Southern California Job Market : Essay : Thinking Small : As ‘traditional’ employers cut back, firms with nine or fewer workers have become the fastest-growing segment of the job market.
This seems to be a bad time to be looking for work in California. The economic news hasn’t been good, and those who are pounding the pavement hunting for a job may find the situation pretty grim.
According to the latest forecast by UCLA’s economists, the state unemployment rate will rise to as high as 7.3% in 1991 from 5.5% this year, well above the projected national rate of 6.8%. That would be the first time in several years that California will suffer worse unemployment than the nation as a whole. It’s likely to be worse in Southern California than in the north.
State industries such as construction, aerospace and high technology are beginning to slump, and the volume of help-wanted advertising, a sensitive measure of economic conditions, is sinking. David Hensley, UCLA’s top California economic forecaster, is expecting a recession next year. Some of his colleagues don’t go that far, but most expect very slow growth in the state at least until 1992.
Oh, my. That’s enough to give you a headache. Is the sun finally setting on the California economic boom of the 1980s? Should those who are hoping to land a good job in the Golden State just forget about it?
The superficial answer to both questions is probably yes. The state is in for some tough times over the next 12 months. If you go no further than the news headlines and the unemployment lines, you may end up feeling depressed.
But if you take a deeper look at the California economy, you’ll spot some amazing changes that have occurred over the last decade. Changes that should bolster the spirits of job-seekers during this difficult time.
A generation ago, people used to enumerate the principal industries of California on the fingers of one hand: aerospace/defense, tourism, agriculture, real estate/construction and services (which included everything from banking to fast food). If you want to know where most Californians work, look in those places, economic observers would say.
But if you are looking for work in California today, forget that advice.
The state’s biggest companies and “traditional employers” are, quite simply, less likely to provide opportunities for good jobs with career advancement potential than they did 20 years ago.
So where are you more likely to find those opportunities now? Think small.
The most intriguing economic trend of the 1980s was the explosive growth of small business in California. According to the state Employment Development Department, employers with nine or fewer employees were the fastest-growing segment of the job market in the past decade. Very tiny firms with three or fewer workers grew by more than 50% in the last five years.
Why did this happen? Mostly because Big Business has slimmed down. The global competitiveness of industry has forced American companies to watch expenses and keep payrolls lean.
In economic terms, companies have become less “vertically integrated.” That means they try to do fewer things themselves and rely instead on outside suppliers, independent contractors and consultants to do some of the things they used to do in-house. In other words, they’re contracting out instead of hiring their own employees to do a particular job. And, for a job-seeker in today’s market, that information should read like a Rosetta stone, translating the grim economic statistics of today into career opportunities.
A study done for the state Senate in 1987 estimated that the “contingent” work force (which includes temporary and part-time workers as well as those hired on contract to perform specific tasks) may make up as much as 25% of the state’s employment. But it noted that growth in such jobs has been so rapid that nobody really knows the true magnitude.
For some job-seekers, this trend may seem troublesome. Who wants to work for a dinky outfit, probably for lower pay and fewer benefits? And not much job security either.
It’s true that small business has traditionally paid less than jobs in big companies. But it’s also true that opportunities for advancement in small companies have usually been greater for those willing to work awhile for less money. In fact, that has never been truer than it is now.
Let’s try an example. You were hoping to get a job in sales and marketing at giant Widgets International, but it isn’t hiring and doesn’t expect to be hiring for months. Then you notice that Widgets International uses tiny WeDoIt Inc. for some marketing research work. You visit the offices of WeDoIt and are soon hired to work on the Widgets International account.
It may be that you won’t make as much money, at least initially, at WeDoIt, and it may also be that you’ll have less job security and perhaps fewer benefits than if you had been hired at Widgets International to do the same thing.
But the advantage you have is that WeDoIt offers more chances to advance, to perform different tasks. And, in the changed job market of the 1990s, you could end up with much more valuable experience that will be transferable to other job situations.
According to forecasts, the sector of the California economy that should keep generating new jobs--even if the state goes into a recession--is the service area, which some people believe represents dead-end careers in low-paying jobs.
But that isn’t accurate. The services sector is where many of the new small-business jobs are. Anyone who performs work for another business or another person is often listed in the “service” category. Many of those jobs now pay very well: Companies that contract out usually pay well for the work because doing it that way is still cheaper than hiring full-time employees to do the task.
That seems especially true in California, where economic change is often more rapid than in the nation as a whole.
Inscribed on California’s Rosetta stone of 1990 might be this career advice: Work at a variety of places and gain broad experience.
CALIFORNIA JOBS BY INDUSTRY, 1979-2000
Growth (in thousands) 1979 1986 2000 1979-88 1988-2000 Agriculture 338.6 360.6 364.0 22.0 3.4 Mining 39.3 42.3 44.0 3.0 1.7 Construction 448.7 607.0 729.7 158.3 122.7 Manufacturing 2,012.7 2,147.9 2,259.4 135.2 111.5 Transportation, Public Utilities 534.7 586.4 713.1 51.7 126.7 Trade 2,223.8 2,869.3 3,697.6 645.5 828.3 Financial, Insurance, Real Estate 595.9 812.8 1,020.8 216.9 208.0 Services 2,074.6 3,074.9 4,487.8 1,000.3 1,412.9 Government 1,735.0 1,934.5 2,337.4 199.5 402.9 Self-Employed 928.8 1,131.2 1,389.9 202.4 258.7 Total 10,932.1 13,566.9 17,043.7 2,634.8 3,476.8
BASIC SERVICES JOBS, 1988-2000
(Figures in thousands) 1988 2000 Wholesale Trade 719.7 891.2 Computer Services 97.0 171.9 R&D; Management Consulting 350.0 533.0 Film Production 72.1 83.5 Agriculture Services 65.2 89.7 Other 151.7 154.3 Total 1,455.7 1,923.6
Source: Center for the Continuing Study of the California Economy
