Employers Singing the Full-Employment Blues : Jobs Go Begging in Country’s Richest Areas
In the eight weeks since Bill Thomas signed on as manager of the Circle K market in Laguna Beach, he has worked 12 to 15 hours a day, seven days a week--by himself. While most of the chain’s convenience stores need four to six employees to operate 24 hours a day, Thomas makes do with two.
An untouched stack of employment applications sits on his checkout counter, but there are more takers for cigarettes and beef jerky than there are Circle K jobs.
“When people come in for the applications, they see my assistant manager or myself, who’ve worked 90 hours a week, and they say, ‘God, I don’t want to work here. I don’t want to look like you ,’ ” Thomas said. “I’m married, and my married life is really suffering right now.”
As their local economies strengthen and their unemployment rates drop, areas like Orange County are experiencing what can be called--for lack of a better term--chronic employment. It is a condition that leaves low-paying jobs at convenience stores, fast-food restaurants, warehouses and steno pools empty and causes employers to raise wages to attract and keep a work force.
Federal unemployment statistics show that this is a scenario replayed in pockets of plenty throughout the country--usually high-technology, university or government regions, such as Orange County; Stamford, Conn.; Washington, and Raleigh-Durham, N.C.
The unemployment rate in such areas flirts with the 2% and 3% level, well below the 5% statistical definition of “full employment.” As a result, local businesses are paying the price of prosperity with lowered productivity, depressed earnings and heavy employee turnover.
“As a general rule, low unemployment rates aren’t bad for an economy,” said Donald Walls, vice president and chief regional economist for the Boston-based research firm Data Resources. “They’re simply an early warning signal that a very successful economy (could) be undone by its own success. As you put more pressure on the wage rate, what that will do is make you less competitive vis-a-vis other regions of the country.”
Fifteen years ago, the New England states were mired in depression, the result of a dated industrial base. But they have spent the past six years in the nation’s top 10 in real wage growth, Walls said, an enviable--or unenviable--position, depending on whether you are a worker or an employer.
Hard to Find Workers
“The local population is richer as a consequence,” he said. “However, the cost of doing business relative to other regions of the country is going up, which means that New England is less competitive today than it was six years ago.”
The labor market is so tight that in the affluent Stamford area, several McDonald’s restaurants have been busing in workers from the Bronx since 1983 in an effort to fill job openings. Stamford’s unemployment rate has ranged from 2.9% to 2.0% in the last two years.
In the so-called “research triangle” area of Raleigh and Durham, the unemployment rate has ranged from a high of 3.7% to a low of 2.6% for the past two and a half years. In June, the rate was 2.9%.
“When you have an unemployment rate of 2.9%, you know it’s difficult finding all kinds of labor, skilled labor, unskilled labor,” said G. Donald Jud, chairman of the department of finance at the University of North Carolina, Greensboro. “The firms in the research triangle complain that it’s hard to keep people. It’s so easy for people to move to an upper-level job--quit one job Friday, walk across the street, increase their salary by 10% on Monday morning.”
Edward W. Back Jr. is executive vice president of CCB Financial Corp., which operates 70 bank branches, most of them in the research triangle. To Back, the low unemployment rate is a mixed blessing.
“It’s a way of life,” Back said. “We’re happy for the economic growth. But we have turnover, we’re always looking for people, and we have jobs that take a long time to fill.”
While Orange County is a relative newcomer to the world of high employment, it is rapidly learning the lessons of its partners in plenty.
In the past five years, a steady stream of low-technology manufacturing companies has trickled out of Orange County and into the nearby Inland Empire or further south to Mexico. In addition to escalating real estate costs, the local labor shortage is to blame. A recent Times survey of Orange County executives showed the tight labor supply was considered one of the worst features of doing business in the county and a major reason for relocating.
Service Industry Key
For the past eight years, the area has experienced a worsening labor shortage that reached new proportions in the past year, said Daniel A. Johnson, county labor analyst for the state Employment Development Department.
County unemployment has been 3.5% or less for the past 17 months; between December and May, unemployment was under 3% for four months, hitting an all-time county low of 2.5% in December.
The service industry constitutes the fastest-growing segment of the Orange County economy, and the pressure of full employment is especially felt in that sector’s lower-paying jobs. It is relatively easy for workers to find new opportunities at a higher wage.
“We’ve got shortages in clerical,” Johnson said. “We’ve got shortages in medical--technologists and registered nurses. . . . In services there’s quite a shortage--cleaning, janitorial, food service.”
For local employers, such an environment translates into a scramble--to get workers, to keep workers, to pay workers.
Even Mickey Mouse has had to hustle to hire an entourage for his Magic Kingdom. Disneyland has traditionally paid more than the hourly minimum wage--which recently rose from $3.35 to $4.25 in California--but even that has not been sufficient to attract enough workers.
The Anaheim amusement park unveiled a slew of new recruitment strategies for 1988, including a first-time job fair for 1,000 prospective employees, three mini-job fairs for 200 each and a booth at its annual graduation night parties for high school students. What it found is that the graduation party-goers were more interested in entertainment than employment.
“It (the graduation-night booth) was the first step to let them know there were jobs available,” said Bob Roth, Disneyland spokesman. “If they were interested, they could sign up. There were a lot of kids who stopped by; we had a few people who followed up.”
Many Openings
Sonfarrel Inc., an Anaheim machine shop that would like to employ 130 workers, is currently trying to fill between 10 and 20 openings. As a small, non-union metal-working and plastic injection-molding company, the firm can’t compete with wages and benefits offered by the large aerospace companies in the area.
In the past six months alone, chief manufacturing engineer Kenneth R. Woodward estimates that his company has lost at least a worker a week--even though it recently has increased its wage scale.
“We’re not having a lot of success,” said Woodward, who declined to comment on Sonfarrel’s wages. “We’re almost willing to pay whatever it’s going to take to get some of these people. . . . So many times, boy, they spend six months here, gain all this experience and then go out there somewhere else. It always seems to be money.”
In the past five years, wages for many of the county’s lower-paying jobs have crept up--more often than not at the bottom end of the scale, not the top, according to state statistics. In 1983, an Orange County janitor, for example, made between $3.35 and $10.95 per hour. By 1987, the range for such custodial work was between $6.06 and $10.85.
Circle K stores, which employ the overworked Bill Thomas, have found that in many cases increased wages do little to attract the necessary workers. Of the 75 Circle K markets in Orange County, the 30 in the southern part of the county are operating with skeleton staffs.
“It hurts everything,” said Don Aaker, human resources director for Circle K stores in the six Western states. “It hurts our sales, because our customer service is lacking. If you have someone working all night, the store won’t be as clean or as well run and the customer service is going to suffer.”
In an effort to attract workers in the hardest-pressed stores, the chain raised wages from minimum wage to $5.50 an hour. All stores are required to have a stack of applications on the checkout counter, and they all sport bold “Join the Circle K Team” signs. A radio advertisement to recruit new employees is in the works.
“If we offered $20 per hour, we would probably get some takers,” Aaker said.
But the face of full employment does not always resemble Orange County, Stamford or Raleigh-Durham. According to economist Donald Walls, a low unemployment rate can be the signal of a phenomenon very different from prosperity.
“Once economic opportunity leaves, so does the population, so you have what appears to be low unemployment rates,” Walls said. This accounts for the pockets of low unemployment in many Midwestern states.
Tiny McPherson County, Neb., is the only county in the country to have 0% unemployment, a feat it has managed to maintain from January, 1987, to date. But County Clerk Judy Dailey said that the situation in her home of Tryon (McPherson County’s only town) differs greatly from its urban full-employment counterparts.
Tryon boasts a filling station, a beauty salon called the Hair Cabin, two cafes--the Ranch Store and Cafe and the Lariat Cafe--a feed store that is open two days a week, a few farms, and a number of large family ranches. The high school has about 30 students and is losing population fast. Just like the town.
“In the last census we had 593 people,” Dailey said. “Next time it’ll be much fewer.” The number of workers population has shrunk from 297 in October 1986 to 217 in March, 1988, the last time statistics were available. But they all had jobs.
“When there aren’t any jobs, people leave,” Dailey said. “Ranching and farming are all we do. They have to go to other towns to find something else. It’s scary.”
COUNTY UNEMPLOYED: AN ENDANGERED SPECIES In Orange County, the signs of the times say “Help Wanted”--a result of the area’s low unemployment level. Despite two national recessions in the past 14 years, the county’s annual average jobless rate has never reached double digits, and the percentage plummeted to 3.3% in 1987. Wages are inching their way up here as employers find that they must pay more to attract workers.
HOW SALARIES CHANGED IN FOUR YEARS
Salary ranges for selected occupations in Orange County
JOB 1983 1987 Clerk/general $950-1,250/month $868-1,985 Cleaner/commercial, institutional $3.35-10.95/hour $6.06-10.85 General duty nurse $1,750-2,200/month $2,215-2,667 Cleaner/ housekeeper $3.50-4.50/hour $4.25-5.50 Security guard $4.50-12.00/hour $4.85-13.37 Receptionist $872-$1,080/month $998-1,142 Bank teller $700-1,200/month $970-1,675
Source: California Employment Development Department
