Job Loss in State Worst in a Decade
California’s deepening economic slowdown led to the loss of 53,400 jobs last month, the steepest drop in nearly a decade, state officials reported Friday. Economists said it was the strongest evidence yet that California has followed the nation into recession.
The jobs decline, which analysts attributed largely to the retrenchment in high-tech industries and a travel slump worsened by the Sept. 11 terrorist attacks, helped push up California’s unemployment rate to 6%. The jobless level, up from a revised 5.8% in October, is the state’s highest in more than three years.
The latest job figures suggest, however, that Southern California continues to be spared the worst of the economic damage. In fact, last month the region showed surprising signs of stability: In Los Angeles County, the jobless rate declined to 6% in November, down from 6.1% in October. Orange County’s unemployment edged down to 3.4%, from 3.5% the month before.
In contrast, Silicon Valley and other technology-dependent parts of Northern California are suffering the brunt of what appears to be California’s first recession in eight years.
“The Bay Area is the real driver behind the increase” in job losses, said Michael S. Bernick, director of the California Employment Development Department, which released the employment report.
Ross C. DeVol, director of regional studies for the Santa Monica-based Milken Institute, noted that “up to this point California had weathered the downturn better than the rest of the U.S., despite our concentration in high-technology.” But now, DeVol said, it appears as though California will suffer about as much as the rest of the nation through the downturn, which he predicted will last until spring.
As reported a week ago, the national economy lost 331,000 jobs in November, driving the U.S. jobless rate up to 5.7%, from 5.4% in October. The nation has lost about 1,164,000 jobs over the last three months, while California’s employment has fallen by about 89,800 over the same period.
Although technology industries are stumbling nationwide--contributing to a national recession that officially began in March--the impact has been particularly severe in the Bay Area.
Santa Clara County, home of such Silicon Valley behemoths as Cisco Systems and Intel Corp., provides the most dramatic example of the region’s reversal of fortune. In November 2000, unemployment in the county southeast of San Francisco stood at just 1.5%. Last month it hit 6.6%, and some industry watchers worry that more layoffs are ahead.
“This downturn isn’t over,” warned Carl Guardino, president of the Silicon Valley Manufacturing Group, a trade organization that represents 190 high-tech employers in the Bay Area. “It’s going to continue to be a very tough environment for the next few months.”
In addition, Bay Area hotels and restaurants, like those around the nation, are suffering from a steep decline in tourism stemming from the Sept. 11 attacks. San Francisco, which is heavily dependent on air travelers and big-spending foreign visitors, filled just 61.8% of its rooms in October compared to 87.9% occupancy the same month a year ago, according to the most recent survey by the hospitality consulting firm PKF Consulting.
Travel-related industries, and workers in those fields, have suffered in Southern California too.
Tourism officials project that Los Angeles County alone will see a $2-billion drop in travel-related spending between Sept. 11 and June 2002. That has prompted a wave of layoffs at area hotels, restaurants and Los Angeles International Airport.
On Sept. 11, Inglewood resident Dawn Sitahal was looking forward to celebrating her one-year anniversary as a customer service agent with United Airlines at LAX.
“I planned on having that job the rest of my life,” said Sitahal, a native of Trinidad. “I absolutely loved working there.”
But like thousands of other airlines workers, Sitahal got a pink slip shortly after the terrorist attacks grounded the nation’s carriers, hitting them with staggering losses.
These days the 49-year-old spends her days hunting for work. She figures she has sent out at least 150 resumes, yielding only three interviews and no job. Used to landing work within days, she’s finding the competition fierce. She recently applied for a customer service job with an insurance company and counted at least 20 other applicants taking the screening test.
Job hunters also have flocked to the Employment Development Department offices around the state, and they represent a broad cross-section of the labor force, Bernick said. “It’s not just laid-off hospitality workers and retail workers,” he said. “We’re also seeing a good number of executives, managers and professionals. . . . It has become a much tougher economy for those folks too.”
Last month’s statewide employment numbers tell much of the story. The slowdown in high-tech production contributed to the loss of 9,200 jobs in manufacturing. Over the past year, the state’s manufacturing slump has slashed employment in that sector by 88,300.
Last month, though, various other segments of the economy showed substantial weakness too. The transportation and utilities category was down 9,800, largely because of job losses at the airlines. Construction was down 8,700.
In addition, the broad services sector, normally a fount of new employment that includes everything from software consultants to advertising agencies to hotels--lost 15,900 jobs.
And even though retailers hired workers for the holiday shopping season, they didn’t add as many as they usually do.
“They’re keeping costs to a minimum in anticipation of a lackluster holiday, “ said Richard Giss, a retail consultant with Deloitte & Touche in Los Angeles. “In recent years retailers couldn’t find enough holiday help. This year, there were plenty of high-quality people looking for jobs, but the jobs weren’t there.”
Unemployment went up among all three of the ethnic groups tracked by the state. Among blacks, the rate climbed to 8.5% in November, up from 8.2% in October and from 7.6% in November, 2000. Among Latinos, the jobless level rose to 7%, up from 6.9% the month before and from 6.4% a year earlier. Among whites, unemployment was 4.9% last month, up from 4.8% in October but equal to the level of November, 2000.
California’s unemployment rate is now at its highest level since September 1998, when it also stood at 6%. The state’s job loss in November was the biggest since January 1992, when employment fell by 56,200 jobs amid the state’s big downturn in such industries as aerospace, real estate and banking.
Most forecasters remain hopeful that the nation’s low interest rates and the general health of the state’s real estate industry, among other factors, will enable California to avoid a recession like the early ‘90s.
For now, though, the slowdown has brought a sharp decline in tax revenues that threatens the budgets of communities statewide.
