Mixed Signals From the Southland Economy : Solid Growth in Jobs Belies a Weakness in Certain Sectors
At Rockwell International and Hughes Aircraft, the job outlook is not exactly flying high these days. Due to declining !ork on some military aircraft and space programs, the two aerospace giants each plan to cut about 4,000 Southern California jobs this year.
But over at Douglas Aircraft, the job outlook is soaring. The addition of two new military aircraft programs will lead the Long Beach firm to create more than 4,000 jobs next year, adding to more than 6,000 new jobs expected this year.
The contrast between Douglas and its two aerospace counterparts is indicative of a schizophrenic picture pervading the entire Southern California job market that, some experts say, is slowing overall job growth in the region.
While some industries, such as services and trade, are expected to produce strong job gains next year, other previously booming industries, such as aerospace and health care, are not as robust. And within some industries, such as aerospace and electronics, some companies are hiring like mad while others are cutting jobs or imposing hiring freezes.
The result is that while the Southland continues to produce stronger job growth than Northern California and the rest of the nation, it is not expected to do as well next year as this year or any other year since the 1982-83 recession. That is expected to push up unemployment and make it more important for job seekers to hone their skills and qualifications in an increasingly competitive job market. And workers also may not get the wage increases they were accustomed to in earlier years.
The weak sectors in the state “are dragging down the good parts of the California economy,” said Adrian R. Sanchez, an assistant economist at Security Pacific National Bank.
“Even though there are a lot of jobs, they’re only at certain companies,” said Sandford A. Lechtick, president and chief executive of National Recruiters Corp., an aerospace recruiting firm. “A lot of companies are not even rehiring when they lose somebody.”
One of the principal reasons for the less favorable job outlook is the sluggish national economy. Lower interest rates, lower energy prices and a lower dollar have not yet produced expected economic benefits. Meanwhile, imports in cars, shoes, electronics and other goods continue to flood the market and depress growth in U.S. and California manufacturing employment.
Another major cause of slower job growth has been continuing corporate restructurings and cost-cutting efforts, due to deregulation and heightened competition.
“Whether we like it or not, we’ve got to get leaner and meaner,” said George Chesney, vice president for human resources at American Medical International, a Los Angeles hospital management firm that has cut about 500 managerial and staff jobs in the past year.
Another cause of the slowdown is the continuing slump in durable-goods manufacturing, ranging from producers of leather products to machinery. California will only produce a net increase of 7,500 manufacturing jobs for all of 1987, Security Pacific economists predict.
Aerospace, previously a shining star in manufacturing job growth, thanks to the Reagan Administration’s defense buildup, will lose some of its job-creating muscle, due partly to declining space shuttle work and budget pressures that are slowing growth in defense spending. Missile and space jobs in California, for example, will only rise 0.7% next year, compared to 2.9% this year and 11.6% in 1984, said Larry J. Kimbell, director of UCLA’s Business Forecasting Project.
The electronics and computer equipment sector, thanks to foreign competition and slower orders, also is performing below par. Meanwhile, agriculture and energy continue to lose jobs as they suffer severe depression-like slumps.
Consequently, the seven-county Southern California region will produce only 208,000 new non-farm jobs next year, a 2.9% growth rate, Bank of America predicts. That is off from the 235,000 new jobs, or 3.4% increase, expected this year. And it is far from the 331,000 new jobs, or 5.2% rise, posted in 1984, the best year for job creation since the economic recovery started in late 1982.
And while jobs will be increasing at a slower rate, migration into California from other states or nations will grow at a faster rate, economists said. Consequently, unemployment in Southern California will rise to an average of 6.1% next year, compared to an average of 5.8% this year, said Duane Paul, vice president and senior economist at Bank of America.
One result of this tighter job market is that many companies are becoming more selective in whom they hire, experts say. Many high-technology firms, for example, say they are looking for people with more refined skills. Other companies are looking for workers with broader skills. For example, clerks and secretaries are increasingly expected to have computer skills as well as typing and filing skills.
But not all the local job news is getting worse. Southern California, with its more diverse economy, continues to outperform Northern California, which is still hurting from the electronics industry slump in the Silicon Valley and the farm slump in the San Joaquin Valley.
Riverside and San Bernardino counties, with faster population growth and lower land and housing costs, will continue to be the fastest job creators in Southern California, with a combined 4.3% growth rate in new jobs for 1987, Bank of America economist Paul predicted. However, Los Angeles County will continue to produce the highest numbers of new jobs next year, with 96,000 (a 2.5% growth rate), followed by Orange County with 35,000 (3.0%) and San Diego County with 30,000 (3.2%), Paul predicted.
The brightest job-creating industries continue to be services and trade, which together will account for nearly three out of four new jobs in the state in 1987, Security Pacific’s Sanchez said. Services include such industries as tourism and restaurants, while trade includes retailing.
Job growth will even continue in government, particularly state and local government, which were hurt in the late 1970s and early 1980s by cutbacks forced by Proposition 13. But since then they have benefited from strong population growth and a recognition that some state-provided services, including education, were not meeting public needs.
Occupations expected to post strong job growth, experts say, include:
Secretaries. This field, one of the largest overall for jobs, is expected to benefit from office-space expansion and growth in financial services.
Data processors and other computer operators. Opportunities have been increasing along with the growth in computer use. However, in some firms, this work is being absorbed by other clerical workers already on staff.
Teachers, particularly elementary school teachers, educational aides and preschool teachers. This is due in part to the growing influx of families from other states and nations, and the growth in birth rate of Baby Boomers, said Jerry Hawbaker, a labor market analyst at the state’s Employment Development Department.
Restaurant workers, including managers, cooks, waiters, kitchen helpers and dining room attendants. This favorable outlook is sparked by strong growth in restaurants, particularly fast-food eateries, Hawbaker said.
Retail store managers, sales clerks and other retailing personnel. With a new focus in the retailing industry on customer service, “people with strong managerial and sales skills are what we’re really looking for,” said Bill Dombrowski, spokesman for Carter Hawley Hale Stores, which operates the Broadway and other retailing chains.
Auto mechanics. Lower gasoline prices will increase driving and boost demand for auto repair services, the Employment Development Department said.
Nurses. While hospitals are cutting costs due to changes in medical reimbursement procedures, demand for nurses is still strong, due partly to the continuing rise in the average age of the population.
Engineers. While growth in this field has dropped because of the computer industry slump and slowdown in the growth of defense spending, strong demand is reported for engineers and others with skills in robotics, telecommunications, computer software, microelectronics and biotechnology, said Jeff Parietti, a spokesman for the American Electronics Assn.
“It will be difficult to fill certain positions,” said Sally Ghan, employment administrator at Douglas Aircraft, which plans to hire mostly engineers for the 4,000 new jobs next year at its plants in Long Beach and Torrance.
The outlook is also positive for workers with skills in banking, insurance, real estate and other financial services. However, with increasing use of automated tellers and shutdowns of branches at some banks, demand for bank tellers is not as robust, bankers say.
In addition, many banks are seeking to cut costs and automate many jobs. “We’re trying to perform each task with fewer people,” said Irving Margol, executive vice president and head of management services at Security Pacific, which is expanding its work force next year by less than 4% despite strong profits and a branch expansion program.
