Taking Care Of Business…And Jobs

The nation's unemployment figures remain unchanged at 9.7 percent, according to the latest data. That's not news to the roughly 730,250 unemployed workers in the city of Los Angeles. But instead of relying on federal stimulus money to trickle through East L.A., Downtown, or Echo Park, the city has taken the unusual step of hiring its own "jobs czar."

To help get Angelenos working again, Los Angeles Mayor Antonio Villaraigosa chose 49-year-old Austin Beutner, a former partner at the Blackstone Group and cofounder of the boutique private investment-banking company Evercore Partners. Beutner accepted the job in mid-January with a salary of $1 a year. Officially, his title is first deputy mayor, and he's charged with overseeing job creation in the city—managing 13 departments and 16,500 government employees while developing a local economic-development strategy that does not lean too heavily on the federal government. He needs to accomplish all this in a city that has an unemployment rate of 11.3 percent and is grappling with a budget deficit of $484 million. Even as he pledges to help create jobs, the city's school system has announced plans to lay off 5,200 teachers and staff while other city agency cuts will eliminate another 4,000 jobs.

In the wake of all that, Beutner's first order of business is to, well, transform City Hall. "The greatest challenge is changing the mindset and the culture of the people who work in government," he says. "This is not to say that they do not work hard, but everyone should be working hard toward delivering better service to our constituents."

That may sound political, but Beutner's style is fairly direct and offset by a quiet, dry sense of humor. He has only had one other foray into the public sector. In the mid-1990s, he worked for the U.S. State Department in Russia following the Soviet Union's collapse. He jokes that the Russia experience was easier than his California assignment because the Russians, he says, were more prepared to acknowledge change on the horizon. His private-sector experience, and more specifically his years in banking, taught him one key philosophy that he hopes to apply to this job. "When I was at Evercore, I would wake up and think about the five things I will do for my client today. That discipline does not exist right now in City Hall," he says.

He's been in office only a few weeks, but he points to one small victory. On the eve of the Asian New Year, a family-owned business was on the verge of moving out of the city limits, thanks to an eminent-domain case. Pear Garden Produce in Koreatown—the self-proclaimed largest grower of hydroponic soybean sprouts in the U.S.—employs 20 people and was started by two immigrants 30 years ago. Despite this history, the city's plumbing inspector, electrical engineer, and building safety office were giving it lots of "runarounds," says 44-year-old Tony Han, the operations manager and founders' son. Finally, Han's family called Beutner's new office, which was able to streamline the inspection process and nudge the health department. Pear Garden Produce opened east of Downtown in its new store in mid-February. "It sends an important message," Beutner says. "'We understand what their business is. We can't leave them hanging.'"

Beutner will have a lot of people fighting for his attention. Business leaders want less regulation and lower taxes to keep businesses inside the city limits and to encourage foreign companies to pick L.A. as their headquarters. Unions and labor activists want Beutner to join their fight for fair wages, and City Council and City Hall employees primarily want to keep their jobs. They all agree Beutner needs to act as a mediator, expediter, and negotiator—all words different people mentioned in interviews with NEWSWEEK. "He needs to be like a bulldozer," says Russell Goldsmith, chairman and CEO of City National Bank. "There are a lot of projects that are just backed up in bureaucracy that need permits. A lot of this is bulldoze and expedite."

Beutner does not view his job in quite those terms. His immediate goals—apart from tweaking the City Hall culture—are creating a better tax policy for Internet businesses, among other tax changes for various industries. He wants to use the Los Angeles International Airport and the city's busy port as tools to aid local businesses to generate more jobs, more places for consumers to spend money, and more tourist spots. And he wants his staff to go on five calls or visits every week to different businesses to hear about their concerns firsthand.

This move to hire Beutner and give him so much authority marks a shift in the way U.S. cities are approaching their economies, says Bruce Katz, director of the Metropolitan Policy Program at the Brookings Institution. Typically, Katz says, cities have focused on building stadiums, convention centers, and other real-estate developments to boost revenues and attract businesses. "The sense was that all cities needed to do was focus on the amenities," Katz says. "This recession has been a wake-up call." Post-recession, Katz says cities need to work harder to develop their service economies; their relationships to other countries such as China and India; and their ability to export goods. Once the stimulus money starts to slow down, it will be up to cities to recognize their local economic strengths and build policy around them rather than looking for a one-size-fits-all approach from the state or Washington, D.C. If Los Angeles's experiment works, other hard-hit cities such as Miami or Detroit or Las Vegas could hire their own jobs czars.

Beutner recognizes this challenge and then speaks of another goal he calls "the multiplier effect." He wants each tweak in policy and each new business permit to result in more and more companies opening up and expanding, so many that he wouldn't be able to keep track. "The real win is the 505 businesses that we never meet," he says. "That never [have to] deal with City Hall directly. We don't keep a 'jobs saved' board. We're looking at it differently."