These Trying Times : Job Security Evaporates as Economic Ripple Effect Hits Home
When Hae Hirdler, 33, decided to become a software engineer, she expected one of her career’s primary benefits to be job security. She found out differently.
Laid off on May 1 after two years on the job, the Rancho Palos Verdes resident found herself thrust into a strange new world of unemployment lines and precarious finances. After spending a bewildering afternoon in a Torrance unemployment office trying to apply for state benefits, Hirdler said her faith in the security of high-technology work has been permanently shaken.
“I thought I was secure. . . . When I first graduated, I thought I’d have this job security until I retire,” she said, “but that seems like it’s a fantasy now.”
It is a fantasy that thousands of South Bay residents have been forced to abandon in recent months.
The South Bay’s mainstay aerospace industry, its defense contracts drying up and commercial work in short supply, has been laying off employees at a rapid clip. In the last two years, major aerospace companies have reported cutting at least 12,210 positions in the South Bay. And just last week, Northrop announced it would eliminate 1,000 more jobs by the end of the year, most of them at the company’s El Segundo and Hawthorne facilities.
The ripple effect of that industry’s distress, combined with problems in other industries, has brought the recession home hard to many South Bay households.
Employees of aerospace subcontractors and suppliers, suddenly left with too little work, have seen their hours--and sometimes their jobs--cut. Manufacturing companies, struggling to stay afloat as new orders shrink nationwide, also have been forced to lay off personnel. Workers at office supply companies in turn have seen their jobs disappear as new business dries up and anxious clients delay ordering new goods. The restaurants, department stores and clothing shops that rely on those workers’ paychecks in turn have felt the pinch.
Hiring freezes have become a standard in many industries. Job openings often attract dozens, sometimes hundreds, more applications than they would have before the recession hit. Hirdler said she was stunned to learn that more than 300 other applicants were competing for four software engineering positions she noticed in a classified ad.
Although the South Bay’s 5.5% overall unemployment rate is lower than the county’s 7.4% figure, this area’s working-class communities have been especially hard-hit. In Inglewood, unemployment has increased from 4.9% two years ago to 8.2% now. Carson has seen its rate increase from 4.2% to 7%. City officials say those communities have been hit by both aerospace layoffs and cutbacks among light manufacturing businesses in their areas. In Lawndale, home to many aerospace workers, the rate has jumped from 4.4% to 7.3%
Struggling to make ends meet, more and more South Bay families are turning for help to the county’s welfare system. In the South Bay alone, the number of people on general relief jumped 28% between 1989 and 1990, compared to a countywide increase of 15%.
“The recession is a big chunk of that, obviously,” said Paul Fast, research director for the Department of Public Social Services. “A few major layoffs alone can account for some big increases.”
At His House, a food and clothing distribution center in Torrance, requests for help have been increasing slowly since the start of the Persian Gulf War, director Geraldene York said, and are beginning to accelerate as laid-off workers find their unemployment benefits running out.
During the first week of May, she said, “we had about 50 more people than our usual 400 or so. We’re seeing a little more (emotional) depression now, more people wondering when or if it’s going to change, when or if they’re going to get on their feet again.”
Even those who still have work are cutting back on expenses.
Banks report that applications for used-car loans have risen nearly 60% in some areas, while requests for new-car loans have fallen at roughly the same rate.
“When things are going well and everybody has money, you get the new car and you don’t worry too much about it,” said Jim Davis, president of Bay Cities National Bank in Redondo Beach. “But now the husband and wife who are both working are thinking, ‘Gee, maybe both of us won’t be soon’ and they’re . . . more conservative right now. They’re hanging onto their money and they’re not buying new cars.”
The recession also has deflated the South Bay’s once-soaring real estate market, leaving a few skittish buyers to make offers on the area’s burgeoning stock of available homes.
In addition, landlords of South Bay commercial buildings now must contend with the county’s highest office vacancy rate. As empty aerospace buildings flood the local market with sublease space, landlords are slashing their rents to attract tenants.
After almost a decade of phenomenal growth, the Port of Los Angeles has also seen its growth dramatically slowed by the recession.
According to port spokesman Chuck Ellis, the port has increased trade at only 3% to 4% recently, compared to the 10% recorded annually from 1983 through 1989. That decline, he said, has been felt in imports, most notably automobiles.
Still, Ellis said, the flattening out of business at the port must be measured against its still-huge volume of trade--about $55 billion this past year. And, he said, port officials expect the effects of the recession to be offset eventually by the region’s continued growth.
“Because we are a port of entry . . . we believe (the recession) will at worst have only a temporary effect on us and that we will have a flat year rather than a disastrous year,” he said.
Experts believe the South Bay’s diverse economy--which includes light manufacturing, a large service sector and several national headquarters for large companies--has protected it from being hit even harder than it has.
The South Bay’s economic observers say they think the area will soon pull out of its slide.
“We’re betting on the turn by August or September,” said Rod Freed, a professor of economics at Cal State Dominguez Hills, who has been studying the South Bay’s economic patterns for nearly three years. “Inventories are dropping nationwide, and that will stimulate demand for goods manufactured in the South Bay . . . and that should get things started.”
Freed said he believes much of the recession’s impacts in the South Bay can be traced to cautious spending by people who otherwise have not been directly affected by the downturn.
“People’s expectations will tend to rebound,” he said. “The more confident people are, the more they spend; and the more they spend, the more firms have to produce; and the more they produce, the more people they have to employ and the more money those people have to spend.”
Until the turnaround comes, however, the South Bay will continue to feel the recession in several areas:
Times staff writers Gerald Faris, Shawn Hubler, Deborah Schoch and Tim Waters contributed to this story.
Stagnant home sales, growing welfare rolls, slumping sales tax receipts and burgeoning unemployment all indicate that the national recession has come home to the South Bay. As the area’s aerospace and manufacturing sectors lay off employees, residents have less money to spend. Their decreased spending eats into sales tax revenues that many cities rely on to
make ends meet. For some families, savings disappear, forcing them to turn for help to welfare programs. Meanwhile, real estate sales falter as anxious buyers wait to see what may happen to their income before making a commitment to a large mortgage. Today we begin an occasional series about the recession’s impact on the South Bay.
Spending
Sales tax revenue returned by the state to South Bay cities decreased 3.5% in the fourth quarter of 1990 compared to the same quarter of 1989. Because the revenue is derived directly from retail sales, the lower figures indicate that consumers spent less during that period. The State Board of Equalization returns 1% of the sales tax revenue collected in each city to that city’s government. Oct.-Dec. ‘89: $21,006,209 Oct.-Dec. ‘90: $20,258,254 % change: -3.5 Source: Hinderliter, de Llamas & Associates
Employment
The unemployment rate in the South Bay increased by about 2 percentage points between February, 1989, and February, 1991, due in part to problems in the aerospace industry. However, the rate is still below the countywide rate of 7.4%. Unemployment Rate ‘89: 3.2% ‘91: 5.5% Employed ‘89: 365,625 ‘91: 380,885 Unemployed ‘89: 12,352 ‘91: 22,100 Source: California Employment Development Department, Employment Data and Research Division
Public Assistance
As unemployment increased, so did the number of people seeking government help to make ends meet. The South Bay saw increases in the number of people receiving Aid to Families with Dependent Children, General Relief and Food Stamps. AFDC ‘89: 24,316 ‘90: 29,919 General Relief ‘89: 1,476 ‘90: 1,891 Food Stamps ‘89: 3,027 ‘90: 3,551 Source: L.A. County Department of Public Social Services
Home Sales
Nervousness about the economy stalled home sales, with the number of homes sold dropping. A comparison of first quarter 1990 and 1991 sales shows that prices dipped, as well. Qtr Median Price ‘90: $305,810 ‘91: $272,290 1st Qtr Sold ‘90: 1,599 ‘91: 1,256 Source: Dataquick Information Systems
