It’s More Than Just Jobs

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Los Angelenos are a resourceful lot.


When the economic recovery in recent years failed to create jobs at traditional workplaces, many Angelenos didn’t just sit on their idle hands. They became entrepreneurial.


For some, hobbies became businesses. For others, connections led to transactions. And more than a few figured a way to draw a living from L.A.’s hot real estate market.


How do we know that?


Economist Esmael Adibi laid out some interesting statistics last week at the Business Journal’s Economic Forecast breakfast. (*

For more about the meeting, read the article

.) So-called “payroll employment” in Los Angeles County actually decreased by 0.8 percent from the end of the recession in the third quarter of 2001 until the same quarter last year. But payroll employment only counts employees who work for employers. Adibi pointed out that if you count employment a different way by canvassing people in their homes and asking them if they are employed you discover that employment didn’t shrink. It grew by 4.1 percent.


In other words, if you ask L.A. County employers, they’ll say they have 32,000 fewer employees since the end of the recession. But if you ask people in L.A. County homes, they’ll tell you there are 181,000 more employed since then.


What accounts for that discrepancy? Self employment, said Adibi, who is the director of the A. Gary Anderson Center for Economic Research at Chapman University.


As businesses have become more reluctant to hire, partly because of the high cost of health insurance, some ex-employees or current-but-motivated employees have responded by figuring out how to be their own boss.


For example, many have found a good living by migrating to the sizzling real estate market (although Adibi thinks that market soon will fizzle out). Some have become self-employed real estate agents or brokers, others interior designers or kitchen remodelers. Some buy a run-down home in a good neighborhood for, say $400,000, spend a couple months and $100,000 fixing it up, and flip it for $600,000. Do that a few times a year, and you can buy your own health insurance and still make a good living.


All this serves as a counterbalance to much of what we’ve been hearing in recent years the wailing about how this “jobless recovery” is decimating Americans. As employers grow edgier about hiring, the argument goes, more Americans are left behind. Career aspirations are crushed. Children can’t go to college. Some even believe America is slowly regressing to Third World status.


Of course, it’s true that many are hurt, and hurt permanently, when employers are slow to hire. Many can’t find a job or can’t find the job they want. Many who are employed feel stuck.


However, Adibi’s stats are a good reminder, that Americans, and apparently Angelenos in particular, are resourceful. When presented with a challenge, many rise to meet it. After all, more than 181,000 of them figured out a way to create their own job when employers weren’t creating one for them.


What’s more, as a group, we’re thriving.


How do we know that? Because incomes continue to rise, despite the rising number of the self-employed. Personal income in Los Angeles County increased by 5.1 percent in 2004 and by an estimated 6 percent last year, both of which rose faster than inflation.


In other words, employers may not be creating jobs for us, but as a group we’re figuring ways to create our own jobs and even get richer in the process.



*Charles Crumpley is editor of the Business Journal. He can be reached at

[email protected]

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