The Century Freeway looks just like any of the other snaking concrete channels Californians use to navigate their vast state each day, but there is a significance attached to this road that sets it apart from the rest.
The 17.3-mile stretch of highway connecting the coastal town of El Segundo next to Los Angeles International Airport with suburban Norwalk to the east was opened with great fanfare last autumn. Marching bands and a governor’s motorcade celebrated the event.
Much ado about yet another California freeway might seem an excess, but the Century Freeway is something special because its completion marked a rite of passage for California.
The Century-it cost $2.2 billion, or $127 million per mile, to build-is California’s last major freeway, the final 17.3 miles of a march toward what often appeared to be a perpetually prosperous future.
But the Century seems destined to become a California metaphor, a figurative as well as literal end of the road.
“Pretending that old glory days will return, when economic growth could be taken for granted . . . is unrealistic,” wrote economist Larry Kimbell, director of UCLA’s Business Forecasting Project, in a recent analysis of the state’s future.
The California freeway system, like the California economic dream, was born 30 years ago, and many see the two coming to an end together.
While there are faint signs that California’s present recession, the state’s worst economic downturn since the Great Depression, may be ending, there is a nagging sense that so much has been lost in the last four years that California will never be the same.
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“We down-shifted a lot, and we don’t think we will ever be back,” Kimbell said in an interview. “The old growth rates may come back, but we’ll never catch up to where we were.”
This all has profound import for the national economy.
A recent report by the Federal Reserve Board, in its so-called beige book, said that California stands out as the country’s most troubled area economically.
The December report also noted that California’s continued recession was holding back national recovery and that if the state were excluded from the assessment, the country as a whole would pretty much eliminate the national economic sluggishness that remains.
This fact is not lost on President Clinton, who has visited the state eight times since taking office less than a year ago.
Even the most optimistic assessments indicate that the recovery is going to be faint, feeble and prone to setbacks, a clawing uphill battle toward a perhaps unattainable summit.
What’s more, the decline in California’s economy has been so extended that even a massive spate of growth through the rest of the century-and nobody is predicting that-would still leave the state behind where it was in the 1980s measured in terms of jobs, real estate values, income and living standards.
Economists do say that the state’s economy is showing signs of having bottomed out and predict that the first sign of an upturn could come in the spring or summer of 1994.
“There is a plausible case for a recovery that could begin soon,” said David Hensley, a research vice president at Salomon Brothers in New York.
But he and others were quick to temper optimism.
“It will be just a technical improvement at first,” Hensley said. “The governor and economists will talk about it, but Californians will not see it.”
At the heart of California’s decline and its future problems are massive job losses, particularly in the defense and aerospace industries. The losses have been numerically and socially staggering.
More than 500,000 jobs have been lost in California in the last four years-130,000 in the defense and aerospace industry alone-and a further 80,000 aerospace workers are expected to lose their jobs in the next six years. Stability is not expected to return to this sector until 2000.
And just this month there was more bad news.
One of southern California’s defense industry giants, McDonnell Douglas, was told by the Pentagon that it must correct major problems in its C-17 cargo plane within two years, or risk losing the project.
That could mean a further loss of 20,000 jobs in the region.
With no prospect of recovery until the next century, many skilled workers have left the state and fewer and fewer people are coming here.
UCLA predicts that net migration to California will be practically nil in the next few years, a staggering statistic when viewed against annual increases in the state’s population over the last decade that were sometimes as high as half a million.
An example of this trend is reflected in the state’s employment statistics.
Unemployment in California fell to 8.6 percent in November, but that still left the state’s total a full 2 percentage points above the national average.
And the decline came because workers left the state looking for jobs elsewhere, not because California was creating new opportunities.
This change in the state’s population and the continuing loss of high-tech jobs will have an effect on the state for decades to come.
UCLA’s Kimbell said the declines in the aerospace and defense industries are what foretell a very different future for California.
“We still see more losses of high-paying aerospace jobs. We are seeing growth in lower-paying, less-attractive jobs.”
Previous recoveries in California have been robust, fueled either by renewed government spending on weapons and aircraft, or by rapid growth in manufacturing.
Economists now say that neither of these factors will be part of this recovery. That is why it will be so uncertain and why in the long term California will never return to its past economic glory.
In the four years after the 1974-75 recession, for example, the state was able to add 13 million jobs, mainly because of a burst in the manufacturing sector. This time economists predict that at best California will generate 8 million new jobs between 1994 and 1998.
Those jobs that are being created are largely in the service sector, mainly health care, business services, insurance, motion pictures and amusements.
However, only motion pictures and amusements provide high-paying jobs comparable to those in aerospace-jobs with salaries in excess of $45,000 a year.
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The motion picture and amusements industries both managed to grow during the recession and now employ 80,000 more people than they did four years ago, and this trend will continue.
UCLA’s most recent forecast for the California economy, primarily a gloomy document bidding farewell to the Golden State’s golden days, predicted that employment in this sector will rise nearly 60,000 by 1998.
But gains here offer little consolation, since the overall number of people employed in the movies and in amusement-related businesses is small, amounting to about 10 percent of the jobs lost in the durable-goods manufacturing sector alone.
The decline in the number of good-paying jobs, analysts say, will have profound long-term effects on the quality of life in California and on the state’s already gloomy fiscal outlook.
Salomon Brothers’ Hensley estimates that California will have a $3.5 billion budget deficit in fiscal 1994-95 and that Sacramento will be faced with a choice of cutting government jobs or taking money from local budgets, as it did last year.
The most likely course will be to take the money away from local budgets, and that is expected to lead to further cuts in municipal services.
However, such cuts have already caused the state serious problems, according to Stephen Levy, director of the Center for Continuing Study of the California Economy.
“You’ve got to create an environment for (employers) to live as well as work here. They won’t be swayed only by the cost of doing business,” he said recently.
A critical challenge for the state, he added, is the need to provide adequate public investment, noting that California ranked last among all states in the growth of public investment since 1960.
In an interview, Levy said that amid all the gloom and doom, he could still find a glimmer of optimism for the state’s future.
Levy said that UCLA’s conclusion that high-paying jobs are gone forever is only part of the picture. Those jobs that were erased were primarily well-paying positions in factories, he said.
Higher-paying jobs-those paying $40,000 to $45,000 a year-are still being created in service industries, health care, computers, international trade and professional services, he said, adding that high-tech jobs are still being created in Silicon Valley and that both the computer industry and Hollywood had record years in 1993.