California job market is rebounding, but unevenly
California employers are hiring again, swelling payrolls by nearly 29,000 positions in June and allowing the state to outpace the nation in job growth as its start-and-stop recovery appears to have gotten back on track.
The state has added 110,000 jobs in the first half of the year, compared with just 83,000 positions for all of 2010.
Still, it’s an uneven recovery, with growth concentrated in affluent areas such as Silicon Valley and in high-paying fields such as professional services. Blue-collar trades such as construction and trucking continued to shed workers.
The divide suggests that as the recovery progresses, two economies are developing within California: one for more highly educated workers living on the coast, and one for inland workers with less schooling.
“Silicon Valley is not far from the San Joaquin Valley, but in economic terms, it may as well be on the other side of the ocean,” said Jeffrey Michael, director of the Business Forecasting Center at the University of the Pacific in Stockton. “The tech industry just does not spill over here.”
California added a total of 28,800 net jobs in June, the state Employment Development Department reported Friday, compared with a loss of a revised 21,100 jobs in May. The unemployment rate rose slightly, to 11.8%, from an adjusted 11.7% in May, as more formerly self-employed workers declared themselves out of work.
The San Francisco statistical area, which includes Marin, San Francisco and San Mateo counties, added 4,800 jobs in June.
Silicon Valley did even better, with Santa Clara and San Benito counties adding a combined 8,300 jobs. A tech boom is lighting up the area, where venture capitalists are pouring money into start-ups, office rents are rising and more new cars are popping up in employee parking lots.
In stark contrast, the Inland Empire, which includes Riverside and San Bernardino counties, lost 3,000 jobs in June. Fresno County alone shed 2,000. The signs are evident in the half-finished housing developments that dot the inland areas, and in the stores and businesses that are continuing to close, even as the recovery continues.
“I’m going out of business. It’s the economy. I don’t even break even,” said Jim Larson, who recently closed his collectibles store in Northern California’s Lake County, where the unemployment rate is a woeful 17.3%.
Pain is spread through inland areas up and down the state: Fresno’s St. Agnes Medical Center announced in June that it would cut 150 of about 2,800 positions, citing “a weakened economy and declining reimbursement.” Salinas-based Ramco Enterprises, which does staffing for food processing companies, said it plans to eliminate 357 jobs, according to a WARN Act notice, which requires businesses to give notice of large-scale layoffs.
But few places are harder hit than Southern California’s Inland Empire, which can’t seem to catch a break. The region encompassing Riverside and San Bernardino counties has jettisoned 11,400 jobs since June 2010; the state has added 156,800 over the same time period. Unemployment rates in many of its cities top 20%.
The region suffers from a falloff in construction, from sporadic trade activity and from cuts in the government sector, which is a big employer there.
Some Riverside County communities, including Beaumont and Murrieta, have seen the number of vacant units double from 2000 to 2010, according to census data.
Depressed housing values and tepid demand means that many of those homes could remain vacant for years, said Jerry Nickelsburg, a senior economist with the UCLA Anderson Forecast.
“It’s going to take awhile for the population to grow, to fill up all those homes and boost home prices to the point where it pays to build again,” he said. “The building that you’re seeing is multifamily housing in coastal communities.”
Nickelsburg released a forecast last month suggesting that rising fuel prices will encourage people to live in multifamily homes on the coast, abandoning exurbs further inland. Construction employment won’t return to pre-recession levels until 2021, he predicted.
In San Bernardino County, the volume of home sales dropped 18.3% from last June, and in Riverside the volume of sales fell 14.7%, according to DataQuick.
Job losses cut across almost all sectors in the Inland Empire. Leisure and hospitality shed 3,200 jobs in June, and educational and health services declined by 1,300 positions. Financial activities accounted for 1,000 job losses.
The region has shed 3,900 construction jobs over the year and has lost 75,100 construction jobs from peak employment in June 2006.
The miserable job picture is driving some people, such as Jeffrey Lord, to the coast. Lord, a laid-off Verizon Wireless sales rep, moved from Coachella, where the unemployment rate is 20.7%, to Los Angeles to seek work. So far, he hasn’t had any luck.
“Finding a job is a job,” said Lord, a Marine Corps veteran. “You have to smile and laugh and exercise to stay focused.”
Lord may be having trouble because steady work is sparse for people without college degrees, another factor hurting the inland areas. During the construction boom, there were plenty of jobs for less-educated workers, especially in inland areas where houses were being built. Those jobs and low home prices drew people to the area, but now those positions have disappeared.
“We’re more dependent on blue-collar job creation,” said John Husing, a research economist who is an expert on the Inland Empire. “The Central Valley is a blue-collar area, and you’ve got it here too.”
He estimates that nearly half of the adult population of the Inland Empire has not taken a single college class. In the Bay Area, by contrast, 42% of the adult population has a college degree or higher, he said.
Statewide, the construction sector lost 1,100 jobs in June, while trade, transportation and utilities shed 11,000. Meanwhile, professional and business services — typically high-paying jobs that include lawyers, accountants and consultants — added 16,400 positions. That sector has also gained the most jobs over the year: 66,300.
The June unemployment rate in Los Angeles County increased to 12% from a revised 11.9% in May. The county lost 9,500 jobs, led by cuts in educational and health services and trade, transportation and utilities. Orange County added 2,900 jobs in June, but its unemployment rate rose to 9.2% from a revised 8.5% in May (those numbers are not seasonally adjusted).
While the state’s overall job growth is short of what economists say is needed for a full-bore recovery, it contrasts favorably with the latest national labor report, which found that employers added just 18,800 jobs in May, thanks in part to large losses in states such as Tennessee and Missouri.
“We’ve got miles to go here before we start feeling like we have a normal economy,” said Robert Dye, chief economist at Comerica Bank. “Many lingering after-effects of the recession continue to impede growth, particularly in areas like California.”