State's Economy Robust, Most in Southland Believe

By DON LEE

Nov. 24, 1997 12 AM PT

TIMES STAFF WRITER

Reflecting the profound rebirth of confidence in the region, most Southern Californians now describe the state’s economy as robust, with many saying that California’s greater reliance on small businesses is a good thing, a new Los Angeles Times poll shows.

For the first time in six years since the Times Poll has been asking, a significantly greater number of Southern Californians said the state is headed in the right direction rather than on the wrong track. Moreover, an overwhelming majority of Southland residents hold a surprisingly positive view about California’s business climate, a sharp contrast to the widespread feelings a few years ago that the state was an unfriendly place for business.

“The perception that the economy has turned around for the better has finally caught up to reality,” said Susan Pinkus, director of the Times Poll.

The widespread optimism about the state’s 3-year-old recovery and respondents’ own economic situation--two-thirds described their personal finances as secure--bode well for the recovering housing market and retail sales in general. But the survey found concerns on a number of issues that experts view as critical to the region’s future growth.

Many people believe the region suffers from a negative image, and nearly three-quarters of Southern Californians think that the various cities and counties are not working together for the good of the entire area--a problem that public and private leaders agree is particularly worrisome for a region dominated by small firms and that will be a focus of discussion at an unprecedented economic conference today at the California Science Center.

The Economic Action Summit for the first time is bringing together private- and public-sector officials from all 88 cities of Los Angeles County. Sponsored by the New Los Angeles Marketing Partnership, the one-day session seeks to chart a cohesive economic plan to improve the region’s infrastructure, international trade and access to capital, among other things.

Although cities in Los Angeles County have had a history of bidding and battling against each other, leaders of the summit were nonetheless disturbed to learn that Southern Californians overwhelmingly think local governments are just looking out for their own areas. Joe Aro, executive director of the South Bay Economic Partnership, said there is more collaboration than people know. He cited the recent formation of groups such as his, which brought together government and business leaders from the 15 cities of the South Bay.

“The people who want to improve our regional economic engine are great in number and highly talented, but they are like people milling around in a parking lot who don’t know how to get into the door,” Aro said.

Whether the summit will help them find the door, analysts agree that cooperation by governments and public-private collaboration have become vital as Southern California has emerged from the recession as the capital of small businesses. About 47% of the residents of Los Angeles County now work for firms with 100 or fewer employees--up from closer to 40% at the start of the decade--and such collaboration often has reduced red tape and given nimble firms more flexibility and access to government.

Because a small firm has fewer resources and less clout, “a business-friendly and relatively easy-to-work-with government is going to help the small guys more than the big guys,” said Joel Kotkin, a senior fellow at the Pepperdine University Institute for Public Policy.

Jack Kyser, chief economist at the Los Angeles Economic Development Corp., cited another reason why cooperation among cities is beneficial. “When we fall into squabbling among ourselves, we’re wasting energy and opening the door for poachers to come in,” he said, adding that Southern California is still dotted with 43 offices representing other states that are seeking to lure businesses away. Kyser added that although businesses aren’t fleeing the region as they did a few years ago, in some ways there may be an even greater threat today because small businesses can relocate more easily.

Although experts seem divided on whether the region’s greater reliance on small business is a good thing, the Times poll shows that many Southern Californians are clearly comfortable with the change. Of those surveyed, half said it is better that the state is relying more on small businesses than big ones. Only 15% replied that more reliance on small business was bad, and 26% said they saw no difference.

Asked why they felt a region dominated by small business was better, the greatest number replied that small businesses care about the community.

“They have to live in the community you’re in. There’s more pressure to do a good job, to be friendlier, because you’re literally serving your neighbor,” said Richard Elliott of San Diego, who agreed to be interviewed after being polled.

Elliott, 28, who works as a drama and music teacher at a San Diego church, added that small businesses are “more important because I think California has a bad rap. Outsiders come here and think California is big and uncaring. Small companies will be important in turning around that image.”

Elliott is one of many Southern Californians--48% according to the Times poll--who believe the American public holds a negative image of Southern California. By comparison, 42% said they thought the country held a favorable view of Southern California.

Michele Brown, 25, a student who lives in Los Angeles, was one of the poll respondents who felt the country had a very negative image of Southern California. She blamed it on negative media coverage, which garnered the second-largest number of responses after those who blamed the Los Angeles riots.

“A lot of positive things happen in the community, but they always show the bad news,” said Brown, who is studying computer science. “I have family in Chicago, Miami and New York. They think the Crips and Bloods is the entire state. They just have a negative view. They don’t want to live here.”

The Times poll asked what the region should stress in an advertising campaign to help bring more businesses to the region. The top mentions: weather, followed by strong work force, big consumer market and diversity.

Regina Birdsell, executive director of New Los Angeles Marketing Partnership, a private-public partnership that has been trying to sell a better image of Los Angeles for the last two years, said she has focused her group’s multimillion-dollar marketing budget not on the weather but on the region’s dynamic, wide-open business climate.

“We think we have a ways to go in improving the image of the region outside the region,” said Birdsell, whose group started in 1995 and has spent $9 million thus far, about half on marketing and half on helping small and mid-sized businesses obtain resources.

Among other findings in the most recent survey of 1,218 adults in Southern California, which has a margin of sampling error of plus or minus 3 percentage points:

* Although 19% of the respondents said they will spend more this holiday season than they did last year, 30% said they would spend less. Of those who said they would spend less, the most common explanation was “less earnings.” Kyser said that although personal incomes in Los Angeles and Orange counties were both expected to increase 6% this year, there are still many “nervous” people recovering from the recession. “Christmas is not the biggie in spending as it once was,” he added, citing changes in lifestyle and buying patterns.

* Eighteen percent rated California as an “excellent” place for business, and 58% considered it “good.” By comparison, in early 1993 at the depths of the recession, 58% of the Times poll respondents in Southern California said the state was a poor or not so good place to do business.

* Taxes and too many regulations were cited as the two most important problems facing California’s business community. About 44% of those polled said there was too much government regulation of business and industry; 13% said there was too little.

* People cited better schools as the most important solution to problems facing the business community, followed by reducing red tape and lowering taxes. And 45% said schools are below average at preparing students to meet the changing needs of the local business community.

* Forty-three percent said business has legitimate gripes about state regulations that hamper job growth and hurt the economic climate, whereas 36% said businesses are just using the economic climate and threats to leave, so they can repeal regulations.

* More people in Southern California (49%) said they would be willing to limit some of the environmental regulations that California places on businesses if that would keep businesses and jobs from leaving the state than those (41%) who said they would not be willing to limit such laws.

* More than a third strongly agreed that businesses should be given tax breaks when they hire people who are on welfare, and an additional 27% agreed somewhat with that proposition. That compared with 18% who disagreed strongly and 15% who disagreed somewhat.

How The Poll Was Conducted

The Times Poll contacted 1,218 adults in Southern California by telephone Oct. 25-28. Telephone numbers were chosen from a list of all exchanges in the six counties of Southern California (Los Angeles, Orange, San Diego, Ventura, Riverside, San Bernardino). Random-digit dialing techniques were used so that listed and unlisted numbers could be contacted. The sample was weighted slightly to conform with census figures for sex, race, age, education and region. The margin of sampling error for all adults is plus or minus 3 percentage points; for certain subgroups the error margin may be somewhat higher. Poll results can also be affected by other factors, such as question wording and the order in which questions are presented. Interviews were conducted in both English and Spanish.

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Local Business Climate

For the first time since asking the question, Southern Californians feel things in California are going in the right direction. They also rate California as a good place for business, but are more ambivalent about how the American public percieves Southern California.

* Does the American public have a postive or negative image of Southern California?

Positive image: 42%

Negative image: 48

Don’t know: 10

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* Those who thing Southern California has a negative image offer the following reasons for it: (accepted up to two replies; top five responses shown)

Riots/crime/shootings: 40%

Negative media coverage: 11

Earthquakes: 9

People are shallow: 9

Hollywood/glitz: 7

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