was led by former Mayor Richard Riordan. Far from being a template to replicate, Riordan’s strategy serves more as a cautionary tale.
Riordan, of course, was elected in part on the strength of his free market experience, and his vows to make L.A. friendlier to business. One of his signature initiatives was the Los Angeles Business Team, which was created in 1995 to attract and retain businesses by packaging public subsidies and expediting business permitting. While the LABT, as it was known, succeeded in making the development process more efficient, it failed in what arguably are the most important measures of job growth strategy.
First, Riordan’s team did not make job quality a criteria for the awarding of public subsidies. Many of the firms that received taxpayer dollars as an incentive to expand or locate in L.A. paid wages that left their employees mired in poverty — and often dependent on more taxpayer subsidies in the form of food stamps and other assistance. Rather than encouraging the growth of high-wage jobs, Riordan and his team facilitated the growth of low-wage employers.
Second, the LABT did not give priority to firms operating in poor communities — a key tenant of forward-looking economic development, which seeks to direct subsidies to the neighborhoods and residents with the greatest need. Third, Riordan’s team did not prioritize growth industries. Only a small percentage of taxpayer subsidies went to industries with a strong track record of growth.
All of these findings are documented in an exhaustively researched study released in 2000 by the Los Angeles Alliance for a New Economy. That report should be required reading for Wesson and his council colleagues as they embark on a new effort to attract jobs to L.A.
There will be powerful voices advocating for a jobs strategy that does not take into account job quality or opportunity for disadvantaged communities. Some of these forces will cynically point to L.A.’s recent decision to increase the minimum wage as a reason not to distinguish between employers, arguing that the new wage floor — which many of them fought — ensures that all businesses must provide good jobs.
