Uneducated labor posing challenge for L.A. business.

For Clayton Frech, high school dropout rates and low school test scores aren't just headlines in the local papers. They're hits to his company's bottom line.

As director of operations for El Segundo-hased Classic Party Rentals Inc., Frech is the one who has to grapple with the consequences if a poorly written memo gets misinterpreted or if a salesperson fumbles an order because they can't do simple math.

"We're in the party rental business and we spend a lot of time dealing with square footage. Our sales people have to know how to do simple multiplication and not everybody educated in L.A.- area schools can do this," he said.

"If they get it wrong, then the wrong amount of material gets shipped out from our warehouse and then we have to make a second trip to our warehouse and that has a domino effect on our business, not to mention the impact on customer relations."

Faced with the prospect of more mistakes like this, Classic Party Rentals now casts a wide net when looking for workers, spending more time and money to search for qualified employees.

Classic Party Rentals is not alone.

Amid the heightened debate about whether greater mayoral control would be a solution to improving the Los Angeles Unified School District, area companies already know the cost of the failings of local schools. All over the region companies are shelling out more money and eating up hours to deal with a locally educated workforce that often lacks basic reading, writing and math skills, much less being computer savvy.

And while many smaller districts in the county do a better job than the mammoth L.A. district, the bottom line is that the county has become ground zero in the workplace literacy crisis.

According to the Literacy Network of Greater Los Angeles, a non-profit coalition of literacy providers, 53 percent of adults in Los Angeles County can't read at the eighth grade level--well enough to fill out a job application.

There are many factors behind this startling figure, which is among the highest in the nation.

For starters, take the high school dropout rate at the Los Angeles district, which is the largest in the nation and educates nearly 750,000 students living in 27 cities across the county. The dropout rate has been pegged anywhere from 34 percent by the district to 52 percent in an outside study conducted last year.

And for those that remain in school, their performance has hardly been stellar. While standardized test scores in the district have been rising, they still trail state and national averages; thousands of students are facing the prospect of not being able to pass the state-mandated exit exam to get their diplomas.

At the heart of all this is a huge influx of non-English-speaking immigrants over the last 25 years. While often very motivated to work, these immigrants face substantial challenges in learning enough English to survive in today's workplace.

Cumulatively, the toll on the L.A. economy is in the billions of dollars per year in lost time, lowered productivity and higher recruiting costs among employers, according to experts.

"This is something that's been brewing for a long time. We haven't confronted it and, as a result, employers have found it increasingly more difficult to find the human capital they need in our urban core," said David Rattray, vice president of education and workforce development for the Log Angeles Area Chamber of Commerce.

Of course, the impact varies by industry. For business and professional services, where the need for highly trained personnel is acute, L.A.-based companies have to recruit far and wide to find workers with the qualifications they are looking for.

Move-up training

Other industries that rely heavily on low-skilled laborers encounter problems when they try to move these workers up the chain. That's precisely the problem at Price Transfer Inc., a South Bay logistics provider that employs both recent immigrants and locally educated people.

"I've accepted that people coming out of our schools don't have all the necessary skills they need," said Susan Oldham, human resources manager for Price Transfer. "At the entry level, that's not too much of a problem. But if we want to move our entry-level workers up into supervisory jobs, that's where they need more literacy."

When Oldham joined Price Transfer a couple years ago, the company had just obtained ISO certification, which requires companies to meet quality standard. Part of that certification requires on-the-job training.

That's when Oldham discovered that many of the workers didn't have the necessary literacy skills to do simple things like read loading instructions, write memos and track shipments via computer. Before the job-related training could begin, these workers needed to be taught basic reading and writing skills.

Oldham has turned to a workplace program recently launched by the Literacy Network. Starting last month, coaches are coming to the company's Rancho Dominguez headquarters twice a week to teach English and reading skills to about 15 workers.

"There are workplace literacy programs available, but for most of those programs, the employee has to go to classes at school or the library. With this program, we can bring customized workplace training straight to the place of employment," said Patricia Mitchell, executive director of the Literacy Network.

Of course, this training doesn't come cheap. Even at the non-profit level, employers can shell out up to $15 per hour per employee; more specialized training from for-profit providers can cost three or four times that much.

Besides these outside classes, Price Transfer provides business writing and computer classes, customer service training and supervisory training. Oldham said providing this training is still preferable to going out and hiring workers specifically for supervisory jobs. "We prefer to hire from within. And the training is a big boost for morale and team-building," she said.

That's also the philosophy at Evans Group Inc., a sewing shop in downtown L.A. Owner Jennifer Evans said her company hires first- and second-generation immigrants for the production line. The company said even those immigrants born here need on-site training in basic English skills--"enough so they can read garment specifications and choose the right color threads." The company then provides further training for those deemed worthy of advancement.

Whatever their attitude toward providing training, most companies make some attempt to screen out applicants who can't demonstrate basic reading and writing skills. The first step: making sure the job seeker can fill out an application.

Unfortunately for employers, many people who have difficulty tilling out applications take them home and family members or friends help. That's precisely what happened at a food distribution company where Rattray once worked.

"We were finding ourselves disciplining and terminating employees for errors on the job. They weren't picking the right products for our customers," Rattray said.

"We soon found out they couldn't read. What had happened was that they would take their job applications home and get help filling them out. We had a literacy problem that was totally unknown to us until these errors cropped up."