An Ever-Changing Job Market : Service Economy Shaping Up as Manufacturing Declines : DANIEL A. JOHNSON
When economists, business executives, teachers and chamber of commerce pamphleteers want information on employment in Orange County, one of the first people they turn to is Daniel A . Johnson, county labor analyst for the state Employment Development Department.
His job, which he describes as “being 80% a technician and 20% a forecaster,” is to compile the statistical data that ultimately is translated into a monthly unemployment rate for the county.
When he is not trying to figure out what the numbers mean, Johnson also serves as his department’s liaison with a number of private, educational and governmental job-creation and job-training programs in the county.
The 38-year-old analyst, a Southern California native, grew up in La Mirada, dropped out of high school to join the Marine Corps in 1966 and, after a four-year hitch, enrolled at Long Beach State College, where he earned a bachelor of arts degree in sociology.
It was while collecting unemployment compensation as a student at Long Beach State that he first was introduced to the EDD, which hired him as a part-time claims assistant. He transferred to the agency’s Sacramento office after he graduated and spent seven years there, the last three as labor market analyst for Amador, Butte and Mariposa counties.
Johnson was named Orange County labor market analyst in August, 1987, replacing 20-year veteran Alta Yetter-Gale, who transferred to Los Angeles. For the past nine months, he said in a recent interview with Times staff writer John O’Dell, he has been getting reacquainted with Orange County and discovering that its labor market is as dynamic as its economy.
Q. One of the things a healthy community must do is provide jobs for its indigenous population. Are we providing the training needed to make the next generation employable in the kinds of jobs being created in the county?
A. I’ve really gotten to work with the educational community here in the county, and I’ve never seen anyplace where the schools are more interested in developing labor market information so their curricula are sensitive to the needs of the industry and the community. Also, industry plays a tremendous role in education here, and there’s great communication between industry and educational institutions--especially at UC Irvine. They’re tremendous. And I think the efforts are sufficient to meet the needs here in the county.
Q. School is out this month and thousands of students--and teachers--will be looking for jobs. What does that do to the employment picture?
A. It makes the unemployment rate go up a bit. A lot of them find jobs, and many aren’t counted because they are not looking for work, but there still are a lot who wind up on unemployment.
Q. Orange County’s jobless rate for March and April was 2.9%. Economists say anything up to 4% is considered full employment, but what is really meant by that?
A. Well, that means 4% or so of the people are always out of work, changing jobs or whatever. So if the rate is 4% or less, then we basically have almost everybody working who wants to work.
Q. So a 2.9% rate means what it says, that only 2.9% of the working people in Orange County are out of jobs?
A. No. There are a number of people that aren’t counted because they are the hard-core unemployed. And they are no longer seeking work, they’re no longer receiving unemployment benefits, so they’re no longer counted. That group includes some who are hard to place because their skills are too specialized for a particular job market.
But consider this: There are just over 38,000 unemployed people in Orange County. And I think that if you look at the people that are unemployed, you’ll see that most are hard-core jobless. There are many jobs that go unfilled here.
Q. What, precisely, are the unmet needs?
A. I think it’s important to remember that Orange County is the entrepreneurial capital of the state, and probably the country. Well over 90% of the businesses here are small businesses with less than 20 employees. There are only a little more than 100 companies with more than 1,000 employees. So that’s a consideration for someone entering the labor market.
There are a lot of jobs. There are a lot of jobs in marketing, in word processing, in personal services. This is an affluent society that works a lot. And that creates jobs for people to do things for those who are too busy working to do them for themselves. There’s a shortage of assembly-type jobs and a shortage in a lot of the business service occupations. And there is a tremendous need in the technical field. We need technicians in almost every field.
There seems to be a trend in Orange County and everywhere else in the nation to trim the number of administrative and management personnel and increase the number of technicians. And one of the greatest job shortages in the county is in the health field, especially registered nurses and medical technologists.
Q. Why? Are medical people not paid all that well?
A. A lot of those occupations don’t pay as much as you might think. For the education that is involved, the pay isn’t really that great. And the amount of work and commitment and stress is tremendous in those occupations. So a lot of those people leave for other fields. To demonstrate, hospitals and other medical care facilities are bringing hundreds and hundreds of medical people from other countries into Orange County. There is a tremendous demand for nurses in convalescent homes and other facilities. But the biggest shortage seems to be in the clerical field.
Q. Because of pay? Or because there is just more demand than supply?
A. The clerical field is real interesting, and it is to some degree unique to Orange County. With all of the entrepreneurs here, with all of the small businessmen, the type of clerical person in demand isn’t what it might be if all the demand was coming from large corporations. In a big company, they hire one person to do stenography, and someone else to write letters all day, and a different person to be a typist all day and so forth. But in the small business in Orange County, what is needed is one person who can do it all. That’s where the shortage is. It takes years to learn all the facets of running an office, but many employers don’t want to pay as much as this person probably deserves.
Q. If there is such a shortage, why doesn’t the pay rate go up?
A. If the shortage worsens, employers are going to be forced to deal with it by increasing salaries. I get a tremendous number of telephone calls from companies that just entered the area, and they can’t understand why they have had an ad in the newspaper for months and months, and they can’t seem to fill it. And I’ll ask them how much they’re paying. And then I’ll look in my wage and salary survey, and find out that they’re paying about 10% or 20% below the prevailing wage for Orange County. They’re just not accustomed to paying the rate of pay that is a prevailing rate here, and even when employers are paying the prevailing rate, they have a difficult time attracting competent people.
Q. Do we have a job war going on, with companies raiding each other to find technicians and nurses and clerical talent?
A. I don’t notice too much of that. It’s not like a few years ago in the electronics field, when everybody was stealing everybody. What employers are doing now, and it’s created a tremendous business here in Orange County, is hiring temporaries. Some of the most active employers in the county are the temporary agencies. They fill the needs of many companies here.
Q. If we have 38,000 people counted as jobless, why do we have these labor shortages? Why can’t the unemployed be placed in some of these positions, and why aren’t they?
A. Well, because they have some barrier to employment. But I don’t really know the composition of that group. I mean, they may be qualified to do something, but that particular job isn’t in demand here in the county.
Q. But isn’t it normal that when job shortages occur in one area, people with the needed skills move into the area to help fill the gap?
A. That’s true. However, for one reason or another, it doesn’t work that way here, and I think pay is a factor. In Orange County it requires quite a bit of income to support yourself. And these occupations generally are not the highest-paying.
The situation with clerical jobs is an example. There is so much business in Orange County, and everybody needs a clerical support person who does typing, telephones, correspondence, billing and word processing. They need this all-around person that basically can run a small office. People with those kinds of skills are valuable in every office, in every business, so they are in demand. But generally they’re one of the lower-paid positions at any company.
Q. If we have a huge shortage of skilled clerical people, wouldn’t that create a seller’s market in which clerical workers could name their own pay?
A. Somehow, the law of supply and demand doesn’t seem to be in effect for clerical workers. Wages are going up, but they’re not going up sufficiently to fill the demand.
Q. Why not?
A. Well, I think that employers generally are accustomed to paying a certain amount for clerical help. In Orange County, it already is higher than it is in most other places, and I think employers are just reluctant to increase the pay even more for their clerical staff.
Q. Another thing that has got to have an impact on some types of employment is the new immigration law. How much of an impact have you seen in Orange County?
A. I haven’t seen a tremendous effect. I’ve done some rather informal surveys in the garment industry and the hospitality industry. There have been a few employers in the garment industry who are having a difficult time making a profit because they’re having to pay more to get qualified, legal employees. And that is the only industry in which I’ve seen or heard any reports of a problem. The hospitality industry hasn’t reported any significant labor shortage because of the immigration rules.
Q. If one of the causes of labor shortages in the county is that some jobs don’t pay enough to enable workers to live here, what are employers doing to correct the situation? Do you hear from employers that they’re thinking about going elsewhere, to where there is a work force? Or are you hearing something else, that wages in those job categories are going up?
A. A few employers have told me that they’ve been forced to leave Orange County, that they’re going to Texas, that they’re going to Mexico.
Q. What kind of companies are these?
A. They’re in manufacturing, generally. They hire a lot of assembly workers. But I don’t think that there’s any major trend of people leaving the county. Perhaps some industries will leave, but there’s still a tremendous number of people involved in that kind of work here.
Q. What is the upside and the downside of having full employment in the community?A. Well, full employment certainly requires that less resources be spent on training, on welfare, on a lot of social programs. But full employment affects employers because pay tends to go up and there is increased competition for employees, and ultimately, consumer prices can go up to cover the increased labor costs.
Q. Do you see any significant change in the business makeup of Orange County because of the labor situation here?
A. Well, there’s certainly a shift away from manufacturing toward services.
Q. But if we are moving toward a service-type economy, how do we maintain it if there is a labor shortage at the lower-paid end of the services industry? Can we have a service economy without maids and busboys and cashiers and all the other support personnel required for a retail services economy?
A. There’s a certain amount of growth in retail services, but there is more growth here in business services. Accounting firms, legal, data processing firms, marketing, publishing. A lot of the service industry growth is in that type of business. And those tend to be very high-paying jobs.
Q. But Orange County is a major tourist destination, and tourism jobs traditionally are not well-paid. Do you see that changing? Is the labor shortage bad enough that the amusement parks and the beachfront hotels won’t be able to find enough staff to keep themselves going at a level that’s acceptable to the paying customer?
A. I haven’t seen any major shortage; well, that’s not quite true. I haven’t seen shortages to the degree where they have affected business, especially in tourism. In Disneyland, for instance.
Q. But Disneyland tends to be more high-paying than a lot of places, I would think.
A. Yeah, and they will increase their pay. And they will do what’s necessary to find the employees. They will develop different kinds of recruitment processes. They’ll open employment offices outside the county. They’ll do whatever’s necessary, and they’ll find those employees.
Q. You’re involved in a number of job programs. Is there talk anywhere in Orange County of creating housing for lower-paid workers?
A. Well, I think it’s a great idea. But I’ve talked to a few people in the development field, and I haven’t gotten any response. And I don’t know of any such plans. There’s a tremendous, tremendous shortage of low-cost housing--as everyone knows. And it’s getting worse, with the tax advantages disappearing for multi-unit rentals.
I think it’s a terrible dilemma, and I’m sure that as it becomes more of a crisis, somebody will find an approach that works, and probably even make a profit. I don’t know what the answer will be. But Orange County is such a creative place, and wherever there’s a possibility of profit there will be somebody to take advantage of that.
Q. Historically, jobs have followed population. Orange County was a bedroom community for Los Angeles until people refused to go to Los Angeles any longer, at which point the businesses started moving down here. Now we see an enormous number of people leaving Orange County and moving to places like Moreno Valley. Are businesses here going to follow them?
A. I think so. We’ll begin to see a further shift in Orange County’s business composition. And a lot of the businesses will probably leave Orange County for areas where they can make a greater profit because they will be able to pay their employees less because the cost of living is less.
However, there are new industries replacing those that are moving out. It looks as though Orange County may well become the bio-tech capital of the United States. The export business is booming, and, as I understand it, Orange County now is the center of export to the Pacific Rim. And it looks as though that’s only going to grow. It will create a tremendous number of new jobs in Orange County. And so I think we will lose industries, but we’ll attract others.
Q. Population growth here is slowing down. Where do you and others in the employment field see employment heading over the next decade or so in Orange County?
A. Well, of course, there will be fluctuations. And business cycles. And recessions. That’s part and parcel of our system. But overall, I see low unemployment because the average age of people living in the county is getting older, and the wealth of the county is great. The county economy is increasingly diversifying and is not dependent on one industry.
Orange County really prepares with an eye toward the future. I’ve never seen anyplace that does it like Orange County does it. People here really look down the road. And I’m very optimistic for the unemployment rate. I don’t know that it will always continue at 2.9%, but I think in the long term it certainly looks very good.
