Valley Perspective; REFLECTIONS; Perspective Asked Local Observers to Share Their Observations About the Valley for 1998-'99; How to Help the Poor? Remove Barriers to Options, Including Jobs; [Valley Edition]

SHIRLEY SVORNY  Los Angeles Times Jan 3, 1999

Current government programs seem to have failed our most needy populations. It should come as no surprise that many programs ostensibly aimed at the poor fail to help them--the poor tend not to vote, and neither do they contribute large amounts of money to political campaigns.

We know how to direct aid at the working poor. The earned income tax credit provides subsidies to low-income households through the tax system. But instead of increasing our reliance on programs that target the poor, we continue to use such programs as the minimum wage, and subsidies to community development and home ownership, all of which benefit medium- and upper-income families more than the poor.

In a classic, misguided, attempt to help, the Los Angeles City Council passed a living wage ordinance requiring city contractors to pay workers higher wages. The living wage is already reported to be attracting a "better class of workers" . . . read "low-skilled workers need not apply."

City officials heartily subsidize companies that will bring in "good" jobs--jobs that employ high-skilled individuals. Low-skilled individuals can never hope to qualify for and keep these jobs.

Maybe the focus here is wrong. Poverty is directly related to unemployment. Rather than try to run myriad poorly targeted programs, a simpler and more productive strategy is to remove barriers to job creation and access. For instance, deregulating taxi service--allowing private vans to cruise the Valley floor, competing with buses and taxis--would make it easier for low-income individuals to get to jobs outside poor neighborhoods.

Private job creation can be spurred in Los Angeles by reducing business taxes. Economists have found that taxes discourage economic activity and job creation. Private sector job creation can be further enhanced by streamlining Los Angeles' costly business permitting process. Small companies complain about the difficulty of doing business in Los Angeles. All firms should be afforded the ease of permitting that currently only the largest and most visible receive.

Low-income families need good schools, so that their children can be challenged academically. But how much more public can the protection of inadequate teachers be than in Los Angeles, where Mayor Richard Riordan constantly condemns the "dance of the lemons," where inadequate teachers are simply transferred from one school to another?

Rich people can buy their way out of bad schools by moving to better neighborhoods or choosing private instruction. Similar alternatives can be provided to the poor through voucher programs that provide funds for private education where test scores show public education fails to deliver.

In Los Angeles, poor neighborhoods do not have the political clout of wealthy areas. Major roads in the poorest areas of South Central serve as arteries for commuters driving to the civic center, precluding business activity on these streets. Can you imagine such an intrusion in a wealthy neighborhood? And, although crime rates have fallen dramatically across Los Angeles, the share of crime in the northeast Valley has increased, suggesting a lack of sufficient attention to the most needy neighborhoods. My wager is that poor neighborhoods don't even get the share of tax revenue they contribute to the city.

The solution is to give residents control over their neighborhoods and service provision. With self-rule comes a sense of community and responsibility. Opponents of breaking up the city label it as anti-poor, but shifting public spending to the local level may lead to revitalization of some poor neighborhoods. Participation in local government would increase, facilitating crime reduction and promoting economic well-being.

Rebuild LA's efforts to improve depressed areas in the aftermath of the Los Angeles riots is illustrative of the problems with programs that seek to help the poor. It was remarkable to hear how much effort went into siting just one grocery store in a depressed area. A classic case of well-meaning efforts misdirected; but business location follows wealth, it does not precede it. Job access has to come first, coupled with an attack on crime. Then, as standards of living increase and crime falls, grocery stores will not have to be dragged into these neighborhoods.

Instead of trying to play big brother by funding poorly monitored programs, what we really need is to open options for the poor. By encouraging job creation through lower taxes and a simplified business permitting process, by increasing access to jobs by deregulating transportation, by offering vouchers where public schools fail and by stimulating civic participation through smaller, more local governments, we can create an environment where people find their lives significantly enriched.

Shirley Svorny is professor of economics at Cal State Northridge