State caught in avalanche of job losses
Unemployment in California shot up to its highest level in nearly 26 years in January, leaving more than 1 in 10 workers without a job.
Figures released Friday show that 79,300 jobs were lost in the state last month, bringing the total number of unemployed to 1,863,000, or 10.1% of the workforce. That’s the highest since the rate touched 10.4% in 1983.
Conditions are even worse in Los Angeles County, which saw its unemployment rate jump to 10.5% in January from 9.2% the month before.
The deep job losses follow a sharp drop in the gross domestic product -- the value of all goods and services produced -- in the waning months of 2008. Nationwide, GDP shrank at an annual rate of 6.2% in the fourth quarter, the Commerce Department said Friday. That was far worse than the 3.8% drop the agency had estimated, and the biggest decrease since 1982.
Paul Policarpio knew it was only a matter of time before he would be laid off.
In his final months as a sales associate at a Nordstrom store in Canoga Park he spent most of his time straightening out the piles of unsold clothes. A couple of weeks ago, the ax fell.
Policarpio’s experience has been repeated across L.A. County, where retail jobs have taken the hardest hit in an ever-growing wave of layoffs and downsizing.
The outlook for Southern California is considerably worse than the national forecast presented by President Obama’s budget team this week because the economy here -- usually considered resilient because of its diversity -- relies on sectors battered by this particular recession, said economist Jack Kyser of the Los Angeles County Economic Development Corp.
L.A. County alone, his group projects, will lose 89,000 jobs in 2009, and Kyser suggested the unemployment rate could surpass 10.5% for the year. In the Inland Empire, the group predicts the unemployment rate will rise to 11.1%, while Orange County, which lost 41,400 jobs last year, is projected to see unemployment climb to 7.3%, the highest rate in 16 years. January figures for those counties will be released next month.
Los Angeles County lost a net 41,900 jobs last year and nearly all of them -- about 41,000 -- were in retail, manufacturing and construction, in that order. In January, retail shed 15,100 jobs, manufacturing lost 6,800, and construction, 4,800. The three sectors were caught in the collapse of the housing boom and recession.
To make matters worse, another key California industry -- the film business -- lost 22,300 jobs in January, leading L.A. County layoffs for the month.
Sally Wang found out she was losing her job the day she returned from a New Year’s vacation.
The mother of one managed a high-end women’s clothing showroom in the garment district in downtown Los Angeles selling wholesale to department stores such as Barneys and Neiman Marcus. She said 2008 started poorly and got progressively worse.
“First, very few people were coming in,” Wang, 36, said. “Buyers stopped traveling so they asked us to send pictures. Then people wanted to return stuff because it wasn’t selling. And then they started canceling orders.”
Wang agreed to a $25,000 cut from her $80,000 salary before the winter holidays. But that wasn’t enough to save her job. She was fired after four years with the company.
“It doesn’t look like I’ll be able to get a job in the same industry for the same salary,” said Wang, who is concerned she’ll have to scrap her plans to enroll her 5-year-old daughter in private school. “The only things available are very skilled jobs where you need lots of experience or $10-an-hour jobs.”
Hollywood studios and television networks have been slashing payrolls as financing and revenue ebb. Although box-office sales are up 23% for the first few weeks of the year, other parts of the entertainment business, such as DVD sales, have been struggling.
Warner Bros. announced last month it would eliminate 800 jobs. Other entertainment heavyweights, including Viacom Inc., video game giant Electronic Arts Inc. and Hollywood’s largest independent studio, Lionsgate, have also downsized.
Economic pressures have forced studios to scale back the number of films they are shooting, further eroding the number of available jobs.
With more competition in the job market, the chances of finding employment declines.
Anthony Azucar was laid off twice last year and has spent the last six months looking for work.
The former printing press technician has sent out dozens of resumes, applying for jobs far afield from his trade such as customer service call center representative and office assistant. Desperate to help support his wife and 10-year-old daughter, he’s willing to accept a fraction of his former pay, but still hasn’t received any offers.
“It’s overwhelming,” Azucar, 52, said. “I feel like there’s too much competition. And you don’t see any improvement in the near future. That’s what it boils down to.”
Economists say that, even if the economy begins to improve later this year, employment will lag behind.
“There will be more pain to come,” said Jerry Nickelsburg, a senior economist for the UCLA Anderson Forecast. “Typically, when it comes to unemployment, it continues to decline even after we reach the bottom of the recession. And we’re still not there.”
Nickelsburg expects consumer spending to rebound slightly in the second half of the year, spurring some economic growth. But the unemployment rate may not begin to recede until months later.
“Businesses have to be convinced we’re out of the recession before they start hiring,” said Lisa Grobar, a Cal State Long Beach economist.
Grobar said unemployment rates tend to lag six to 12 months behind GDP growth, and companies climbing out of a recession usually hire temporary workers first. Only when they’re confident they’re entering a sustained growth period will they hire for the long term.
Though December 2007 was declared the national recession’s starting point, unemployment in L.A. County started gaining momentum in the spring of 2008 in concert with the crumbling housing sector.
Building contracts dried up and project engineers like Casey Lorenzen were suddenly forced out of their jobs.
“We were the first to get hit,” said Lorenzen, who learned he was being fired in April at a job site in Lancaster. “I wasn’t exactly blindsided. I’d been reading every day about how the economy was souring. I could see everyone was struggling and beginning to downsize.”
He lost his job two weeks before he was married. The celebration went as planned with 200 guests, but after the honeymoon, his bride had to take on two jobs while Lorenzen struggled to find work. He’s since landed some handyman assignments -- building a fence, plumbing, remodeling an apartment.
Looking for employment with a construction company was a dead end. In 2008, the industry lost 8,600 jobs in L.A. County, the third-largest loss of any sector.
“It’s been really tough getting by,” said Lorenzen, 29, of Granada Hills. “My few friends in the industry tell me there just isn’t any work.”
The problem would spread. With the collapse of the housing market, consumer spending declined.
Retail sales plummeted and, in a mad dash by businesses to stay afloat, 19,300 jobs were eliminated in L.A. County, the most of any industry last year.
The worst of the losses may be past for retail, but that doesn’t mean companies will be staffing up any time soon, said Richard Giss, a partner in accounting firm Deloitte & Touch’s consumer business division in Los Angeles. Many jobs -- such as those lost in the liquidation of Mervyns and Circuit City -- are never coming back, he said.
“The name of the game for retail is survival, not growth,” Giss said. “It means conserving resources.”
If those selling goods are having a hard time staying employed, so are the people who make the goods. Manufacturing took the second-largest hit of any sector in 2008, shedding 13,100 jobs.
The losses were felt across the board, by metal workers, furniture makers and aerospace manufacturers alike. Boeing Co. in Long Beach eliminated at least 68 positions last year, with more expected in 2009. The airplane manufacturer said it would cut 10,000 jobs, or 6% of its total workforce.
The losses continued in the new year when Superior Industries International, which makes aluminum wheels for the auto industry, announced Jan. 13 it would close its Van Nuys plant. The move eliminates 290 jobs and is expected to save the company $16.5 million a year in labor costs.
While dwindling consumer demand contributed to many of the layoffs, additional manufacturing jobs were lost to outsourcing and to new technology that reduces the need for workers. There are 29% fewer workers in manufacturing in L.A. County today than there were in 2000.
The opposite is happening in healthcare, which added 8,400 workers last year as providers expanded to accommodate the graying baby boomer generation, experts say.
That’s not lost on Resty Tiangco, 35, who was laid off from a car dealership in Santa Monica on Feb. 17. After 15 years in the industry as an auto technician, the father of three is thinking about going to nursing school.
“After looking online and seeing there’s no work out there, I realized I should probably change fields and go to school,” he said. “But maybe I need to take any job I can find. I have kids to worry about.”
Times staff writers Marc Lifsher, Jim Puzzanghera and Richard Verrier contributed to this report.