Do immigrants underpin L.A. business world?

Do immigrants underpin L.A. business world?

Amid one of the greatest concentrations of wealth and economic power the world has ever seen, Los Angeles is fast developing full-blown Third World-style labor markets - complete with an economic underclass upon which the region depends for its prosperity.

Two decades of heavy immigration, feeble labor law enforcement and a loss of heavy manufacturing jobs have created a working lower class estimated at one-quarter of the region's population, say researchers and government labor law enforcers.

Cash pay has become common here, perhaps accounting for 20 percent of total wages, by one state estimate - making for inexpensive labor, but also workers bereft of benefits.

"You have to wonder what happens to an informal worker when he gets injured, ill, or is shortchanged in a paycheck or not paid," says Goetz Wolff, industrial economist in downtown Los Angeles. "They really have little recourse in many matters."

The Southland operates on a framework of immigrant labor, from the Santa Anita racetrack - raided several times by the federal Immigration and Naturalization Service - to the Jack-in-the-Box restaurant in Mid-Wilshire staffed by immigrants, to garment district seamstresses, to light manufacturing, to cement-mixing men, to men selling oranges at freeway offramps or collecting cardboard.

By economist Goetz' reckoning, the under class allows an upper class - including sometimes the middle class - to maintain a higher living standard than otherwise possible.

"You have to wonder what would happen if just one day all the informal nannies and child-care workers didn't show up, and other Angelenos had to stay home," asks Wolff. "How many jobs would be disrupted? How many people would have to forego a day's paycheck? Without immigrant workers, what would happen to the furniture industry, the garment industry?"

Weak enforcement

The illegal practices of industrial homework, child labor and subminimum wages have re-surfaced here, to become as much a part of the local economic fabric as the new towers of downtown Los Angeles, which are cleaned largely by janitors from Central America.

"We are seeing increasing amounts of labor-law violations," says Roger Miller, regional manager, Division of Labor Standards Enforcement for the state Department of Industrial Relations. "Violations show up in apparel and other light manufacturing, construction and restaurant services ... anywhere you find immigrant labor."

Homework - the practice of industrial workers, frequently seamstresses, working at home - is against state law because it creates difficulty in monitoring whether wage and hour laws are observed, and frequently leads to illegal use of child labor.

Miller is the chief enforcer of labor laws from San Luis Obispo to the Mexican border - a task at which he concedes he is overmatched: For a jurisdiction of more than 9 million employees and roughly 500,000 places of employment, he has "a field staff of 37."

Given the half-million businesses, each of Miller's staffers is responsible for nearly 14,000 business establishments, more than could ever be visited.

Even Mexico has proportionately more labor inspectors than does Southern California. The Mexican state of Guanajuato has five child labor inspectors for 22,000 businesses, or one for every 4,400 businesses, according to a recent Wall Street Journal story lamenting limp labor law enforcement south of the border.

Moreover, in the Los Angeles five-county area alone there are nearly 200,000 businesses employing five workers or less - small enterprises nearly impossible to police or even find. Increasingly, small businesses are not licensed or registered with state agencies, says state labor inspector Miller. "We have come across a number of businesses that have false papers," he says. "I wouldn't say it is uncommon."

Miller cites some 60-80 establishments a month for wage law violations, but readily admits child labor and homework law violators generally get off scot-free.

"We guess that between 20 percent and 30 percent of the work done in the garment industry is done by homeworkers. But they (contractors) have learned that the home is sacrosanct, and it is very difficult to get a Superior Court judge to issue a search warrant to enter someone's home on a homework charge," says Miller. "We probably have one case a month like that, if that."

The economic backbone

The region's dependence upon cheap, immigrant labor can hardly be overstated.

Without foreign immigration, economic growth would slow suddenly: More than 1.62 million immigrants came to Los Angeles County in the 1980s, filling roughly 70 percent of local new jobs in the decade, according to Los Angeles Business Labor Council estimates. According to a 1986 UCLA estimate, one in four workers in Los Angeles County is a Mexican national.

Moreover, whole industries, providing immediate and related employment to a majority of Angelenos, ultimately rely on immigrant labor, including the "basic" industry of manufacturing, which still underpins the economy here.

"We (economists) call an industry basic when it produces goods and services that are exported out of the region," says Philip Vincent, vice president and economist with Los Angeles-based First Interstate Bancorp. "That brings money into the region."

Adds Ed Elias of Torrance-based California Economic Research, "Without basic industries, it is hard to achieve any sort of growth."

Out of 4.27 million employed in Los Angeles County, about 830,000, or one-fifth, work on production lines, many in the sort of jobs that elsewhere in the United States have migrated offshore.

Today, for example, Los Angeles County is home to 100,000 apparel and textile workers, 33,000 furniture workers, 83,000 primary and fabricated metal workers and 35,000 rubber workers, and the vast majority of these jobs are filled by Hispanics.

"In the furniture industry, 85 percent to 90 percent of the workers are Hispanic," says Peter Olney of Local 1010. "There are some Afro-Americans, but they are usually older and have been in the trade for a while."

Still, even with lower wages, says bank economist Vincent, economists credit each manufacturing job with creating another two to three jobs in collateral activities, such as trucking, warehousing, advertising and business services.

The "multiplier" effect of manufacturing jobs underlines the importance of immigrants to the Los Angeles economy: If it is assumed that each industrial job creates two more jobs in Los Angeles, then nearly three-fifths of local employees have their futures tied to manufacturing - an activity vitally dependent upon immigrant labor.

Ironically, Los Angeles' second-largest "basic" industry, after manufacturing, is tourism, also vitally dependent upon immigrant labor.

In the last 10 years, the 12,000-member Hotel Employees and Restaurant Employees union has become 60 percent to 70 percent an immigrant union, according to Lee Streib, union researcher. "The beds wouldn't get made and dishes wouldn't get washed without immigrant labor," said Streib. "Immigrants form the backbone of this hotel industry."

Working life

At the same time Angelenos rely more heavily than ever on immigrant labor, conditions in manufacturing and other services are returning to those found in the early Industrial Revolution, according to local authorities.

For example, in prosecuting a San Fernando Valley apparel maker last year, Los Angeles City Attorney James Hahn said, "The violations - things like unsanitary conditions in the workplace, paying below minimum wage and giving employees bad checks - paint a picture of a classic sweatshop operation."

Hahn said such sweatshops formerly were not common in the Valley, but were becoming so, as they already were in downtown Los Angeles.

Also last year, the U.S. Attorney in Los Angeles began prosecution of a "prominent flower grower" in Southern California on "slavery and civil rights" violations, after the grower forced more than 100 hands to work from 3:30 a.m. to 7:00 p.m. six days a week, behind locked gates and under the eye of a violent foreman.

The U.S. Attorney said the laborers, primarily Mexican nationals, were housed in "filthy, overcrowded barracks," and some had been beaten to the point of requiring medical attention.

After two weeks, the workers received less than $100, and often nothing, having been charged for goods purchased at a company store. The case is pending.

According to Miller, state labor law enforcer, each sweep through the Los Angeles district - a monthly event - nets 70 or more sewing shops with labor law violations, involving roughly 1,400 workers. "It seems to be getting worse each time," he says.

Wages

In certain industries, the press of immigration, and its effect on labor rates, is clear and irrefutable. In 1983 janitors in the Service Employees International Union, largely black and native-born, made as much as $12 an hour.

By the end of the decade, Hispanic immigrants had come to dominate the ranks of janitors, the bulk of whom were non-unionized, and the minimum wage - $4.25 an hour - was the prevailing standard.

"As a union, we were nearly crushed in the 1980s," says David Stillwell, executive vice president of the Hospital & Service Employees Union (janitors), Local 399. "We lost 75 percent of our membership. The non-union shops came to dominate."

Hispanics were a ready labor source for janitorial services or building owners who wanted to dump existing, well-paid black janitors, said Stillwell.

It is unclear whether immigration in general depresses or raises living standards for Southern Californians as a whole, although it raises troubling questions for Los Angeles' working class.

As economist Wolff points out, when Angelenos eat in restaurants, hire domestics, stay in hotels, buy housing or buy clothes, they get a better deal than otherwise because of cheap, immigrant labor.

But UCLA professors Paul Ong and Rebecca Morales warn that a whole generation of young Angelenos, particularly Hispanics, may end up competing against immigrants for work, and suffer from depressed incomes. "The pressure of an increasing supply of Hispanic workers has been confined to their own racial segment of the labor market, causing a downward pressure on wages for all Hispanic workers."

But some black Angelenos believe immigrants have undercut the job markets in which they used to dominate. "The Hispanic group, in general, will work at menial jobs, and that does take away a lot of the jobs that were in the community," says Celes King, 68, bail bondsman, and lifelong South Central resident with a masters in planning from Pepperdine University. "The Hispanics have made it more difficult for blacks, and for a community that at best is the lowest socioeconomic community."

Immigration

Even those who believe immigrants should be accepted and organized concede their presence plays havoc with efforts to achieve First World labor conditions.

"It's probably true the large number of immigrants in some industries tends to lower working conditions," says Steve Nutter, attorney with the International Ladies Garment Workers Union in Los Angeles. "We see plants where workers were legalized (following the federal Immigration and Reform Control Act in 1987) full again with immigrants. It makes it harder to conduct an effective strike."

Many legalized immigrants are able to command $6 an hour or more outside the garment district, according to Nutter and garment-shop operators.

With unskilled labor markets flooded with immigrants eager for work, the otherwise mechanically upbeat "L.A. 2000" report, the study issued by Mayor Tom Bradley's Los Angeles 2000 Commission, cannot wax optimistically about the city's future for unskilled laborers, native- or foreign-born: "The simplistic notion that all boats rise with the tide is not true in Los Angeles," said the report. "The gap between certain low- and high-income populations is increasingly wider. ... While economic growth is increasing the number of jobs in Los Angeles ... it is not altering the economic outcomes for many of its citizens."

Table : Manufacturing wages Los Angeles County

Year   Per hour
1991 (Jan)   $11.07
1990          11.26
1980          11.87
1970          12.70

Source: Bureau of Labor Statistics

Note: Adjusted for inflation, in current dollars.

Table : Janitors wages Los Angeles County

Year   Per hour
1990   $5.74
1985    6.84
1980    8.52
1975    8.47
1970    9.20

Source: Bureau of Labor Statistics

Note: Adjusted for inflation, in current dollars.

PHOTO : Busting a Spring Street sweatshop in downtown L.A.: Representative from the Department of Industrial Relations Inspects premises