As the Economy Cools Off, Job Growth Takes a Breather : But Openings Go Unfilled in Several Fields
Ronald A. Franz was a good man to see last year if you wanted engineering job.
The director of personnel resources at Lexar, a Westlake Village telecommunications subsidiary of United Technologies, projected last fall that he might hire as many as 150 new engineers and technical workers in 1985. But business soon tapered off, and Franz sharply curtailed new hiring plans, adding only about 30 engineers and actually laying off other employees.
“It’s a totally different labor market than last year,” Franz says.
While Franz’s hiring cutback may be more severe than that of many employers, his situation does reflect an important reality of Southern California’s job outlook: It’s not bad, but it was a lot better last year.
The slowing of the economy, structural changes in the job market, corporate belt tightening, layoffs and other factors have prompted analysts and employment professionals to expect only modest job growth over the next few months, in sharp contrast to the strong, upbeat forecasts of one or two years ago.
“This year is going to turn out to be a fairly good year, but not of the magnitude of 1984,” says Jack Kyser, chief economist at the Los Angeles Area Chamber of Commerce. He expects 218,500 new jobs to open up this year in Los Angeles, Ventura, Riverside, San Bernardino and Orange counties, compared to 301,000 last year when the economy was booming.
A recent survey by Manpower Inc., the temporary-employment firm, showed that 23% of employers surveyed in Southern California plan to increase staff levels during the fourth quarter this year, while 13% plan to decrease staffing and 62% plan no change. That is markedly worse than the responses given for Manpower’s previous survey, when 31% of respondents planned increases in the third quarter, only 7% planned decreases and 58% expected no change.
As for next year, senior economist Philip E. Vincent of First Interstate Bancorp says he expects total Southern California non-agricultural job growth of 3% compared to 3% to 4% this year, although he and other economists say they are beginning to see some signs of a possible pickup in the economy.
Job growth in Los Angeles and Orange counties, with their higher populations and higher living costs, is expected to be relatively slow, while the most vigorous growth will come in less populated Riverside, San Bernardino and northern San Diego counties, where land, labor and housing costs are lower.
“If your business is going to locate in Southern California . . . you can locate with less costs in those areas,” Vincent says.
To be sure, the outlook has not worsened everywhere. Employment experts say that in some fields, it’s almost a cinch for a qualified person to find a job.
Such is the case in aerospace, where the Reagan Administration’s defense buildup this year is having a much greater impact on increasing jobs than in recent years. Until this year, economist Vincent says, much of the defense spending increase went into research and development activities, which tend to create fewer new jobs per dollar of spending than manufacturing. “They (aerospace firms) are now having difficulty finding people,” says Sandy Lechtick, chief executive of National Recruiters, a Woodland Hills placement firm specializing in high-tech and aerospace jobs. “The talent pool is small compared to the amount of openings.”
Aerospace firms are even complaining of shortages of some types of engineers, skilled craftsmen, technicians and manufacturing specialists, experts say. Economists at the UCLA Business Forecasting Project predict overall aerospace job growth statewide of 3.8% next year, rising to 6.8% in 1987.
Another somewhat surprising area of strength is teaching. Elementary and secondary math and science instructors and bilingual teachers are in great demand, experts say.
“Many math and science teachers have opted out of teaching for more lucrative private-sector jobs,” helping create a shortage of such teachers, says Ruth Parsell, acting director of career development at UCLA’s Placement and Career Planning Center. Teachers are also in demand because the influx of immigrants and children of Baby Boom parents mean “more new students are coming into the school systems.”
Also in demand are temporary employees with office automation skills. Betty Ellsworth, a branch manager at Manpower, says the firm receives more orders for temporaries with office automation skills “than there are workers to fill them.”
Service industries such as restaurants, hotels and amusement parks also are showing strong growth, due in part to a surge in tourism. “Last year’s Olympics were a very good commercial for tourism in California,” says Kyser, the Los Angeles chamber economist, noting the strong attendance at local amusement parks and high occupancy rates at hotels. First Interstate’s Vincent predicts that new Southland service jobs will grow 4% next year.
Business services, including computer programming, accounting and advertising, also show stronger-than-average growth. Economists at the UCLA forecasting project predict job gains of 5.5% statewide in this category next year, although that would be a decrease from the 6.8% gain projected for this year.
Prospects for job growth in banking, insurance, real estate and other financial services are also improving. Financial institutions have largely completed cost-cutting efforts to adapt to increased competition under deregulation. Accordingly, UCLA economists predict a 3.3% growth in financial services jobs statewide next year, up from 2% this year.
But these bright spots are offset by many negatives. Most visible of these is the continuing corporate belt tightenings and restructurings that have resulted in many large firms cutting back hiring or laying off workers.
Layoffs range from giant American Telephone & Telegraph, which plans to furlough about 700 workers in the Los Angeles area, to Datametrics, a small Chatsworth printer manufacturer that gave pink slips to 60 of its 282 workers.
The entrance of these displaced workers into the job market to compete with the already growing number of immigrants from overseas and other states is keeping the Southland unemployment rate relatively high by historial standards, economist Vincent says. The current jobless rate of 7% for Southern California will fall only to 6.7% by the first quarter of next year, he predicts.
This high unemployment rate--along with the long-term shift of the economy from higher-wage manufacturing industries to lower-wage service industries--also is helping to depress wage increases, Vincent says. He projects only a 5% increase in overall Southland wages next year, not much more than the inflation rate.
Contributing to the slowdown is the fact that some industries and occupations that were shining stars in last year’s job picture have lost some of their luster.
Perhaps the most noticeable of these is electronics and computers. While demand remains strong for some workers--such as salespeople qualified to sell high-tech products, computer analysts and programmers, and electronic and software engineers--layoffs at beleaguered high-tech firms have swelled the ranks of individuals seeking those jobs.
The semiconductor industry, for example, a year ago was “going through the roof and having difficulty finding people,” job-search executive Lechtick says. “But now people in the field are having a real rough time finding jobs.”
Some workers are taking “months and months before they find something,” Lechtick adds.
Another slowing industry is construction. Building of apartments and office buildings has peaked in Southern California, says Ben Bartolotto, research director of the Construction Industry Research Board.
Consequently, construction jobs will increase “only slightly” in 1986 compared to the 5% growth, or 22,200 new jobs, expected for California this year, Bartolotto says. (Southern California will get about 60% of those new jobs, he says.)