EDITORIAL JOBS EXODUS BAD GOVERNMENT MAKES FOR BAD ECONOMICS.

FOR the last half-century, manufacturing has been the backbone of Southern California's economy, attracting workers from across the nation to high-paying aerospace jobs and the chance to own a piece of the American Dream.

And now that dream is in great danger of coming to an end. The problem is a hostile business climate created by bad government and bad government's reluctance to mend its ways.

There is some good news. The UCLA Anderson Forecast out today finds cause for moderate optimism, and the chief economist at the Los Angeles County Economic Development Corp. just reported that the Los Angeles metropolitan area continues to be the nation's single largest manufacturing center. If the region were a state, its manufacturing sector would be the second largest in the country.

The bad news is that manufacturing is suffering nonetheless.

Since 1990, the number of manufacturing jobs in greater Los Angeles has dropped from 800,000 to 511,000. These are jobs that traditionally have provided workers without college degrees quick access to a middle-class lifestyle, jobs that have long sustained the economy of the San Fernando Valley.

Some might point the finger at free trade and foreign competition, but there's more to the story. While L.A. has bled valuable manufacturing jobs, some of its Southern California neighbors have done quite well.

Between July 1999 and October 2002, Los Angeles County lost 156,000 manufacturing jobs. Yet during that same time, Riverside County gained 7,000, San Bernardino County 12,000, Orange County 5,000, and the Inland Empire is in something of an economic boom.

Clearly Los Angeles is falling behind, and that, in no small part, surely has to do with the way the city treats its businesses. More than a decade has passed since then-Mayor Richard Riordan promised to overhaul the city's punitive business tax, yet real reform still seems to be little more than a pipe dream.

The situation is little better at the state level. An out-of-control workers' compensation system, runaway unemployment insurance costs and costly pro-union legislation has businesses fleeing California.

In his State of the State speech, Gov. Arnold Schwarzenegger asked legislators to pass meaningful workers' comp reform by March 1. They declined. Negotiations still continue, but if reform isn't enacted by the end of the month, businesses will most likely lose the chance to achieve any savings this year.

If the Legislature can't get its act together by the end of the week, Schwarzenegger vows to take his workers' comp reform package directly to the voters. And that, sadly, might be the only way to turn around California's business climate. If the leaders are unwilling to lead, the people will have to do it for them.