PERSPECTIVE ON LOS ANGELES; Divided We Stand, United We Fall; The city's attention to creating high-end jobs is misdirecting focus from the real need: jobs for the poor with few skills.

SHIRLEY SVORNY.  Los Angeles Times .  Apr 29, 1997.  pg. 7

To improve race relations, the focus has to be on creating a community in which peoples' needs are met. There are many voices that call for the creation of high-paying jobs. But growth in our poorest communities requires that residents have access to low-wage jobs in large numbers.

I see two ways Los Angeles can go. In one view, I see the continuation of policies that have failed to create jobs and prosperity. In this vision, I see the voters, the City Council and the charter reform panels rejecting proposals for reform--competitive bidding, local control--to preserve the system of spoils for city workers. Misguided or ill-informed, the city continues to target tax breaks and encourage public-private "collaborative" efforts to "create" high-paying jobs.

Creating high-wage jobs for low-skilled workers defies the laws of physics. If Jackie Goldberg's "I won't vote for a tax break that creates a $5.75-an-hour job" becomes the mantra of the City Council, it will preclude employment for the thousands of unskilled youths and unskilled welfare recipients expected to enter the labor force.

Choosing to target tax breaks will fill the campaign coffers of council members as they deliberate on which industries deserve their support. Down the road, we will find that the wrong industries were targeted. Collaborative programs fail because the only sustainable source of jobs and wealth is the private sector. Nothing will change for the poor.

Alternately, in the haze of the future, I can see a glimpse of attractive streets, a robust economy and better race relations. In this vision, local issues are dealt with at the community level; the domain of the City Council and the mayor is narrowed considerably. Communities receive a share of city tax revenues to cover the costs of services shifted to their jurisdiction. Savings from lowering the cost of providing city services would accrue to the community, as would the lion's share of any new taxes.

As things stand now, the centralized structure of our city government actually enhances racial antagonism. Council districts are drawn to lump minority residents together to afford them political representation. Each district has its own "mini-mayor" who, seeking funds for his or her district, collides with the demands of the other 14 districts. With all drawing from a common pool of funds, the racial bias in district composition effectively results in pitting one racial group against another.

Local control, and more specifically, local financial autonomy, offers positive race-related outcomes: Resentment and alienation would diminish as we stop raiding one another's resources. Incentives to provide public services efficiently will increase since savings could be spent by the community on things it cares about the most. Alternative methods to provide police protection can reduce crime and crime-prevention costs. Under local control, the race of the police chief or mayor will not matter as much. By definition, the person chosen to lead the community policing effort would be representative of that community's interests.

It may seem counterintuitive to think that dividing the city would be a unifying force, but it could be. Some communities would find common interests, leading to joint efforts in the areas of economic development, policing or street sweeping.

The recent competition to attract major employers has made people think that economic growth is a zero-sum game: If one area wins, another loses. But that is not the case. Adopting policies that limit government and that lead to the efficient, low-cost provision of public services can lead to job growth and wealth in every community at the same time.

Increasing the demand for low-skilled workers and reducing friction at City Hall will lessen the tension in Los Angeles and result in lower levels of racial conflict. Devolution of substantial power from the city to local communities and movement away from costly, impossible public sector attempts to create high-wage jobs is a wealth-enhancing strategy. The result will be a better functioning city with increased political and economic influence for the poorest and least skilled.

PHOTO: SHIRLEY SVORNY

Credit: Shirley Svorny is an economics professor at Cal State Northridge and an affiliated scholar at the Milken Institute for Job and Capital Formation in Santa Monica