Mystery

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By EDVARD PETTERSSON

Staff Reporter

A major indicator of labor-market vitality the help-wanted index has fallen precipitously in Los Angeles, to less than half the national level.

That drop-off flies in the face of the latest unemployment figures, which put L.A.-area joblessness at 5.6 percent as of June, down almost a full percentage point from January.

Economists say that the transformation of the Los Angeles labor market has rendered useless some traditional indicators, including the help-wanted index.

The index, published by The Conference Board, shows the relative change in the number of help-wanted ads being purchased in major U.S. newspapers. It long has been considered a gauge of labor conditions because employers tend to buy help-wanted ads to fill newly created jobs in a growing economy.

But L.A. employers have become a different breed. They are far less likely to take out an ad in the Los Angeles Times to fill an opening. (The L.A. index is based on Times help-wanted ad sales.) Instead, today’s local employer is more likely to rely on referrals from its present workforce, ads in foreign-language publications, online job banks, or other channels.

“There is no perfect correlation between the help-wanted index and actual economic activity here,” said Rajeev Dahwan, director of econometric forecasting at the UCLA Anderson Forecast. “The big drop in the index, from 1989 to 1993, reflects the decline of the aerospace and banking industries and, more importantly, the loss in jobs in the supporting industries. Help-wanted ads are predominantly targeted to jobs in these service industries, and there has not been a recovery in that sector.”

So even as L.A.’s overall economy has boomed in recent years, the area’s help-wanted ad index is near the bottom of the list, ahead of only Hartford, Conn.

Using 100 as a base, the index stood at 41 in May. The national average was 91, and other West Coast cities, such as San Francisco and Seattle, came in above average, with 94 and 162, respectively.

The Los Angeles index has remained essentially flat since 1993, when local unemployment was over 11 percent, while the overall U.S. index has steadily recovered to its pre-recession level.

The discrepancy arises because of the nature of L.A.’s job growth. There has been substantial growth in low-skill, low-pay jobs, such as those in the apparel, hospitality, retail and tourism industries not the kind of positions that always show up in the help-wanted ads.

“You don’t see an ad for a seamstress or for a burger flipper,” Dahwan said. “People use an informal network for finding those types of workers, and it is only the cream of service-industry jobs that show up in the help-wanted ads.”

Jobs in newer industries, especially those related to technology, also don’t typically show up on the help-wanted index, because networking is more prevalent than advertising. If advertising is done at all, it’s usually in one of the trade papers, rather than in the L.A. Times.

Renee LaBran, vice president of classified advertising at the Times, acknowledged that the number of help-wanted ads has been stagnant in spite of the tight labor market.

“Many large corporations have undergone massive restructurings and cut back on advertising,” said LaBran. “The aerospace industry, for example, used to be a really big advertiser in the past, but they obviously are not any longer. We made some of that decrease up with more advertising by smaller and mid-sized companies. For instance, EarthLink has become one of our largest advertisers.”

Another factor contributing to L.A.’s low index is a growing reliance on temporary placement firms, which often do not find newspaper ads cost-effective.

“We do very little print advertising,” said Carol Clement, vice president and regional manager with Kelly Services. “It is most expensive and least effective. We rely primarily on word-of-mouth referrals and, in addition, on job fairs and the Internet.”

Also differentiating the local labor market from the national one is L.A.’s labor force.

“The largest segment of our population is Hispanic and we have a growing Asian population. These people rely more on an informal network, when it comes to finding work,” said Jack Kyser, chief economist of the Economic Development Corp. “If a Hispanic business wants to advertise a position, they are more likely to do it in La Opinion than in the L.A. Times.”

Indeed, the amount of space devoted to help-wanted advertisements in La Opinion, L.A.’s largest Spanish-language newspaper, increased by 33 percent from 1996 to 1998, according to Hugo Enciso, business development manager at La Opinion.

LaBran said there is little concern about competition from Spanish-language papers, pointing out that the Times is a part owner of La Opinion.

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