State’s Job Losses Persist
California employers shed a net 8,400 jobs in December, capping three consecutive years of falling payroll employment -- the worst performance since the early 1990s recession.
The report released Friday by the state Employment Development Department was discouraging to economists, who have long been expecting an upturn in hiring. And it was unsettling to budget watchers who know that California can’t hope to emerge from its deep fiscal hole without a boost in jobs and income -- and the tax revenue they generate.
The employment numbers stand in sharp contrast to a raft of upbeat data showing that the economy is poised for solid expansion. Consumer confidence is on the rise in California. Ditto for factory orders and production. Corporate profits are up. The state’s housing market is on a tear. And income tax payments to Sacramento are running ahead of projections.
What’s missing from the party are tens of thousands of newly hired Californians who, by anyone’s reckoning, should have been on the job by now. Some analysts worry that unless companies start boosting their payrolls soon, the recovery could fizzle before it really heats up.
“How long can you have output growth, sales growth, profit growth and no job growth?” asked Brad Williams, senior economist for the state Legislative Analyst’s Office, which provides nonpartisan fiscal and policy analysis for the California Legislature. “We’ve all heard and talked about a jobless recovery ... but you wonder if the lack of jobs will eventually undermine the overall expansion.”
U.S. employment figures for December were similarly disappointing, with the federal government reporting last week that the nation created a paltry net 1,000 nonfarm payroll jobs. And California has been doing even worse than the rest of the country in recent months. Revised figures show that the state lost 20,200 positions in November, much more than previously estimated and the biggest one-month hit for 2003.
Since December 2000, the state has lost 310,000 jobs, or 2.1% of its nonfarm employment, compared with a 1.8% decline nationwide.
California’s unemployment rate did dip one-tenth of a percentage point in December to 6.4%. But economists were fixated on the stubbornly low payroll count.
Employment is traditionally a lagging indicator that doesn’t kick into gear until the larger economy gets rolling. With job losses continuing nearly more than two years after the U.S. was deemed to have exited recession, analysts are struggling to explain what’s really happening.
Some have taken to focusing on the government’s monthly household survey of employment for clues. In contrast to the gloomy payroll survey that shows that Golden State employers axed 35,700 payroll jobs in 2003, the household survey indicates that the number of Californians holding jobs was up by 265,000 from December 2002.
Economists generally put more stock in the payroll figures, which are culled from a much larger sample (about 43,000 firms) and are based on hard financial data from employers. Still, that survey tends to miss independent contractors, very tiny firms and start-up enterprises that are among the first to start hiring when the economy perks up.
Take Chebel Mina, a 52-year-old MBA in Orange County who works about 35 hours a week originating loans for a Laguna Hills mortgage company. He puts in an additional 25 hours as a financial planner and marketing consultant.
“I’m hardly unemployed,” Mina said.
Yet his jobs wouldn’t be counted by the payroll survey because Mina essentially works for himself.
That survey also doesn’t fully capture new businesses, which have been growing briskly in California over the last year. As such, some analysts are betting that California’s 2003 job picture will look brighter next month when the Employment Development Department performs its annual revision of the previous year’s payroll estimates using more detailed tax data that snares these tiny job generators.
“I believe there are a lot of little companies adding one employee here and two employees there,” said Esmael Adibi, director of the A. Gary Anderson Center for Economic Research at Chapman University in Orange.
Others say skittish employers are simply leaning more heavily on their existing staffs until they are convinced that the economic recovery is for real.
That’s certainly the case for Lee Cruz. The general manager of Colbrit Manufacturing, a Chatsworth-based stamping plant, cut more than a third of his workforce after sales and profits plunged in 2001. The phones have started ringing again. But Cruz says he has no immediate plans to beef up his staff of 10 employees.
“We’re running very, very lean,” Cruz said. “And that’s how it’s going to stay for a while.”
Such caution is bad news for job seekers such as John Yip, who hasn’t had a full-time job since May.
Laid off from his technical administrator job at Sun Microsystems, the Mountain View, Calif., resident works a few hours a week for the Bureau of Labor Statistics, collecting price data on such items as TVs and canned crabmeat for the agency’s consumer price index. He continues to seek a full-time position, but has had no luck. Nearly one-quarter of unemployed Californians -- about 250,000 people -- have been searching for work for at least six months.
“The job market is slow,” said Yip, 34. “I really don’t see any improvement in this area.”
Unemployment rates in the hard-hit Bay Area have declined significantly over the last year. For example, Santa Clara County, the heart of Silicon Valley, posted a 6.4% unemployment rate in December, down from 8.3% in December 2002. But analysts said that was largely because so many jobless workers had stopped looking or had left the area in search of greener pastures.
The unemployment rate for Los Angeles County dropped to 6.6% in December from 7% in November. Other Southern California counties, whose rates are not seasonally adjusted, saw similar declines.
Last month, five of the 11 industry “super-sectors” tracked by state employment analysts added jobs. Gainers were led by the information sector, which added a net 4,500 jobs. Construction payrolls were up by 3,100, educational and health services added 2,500, financial activities gained 1,100 and professional and business services added 200 positions.
The lion’s share of the losses occurred in the giant trade sector, which includes retail stores. Analysts blamed slower than usual holiday hiring for the seasonally adjusted decline of 13,300 jobs in December. The services sector shed 2,700 positions, tourism dropped 2,300, manufacturing slid 900 jobs, and natural resources and mining dropped 600. Government payrolls were unchanged.
Times staff writer Don Lee contributed to this report.
