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Immigrant Influx Strains LA Economy - 2002-05-18

Newly released U.S. census figures show that more than half of the people of Los Angeles speak a language other than English in their homes. An influx of immigrants is creating diversity, but also producing strains on the local economy.

The population shift coincides with a rising poverty rate and a shrinking middle class. In Los Angeles, some 20 percent of residents live below the poverty line, a fact that worries political scientist Bruce Cain. "What is happening is that the economy is creating a greater division between the "haves" and the "have-nots" than we had before," he says.

Mr. Cain is director of the Institute of Governmental Studies at the University of California at Berkeley. He says the United States has seen economic gaps before as immigrants flooded East Coast cities like New York and Boston. At first, poverty rates rose but later dropped as the children of immigrants got an education and improved their standard of living. He says the same thing is happening today in Los Angeles. "The immigrant groups that are coming in do take advantage of the educational opportunities for their children, do want the best for their kids in the long run," he says. "So in the long run, these groups do very well. But in the short run, they are in a situation of some hardship and that creates some problems for the state in terms of providing services."

The California state government is coping with a $23 billion budget deficit, and Tuesday, Governor Gray Davis announced deep cuts in public services, even as the demand is growing. Jack Kyser, an analyst for the Los Angeles Economic Development Corporation, says the cuts come at a bad time. "This is very bad news for county agencies, especially Los Angeles County, which operates a huge health care system which takes care of a lot of the lower-skilled people," he says.

Mr. Kyser worries the safety net for the poor is disappearing.

Political scientist Bruce Cain believes the gap between rich and poor will eventually narrow. After all, he says, generations of immigrants have settled in the United States without major obstacles. But, he says, the size of the recent influx to cities like Los Angeles has created a special problem. "I think it is more a question of the volume," he says. "That is, we have had very large influxes of immigrants in the last 20 years, and there is a legitimate public debate as to what is the optimal level of that [immigration] and what can we handle and how much of a divide can we have in society without creating unstable conditions?"

Those conditions could include social unrest and crime.

Population expert William Frey of the Milken Institute in Santa Monica, California, says the economy in Los Angeles looks like a barbell. It is large at both ends and narrow in the middle. He says high poverty rates for immigrants coincide with income growth for people in knowledge-based industries, for example, in the high-tech sector.

Mr. Frey believes the divide may be permanent. "It may be a temporary thing for people, but it may not be a temporary thing for places," he says. "And by that I mean the new Americans who come into a lower-income community, a neighborhood, an enclave, as they pull themselves up, they move off into a suburban area where the housing is better and the general income is higher. But then another new wave comes into that first community, keeping the income levels down, the poverty levels higher."

Economist Jack Kyser says there is more vitality in Los Angeles than is shown in official figures. He says a large underground economy is made up of entrepreneurs, often immigrants, who work informally and pay few taxes. He says this type of business helps the local economy, but not the tax base.

Mr. Kyser is confident that the children of immigrants can find better-paying jobs. He says one route is through education, and notes that even short-term vocational training can raise a worker's standard of living. "There is another message that comes through loud and clear. In Southern California, we have been somewhat cavalier about our manufacturing, and I have heard too many people say all the manufacturing went away," he says. "It has not. There is still a large manufacturing pool. But we have to fight to keep that and to help them thrive in a very, very competitive global economy."

Mr. Kyser says manufacturing jobs are often a route to the middle class because they pay well but do not require a college education.

Population expert William Frey says Los Angeles is serving the historic function of American cities. He says it is a place where immigrants assimilate and learn to be citizens while they bring vitality to their new community. In the process, he says, there are always some stresses.