THE TIMES 100: THE BEST COMPANIES IN CALIFORNIA : THE HUMAN FACTOR : LEARNING TO AVOID THE CROWDS : Smaller Firms Now Offer Most of the Jobs

Small is beautiful--if you’re a job-hunting Californian, at least.

It is the state’s small and medium-sized firms that created jobs in 1987 and are doing so this year, not California’s biggest employers as ranked by The Times 100.

Of the 10 top employers in the state among publicly held corporations, nine slashed employment or held steady last year, even as the state’s economy created 399,600 new jobs. Troubled BankAmerica, the state’s sixth-largest corporate employer, eliminated about 6,400 jobs alone--13% of its California work force.

And while the traumatic downsizings that gutted BankAmerica and some other giant companies’ labor forces in the past two or three years seem to be ending, economists say mid-sized firms will continue to be the engines driving job creation in California through the end of the 1980s.

Job growth “is all in the middle,” said Stephen Levy, senior economist at the Center for Continuing Study of the California Economy, a research firm in Palo Alto. “And that makes sense, because what California is known for is start-up companies.”

Last year’s biggest creator of jobs can’t be called a start-up, though it was hardly a stodgy, old-line company. Scotts Valley-based Seagate Technology, founded in 1980, nearly doubled its employment from 1986 to 1987, adding 8,500 workers as the demand soared for the computer disk drives it manufactures.

Following a pattern that has devastated manufacturing employment nationwide, most of the new jobs were overseas, in Singapore and Thailand, according to Chairman and Chief Executive Alan F. Shugart.

But Seagate’s hiring during the past few months underscores a trend that economists say can only bode well for the state’s economy: The high-tech firm has put 800 people to work in Silicon Valley and expects to hire more as the year goes on.

Indeed, high tech--the industry that, along with aerospace, motion pictures, farming and light manufacturing, distinguishes California’s economy from the rest of the nation’s--expects a banner year in employment in 1988, at least compared to the battering the industry and its Silicon Valley hub suffered in the mid-1980s.

Nearly two-thirds of the high-tech companies responding to The Times 100 survey said that they expected to increase employment this year, and only 4% anticipated a drop. Silicon Valley firms are advertising for entry-level assembly workers for the first time in years. And the number of companies represented at high-tech career fairs in Santa Clara County is up almost 60%, according to Robert Lake, director of finance and planning for Westech Expocorp., which holds job fairs throughout the Far West.

The small-is-beautiful dictum holds in high tech, with most of the Silicon Valley job gains during the past year posted by small and medium-sized firms, according to Bob McLaughlin, who analyzes Santa Clara County’s labor market for the California Employment Development Department. But some of the biggest electronics and computer companies--including chip-maker Intel and computer manufacturer Hewlett-Packard--plan to increase employment this year.

Aerospace--the technology-based industry on which hundreds of thousands of workers depend for employment in Southern California--can expect leaner times. Most of the aerospace firms responding to The Times 100 survey expect employment levels to be flat this year. But the end of the Reagan-era defense build-up is likely to mean employment declines beginning in 1989, according to David Hensley, who directs California forecasts for the UCLA Business Forecasting Project.

“We’re going to lose jobs--there’s no doubt about that,” Hensley said.

Nonetheless, Los Angeles-area aerospace companies remain among the most aggressive employers in the state in courting hard-to-find engineers and other technical personnel.

Litton Data Systems, a Van Nuys-based division of Litton Industries--eighth among The Times’ top 100 California employers--is giving personal computers to the first 88 employees who refer job prospects ultimately hired for technical positions on a tactical air operations contract the company obtained from the Marine Corps and Air Force.

Lockheed--No. 2 on The Times’ employment list--pays workers a bounty of up to $2,000 for referrals. Nonetheless, the company is having trouble filling upper-level engineering positions in such fields as computer science, electrical engineering, artificial intelligence and new materials, according to Larry C. Ito, supervisor of employment for Lockheed Aeronautical Systems in Burbank.

It’s not only the highly skilled who are in high demand in the California labor market, however.

In some parts of the state, retailers are desperate to hire fast-food counter workers and supermarket baggers, especially in affluent suburban neighborhoods.

Vons--No. 30 on The Times’ California employment list--is hanging banners across store aisles and stuffing leaflets into grocery bags in an effort to recruit unskilled help, said Gary B. Duncan, director of employment. The El Monte-based supermarket chain is turning to the elderly and housewives as the numbers of young people interested in part-time jobs as baggers shrinks, a consequence of changing demographics and wages that have not kept pace with the job marketplace.

“We’re getting ready to open a new store in Mission Viejo later this year,” Duncan sighed. “I really have some grave concerns about how we are going to staff that store.”

Temporary employment firms--among the biggest generators of job growth in the state, though as small, typically private firms they don’t show up on The Times 100 rosters--also are desperately seeking workers in Orange County and most other urbanized areas.

Kimco Services, a temp firm headquartered in Santa Ana, is paying entry-level assembly workers $5 per hour and word processing clericals $11 per hour--and the company still can’t fill 20% of its job orders, President Kim Megonigal said. Kimco’s advertising budget has tripled, the company has raised its standard referral bounty from $35 to $150, and Megonigal is standing by helplessly as his customers hire away clerical temps for permanent jobs.

The tight job market is reflected in California’s falling unemployment rate--5% in March, compared to a 6% unemployment rate a year earlier. A persistent frustration for labor market experts, however, is the high rate of unemployment for minorities--9.3% for the state’s black workers in March, 8.2% for Latinos.

Analysts say the swelling ranks of minorities and immigrants in the pool of entry-level workers--nonwhites will constitute 85% of the state’s new working-age population through the year 2000--raise the prospects of a “skills gap” that could endanger California’s economic strength.

“Our biggest problem is that we aren’t educating people very well,” said Phillip E. Vincent, an economist at First Interstate Bank in Los Angeles.

Overall, Vincent expects employment growth in California to slow down a bit in 1988 from the 3.5% gain of last year. And if the publicly held companies surveyed by The Times 100 are any indication, the industries that will set the standard for employment growth may change.

The biggest employment gainers in 1987 were construction, textiles, apparel manufacturing, lumber and wood manufacturing and motion picture production, according to Employment Development Department data.

The Times 100 survey, though, found that industries expecting to add jobs in 1988 included drug manufacturing, high tech, retailing, services and transportation, along with construction.

Some of the changes, economists say, may be directly attributable to the impact of federal immigration law reforms on light manufacturing in Los Angeles County.

The county’s apparel, furniture and textile manufacturers typically depend on immigrant labor for at least one-fifth of their employees, according to UCLA’s Hensley. But immigration reform--which imposes sanctions on companies that knowingly employ illegal aliens and makes it impossible for illegals to legally change jobs--seems to be slowing down employment growth in those industries, Hensley said.

HIRING OUTLOOK Survey respondents’ plans to increase, maintain or reduce staff.

Total Total Percent TOTAL RESPONSES INDUSTRY cos. replies responded Increase Neutral Reduce Aerospace & Defense 15 9 60 2 6 1 Agriculture 4 2 50 0 2 0 Construction 5 3 60 3 0 0 Drugs 45 10 22 7 2 1 Electronics 67 17 25 5 11 1 Energy 36 5 14 1 4 0 Entertainment 60 17 28 6 11 0 Financial Services 100 52 52 12 33 7 Food & Beverages 11 5 45 2 3 0 Health Services 39 13 33 3 7 3 Heavy Industry 76 23 30 7 14 2 High Technology 255 94 37 61 29 4 Manufacturing 45 15 33 3 11 1 Publishing, Media 11 2 18 0 2 0 Real Estate 63 12 19 4 7 1 Retail 42 23 55 13 8 2 Services 43 19 44 10 9 0 Telecommunications 10 4 40 1 3 0 Transportation 10 7 70 4 3 0 Utilities 11 7 64 1 5 1 Wholesale 41 17 41 7 8 2 Total 989 356 36 152 178 26

% OF TOTAL RESPONSES INDUSTRY Increase Neutral Reduce Aerospace & Defense 22 67 11 Agriculture 0 100 0 Construction 100 0 0 Drugs 70 20 10 Electronics 29 65 6 Energy 20 80 0 Entertainment 35 65 0 Financial Services 23 63 13 Food & Beverages 40 60 0 Health Services 23 54 23 Heavy Industry 30 61 9 High Technology 65 31 4 Manufacturing 20 73 7 Publishing, Media 0 100 0 Real Estate 33 58 8 Retail 57 35 9 Services 53 47 0 Telecommunications 25 75 0 Transportation 57 43 0 Utilities 14 71 14 Wholesale 41 47 12 Total 43 50 7