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What’s Ahead for L.A.’s Jewish Economy?

Southern California\'s economy already has withstood the past year\'s downturn -- and the cataclysmic events of Sept. 11 -- better than many competing regions.
[additional-authors]
November 22, 2001

The current recession, deepened nationwide by the Sept. 11 disaster, will hit Los Angeles’ Jewish community like many others. It will have an impact on everything from charitable contributions and bank accounts of the super-rich to the household economies of hundreds of thousands of everyday people.

Yet overall, this may be a time for Los Angeles’ Jewry to count their blessings. Compared to communities in many parts of the country — most notably New York City — the economic prognosis for Los Angeles, and for the industries most associated with Jews, seems relatively rosy.

First, let’s look at the overall economy. It’s been a long time since Jews were consigned to narrow niches in the American, much less the Los Angeles, economy. We are literally everywhere — from aerospace firms to real estate as well as more traditional Jewish pursuits such as garments and entertainment — and, to a large extent, we rise and fall with the rest of our fellow Angelenos.

Basically, Southern California’s economy already has withstood the past year’s downturn — and the cataclysmic events of Sept. 11 — better than many competing regions.

For months, the region’s overall job growth rate has exceeded those of now shell-shocked poster children of the dot-com era, such as Silicon Valley, Seattle and Austin; all of which boast growing and very affluent Jewish communities. Austin, for example, is home to Michael Dell, one of the nation’s largest benefactors to Jewish causes.

The distress is even more severe in the traditional Jewish centers in the industrial Midwest, where slackening demand for big-ticket durable goods is causing dislocation not seen since the 1970s. Detroit, Cleveland and Chicago areas are hemorrhaging blue-collar jobs.

But the most immediate impact, not surprisingly, can be found in New York, which is the only city more critical to American Jewry than Los Angeles. Immediate estimates on the post-Sept. 11 impact are that the city lost an astounding 79,000 jobs last month alone. But most important, according to the city controller’s office, as many as 150,000 jobs may be lost permanently.

Of course, certain sectors of the L.A. economy, such as tourism and durable goods manufacturing, notably furniture, also are reeling from the downturn, but overall, Los Angeles is somewhat less dependent on these industries than many regions. Perhaps the key “Jewish” industry that could be hard hit by the recession is garments.

Overall, as many as 20 percent of business may go out this year, predicts Ilse Metchek, president of the California Fashion Industry Association, although the situation is far from horrendous. Recent concerns about travel to New York and fears of relying on overseas contractors, she believes, is helping shift more business to Los Angeles.

“The people who were hanging on by their fingernails are going out of business,” Metchek says. “But the bigger guys are doing well and will come out of this better than ever.”

But financial services and entertainment, two other key industries for Jews, may actually benefit from the current economy. John Shaw, president of Jefferies Securities, a New York investment bank with a large L.A. presence, believes Los Angeles may gain some of the securities employment that is being displaced from New York. “We are currently redeploying some operations to L.A. right now,” Shaw says.

The third linchpin of the region’s economic recession-resisting force lies in the entertainment sector. On the surface, Hollywood seems to be in a downturn of its own, with significant loss of jobs over the past year. But much of this can be traced to the lingering impacts of the threatened actors’ and writers’ strikes, which led many studios to “front load” their production last year, leaving a large backlog of product for the current season.

The long-term prospectus may be much brighter. Entertainment, which along with trade led the 1990s revival, is traditionally counter-cyclical. Since the atrocities in New York and Washington, D.C., box office sales have jumped by 8 percent, and Internet and cable viewing have risen. There has also been a perceptible bump in the sales of video games, notes Robert Kotick, president of Activision, the largest Los Angeles-based game-maker.

“People want to have a fantasy experience without the cost and hassle of leaving the home,” says Kotick, whose 1,000-person firm expects over $700 million in sales this year. “The home entertainment industry will benefit from this.”

All these forces suggest — in sharp contrast to the devastating L.A. downturn of the early 1990s — that the Jewish community of Southern California, in relative terms, is better positioned both financially and in its ability to attract new migrants, foreign and domestic. This suggests that L.A. Jews may need to play a more aggressive leadership role in shaping the national Jewish agenda in the turbulent times ahead.

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