Job Openings in Orange County Exceed Workers

For 6 years, Orange County has been feasting on the fruits of a prolonged economic expansion: a booming economy, higher personal income and strong employment growth.

According to the Chapman College Center for Economic Research, the gross county product has climbed 50% since 1984 to an estimated $59.7 billion this year; personal income and retail sales have each jumped more than 60% since 1983, and more than 256,000 new jobs have been created in the county in just 5 years.

With this growth has come the penultimate sign of a healthy economy. The county’s jobless rate has fallen from 7.1% in 1983 to just 3.1% for the first 10 months of this year. According to economists, anything less than 4% represents “full employment” because of normal movement of workers within the labor pool.

But like the holiday reveler who fails to push back from the dinner table soon enough, it is possible to get too much of a good thing.

Bountiful employment, coupled with soaring housing prices and an escalating cost of living in the county, are producing a job shortage that threatens to upset the banquet.

At the high end of the job spectrum, positions go unfilled because employers cannot lure skilled people to an area that ranked as the nation’s most expensive housing market for 6 months this year.

At the other end, there is a proliferation of low-paying service jobs that many potential workers are reluctant to take because they cannot afford to live in the county on the wages being offered.

The first manifestation of too much work and too few workers is being felt by employers who need clerical employees, technicians and professionals in high-technology and medical-technology industries, as well as by those seeking skilled mechanics, nurses and top management people.

Cases in point:

- A growing number of county technology companies are raiding competitors to lure skilled and professional workers, in part to avoid the need to offer housing aid to prospective candidates from other parts of the country.

- Hospitals throughout the county are complaining about nursing shortages, and some are even recruiting overseas nurses. Midwood Community Hospital in Stanton, for example, hired several Irish nurses this year.

- Allstate Insurance Co.’s regional operations center in Brea last month sent a direct-mail appeal to insurance customers, asking them to help the company find qualified clerical workers.

- James R. Lizzio, founder and president of Storage Concepts Inc., an Irvine computer peripherals makers, tells of publishing ads for highly paid engineers and failing to draw a single response.

Pressure on Wages

Following close behind a worker shortage, UC Irvine economics professor David Lilien said, is “upward pressure on wages, particularly wages for trained workers, and greater transportation congestion as businesses are forced to draw labor from outlying areas.”

Unlike other high-employment areas in the nation, such as the Raleigh-Durham-Chapel Hill research triangle in North Carolina, Orange County is not luring people from high-unemployment areas of the country.

With the median-priced resale home fetching about $227,000 and the median-priced new home going for $314,000, the county is not an inviting place for out-of-work job seekers to come calling cold, said Virginia McDermott, vice president of U.S. and Puerto Rico operations for Allergan Inc. in Irvine.

Sky-high housing prices restrain the size of the labor pool and contribute to the worker shortage here, she said.

James Doti, acting president of Chapman College in Orange, said the same economic forces responsible for the county’s low unemployment rate are forcing traditional blue-collar manufacturing out of the county.

Many workers simply can’t afford to live in the county on the wages that many manufacturers are willing to pay; companies cannot remain competitive if they raise pay enough to attract a stable work force, managers say.

As blue-collar workers leave the county for more affordable areas of the country, their traditional employers gradually follow.

In many cases, workers who lose jobs as their old employers move out often don’t have the training and advanced skills needed to fill positions that are going begging in newer industries, said Daniel Johnson, the state Employment Development Department’s labor market analyst for the county.

In addition, the abandoned workers tend to be unwilling to take the low-paying service and production jobs. The average hourly pay for the 90,854 jobs advertised at state employment agency offices in Orange County for the 12 months ending June 30 was $5.36 an hour, or $11,149 a year. That’s slightly less than the official poverty level of $11,650 for a family of four in California.

Workers Loss Jobs

About 825 employees, predominantly production workers, were laid off in October when Xidex Corp. closed its computer-disk manufacturing plant in Irvine. Two months later, a state survey of 125 former Xidex workers found that only about 25% had found new jobs.

Those workers and others like them are caught in the gap as manufacturing employment in the county rapidly shifts from unskilled and semiskilled production to more technical work in electronics assembly and processing medical products, McDermott said.

One result is that colleges and universities in the county are being asked to train people with the new skills needed to support both the technology-manufacturing portion and the fast-growing service and trade sector of the county’s economy.

Another result is that worker shortages will persist until the training and retraining processes catch up with the county’s explosive economic growth of the last decade.

In the meantime, McDermott said that “if companies can’t hire the kind of people they need, then it will limit the kinds of companies that are willing to move into the county, and that can hurt the tax base.”

Employee shortages can also cause costly, sometimes fatal, setbacks in a company’s growth, McDermott said.

She said some management and technical positions at Allergan remain open for as long as 6 months because qualified people are so difficult to find.

The lengthy delays can often slow down development of new products, she said.

Lizzio, president of Storage Concepts, knows all about that.

His 4-year-old company is poised for explosive growth, he said, and Lizzio is worried that difficulties he has had hiring engineers and other technical people in the last year are indications of even bigger problems ahead.

The company, which makes large disk-storage systems for major computer installations, expects to double its sales next year to about $9 million and will add about 24 people--mainly professionals and administrators--to do it.

‘Zero Response’

But Lizzio said it is not unusual for the company to run an ad seeking an engineer or other technical worker and “get absolutely zero response: They’re all already employed.”

He said he has also had problems finding qualified clerical people, even when using professional employment agencies.

The general recourse, he said, is to raid the competition by putting out word through his employees that Storage Concepts is ready and willing to offer better wages than other firms.

Networking, he said, is a common employee recruitment technique throughout the county’s electronics industry. While he sometimes benefits from the practice, he said, “I have to worry about losing people I already have.”

The employee shortage requires Lizzio to plan his work force needs far in advance, and he must often wait longer than he wants to find someone to fill an opening.

“Hiring holes can cause severe problems by slowing us down,” he said. “Sometimes we can find an outside consultant to get a project started, but when we can’t, we have to delay the start of development of a new product or program, and that can be very costly.”

Technology changes rapidly in the computer data storage field. “If you are not ready with your products to take advantage of those narrow windows of opportunity, you start losing your customers, because someone else will be there,” he said.

The situation is also costly, Lizzio said, because “all the engineers know there is a shortage, and they hold out for the best wages they can get.”

If the county’s low unemployment rate were the norm nationally, economist Doti said, “it would be a calamity” because of the corresponding inflation.

“A low unemployment rate simply means that demand for workers is outstripping supply, and that causes a wage-price spiral that leads to inflation,” he said.

It is less likely to cause widespread inflation when confined to a limited geographical area such as Orange County, he said.

Smaller Businesses Hurt

But even at the local level, wage inflation takes its toll. “One thing that happens is that it hurts smaller businesses,” said Johnson, the state Employment Development Department’s labor market analyst. “They can’t compete with what the big employers can pay for top-quality help.”

That has also been the case in North Carolina, said Michael I. Luger, associate professor of city and regional planning at the University of North Carolina at Chapel Hill.

Traditionally low wages have begun spiraling upward, not only in the research triangle, but in outlying areas where some companies originally moved to escape the wage pressures of the high-technology center, he said.

To help avoid the worker shortages that cause these kinds of problems, Orange County’s community college system is getting involved in a big way in training new workers and retraining others.

For 2 years, these colleges have been operating under a state mandate to make job and vocational training a priority second only to preparing students for transfer to 4-year colleges and universities.

More than 60% of the 33,000 full-time and part-time students at Rancho Santiago Community College District campuses are enrolled in job or vocational training programs, said George Osborne, dean of occupational education and special projects.

Classes Tailored

And besides traditional occupational courses covering broad areas such as welding, drafting, practical nursing and bookkeeping, the district works closely with employers to tailor classes to a specific firm’s needs, Osborne said.

One way to do that is through contract programs, in which a special course is developed for a company’s workers, with the costs paid by the employer.

Rancho Santiago is working on a major program with four other Southland community colleges, Osborne said, to prepare courses to train industrial construction workers to fill a specific need at Fluor Daniel, the construction arm of Irvine-based Fluor Corp.

“We were contacted by them,” Osborne said. “They are one of the largest industrial construction contractors in the world and are having severe labor shortages, particularly in the craft trades, like electricity, general construction and welding.”

Fluor Daniel, he said, “is looking to recruit employees in very large numbers in that band of occupations, and while it has done its own training in other parts of the country, it decided that the community colleges in California were ready and willing to do it.”

But until the new training and retaining programs build up speed, or provisions are made for less costly housing in the county, the worker shortages will continue, according to the specialists.

The saving grace, UCI professor Lilien said, is that rising wages, low unemployment and appreciating housing prices are all signs of a healthy economy.

“And while not everything that goes with it is good, we should be pleased, overall, with the economic situation in the county,” he said.