The future of Bay Area employment

Michael Bernick
Counsel with the international law firm of Duane Morris LLP, a Milken Institute Fellow and former Director of the California Employment Development Department

The latest numbers show unemployment in California at 12.2 percent, its highest level since World War II. Bay Area counties are only slightly lower, in the range of 9 to 12 percent, and way above their rates of around 5 percent in December 2007.

To be sure, since 1970 state unemployment has soared near or over double digits several times, and each time the economy came back. In the early 1980s, amid a downturn in heavy manufacturing, state unemployment reached 11 percent in February 1983, only to come back down to near 8 percent within a year. In 1993, with major cuts in defense and aerospace jobs, state unemployment reached 9.9 percent in January, but the figure came down to near 8 percent by November 1994.

During those recessions, unemployment seemed endless, but employer and consumer confidence returned, and hiring commenced in significant numbers.

The current California recession differs from those in the past in at least two major ways.

One is its severity. The 12.2 percent rate (affecting more than 2.2 million workers) is not only the highest, but it does not cover the roughly 1.3 percent of the California workforce (more than 200,000 workers) classified as discouraged workers or marginally attached or the roughly 5.8 percent (nearly 1 million workers) employed less than full time for economic reasons.

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SF Renaissance Job Center: 1982-Present

Michael Bernick
Counsel with the international law firm of Duane Morris LLP, a Milken Institute Fellow and former Director of the California Employment Development Department

In early 1982, I left a law firm and went to work full time on a fledging job training group in San Francisco, the San Francisco Renaissance Center. Renaissance had been started a few years earlier by labor leader Walter Johnson, then the head of Retail Clerks Union Local 1100, and he soon recruited Bill Russell-Shapiro, a prominent local businessman. Renaissance was a labor/business collaboration, aimed at innovative approaches to both job training and job creation

Over the next five years, Renaissance launched a series of job training programs, small businesses, and a Renaissance Entrepreneurship Center. The training programs were a mix of vocational programs (business machine repair, computer repair), literacy/job preparation for young women on welfare, and direct placement of older workers. The businesses, intended to generate jobs and work experience, totaled five at one time: carpet cleaning, cable assembly, business machine repair, messenger service, and a convenience store in the financial district. Renaissance spanned ethnic groups and ages. A photo of part of the Renaissance staff from 1985 is below.

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Post Labor Day 2009: The Jobs Lost Forever in California…And Those That Might Emerge

Michael Bernick
Counsel with the international law firm of Duane Morris LLP, a Milken Institute Fellow and former Director of the California Employment Development Department

I do employment commentary for several of our California radio and television stations, and this Labor Day 2009, the main story was the national unemployment rate of 9.7% announced last Friday (including the more than 25% teen unemployment rate—the highest since this rate was first tracked in 1948). But the longer term story of Labor Day 2009 is the California jobs lost that will not return, and the future of employment in California.

Over the past year, California has lost over 700,000 jobs, and many of these jobs are not coming back, even when the recession is over. The twin forces of globalization and technology are impacting a range of employment sectors, particularly employment in retail, financial services, and professional and business services. Retail employment has fallen in California from 1,631,500 jobs in July 2008 through July 2009 from 1,631,500 jobs to 1,521,100 jobs–a loss of over 110,000 retail jobs. As sales move to the internet, auto dealerships, electronics stores, clothing stores, and other retail outlets no longer have the need for salespersons in a shop or dealership.

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The Fate of the NUMMI Workers

Michael Bernick
Counsel with the international law firm of Duane Morris LLP, a Milken Institute Fellow and former Director of the California Employment Development Department

What will be the employment futures of the approximately 4800 workers at the New United Motors Company (NUMMI) in Fremont that is now scheduled to close in March 2010?

The recent history of large scale layoffs in California suggests that these futures may not be as bleak as initial reports are suggesting. Over the past two decades, workers of mass layoffs have taken a variety of paths in new job placement and/or retraining in their region, as well as movement to jobs in other regions of California and other states.

In the early 1990s, the aerospace industry in California went through enormous downsizing, shedding over 200,000 jobs. The conventional wisdom then was that aerospace engineers and production workers would become either the long term unemployed or hourly McDonald’s employees.

In the mid 1990s, a group of researchers at the RAND Corporation decided to test this conventional wisdom. They gathered wage data for 517,148 workers employed in the aerospace industry at the beginning of 1989, and tracked their earnings from 1989 to the third quarter of 1994. As set out in Life After Cutbacks: Tracking California’s Aerospace Workers (1996, RAND Corporation), the researchers found around a quarter of the laid-off workers experienced a significant reduction in wages (15% or more) by the end of the period. However, the remaining three-quarters were employed, and at wages comparable to or higher than their 1989 wages.

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Community Colleges and Job Training: The NY Times Asleep Again

Michael Bernick
Counsel with the international law firm of Duane Morris LLP, a Milken Institute Fellow and former Director of the California Employment Development Department

The New York Times has done it again in an article last Saturday, August 15, on community colleges and job training. The article is worth noting for how clueless it is of the wide range of job training and economic development activities being undertaken by community colleges, as well as how it misses the key challenges for future community college programs.

The article, “College is Model for Retooling U.S. Workforce” by Steven Greenhouse, focuses on Sinclair Community College in downtown Dayton. Greenhouse breaks the news that Sinclair is pioneering a new model of community college involvement in job training, and especially in retraining laid-off workers. Sinclair staff work closely with local employers to design customized training. The college works with local elected officials to identify potential growth industries in technology, including aerospace research and development, and advanced materials and manufacturing—industries that Dayton is trying to attract to the region. The college reaches out to high school students who might not think of attending college, and to workers laid off from General Motors, Delphi and other auto-related industries.

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What’s Going on with Job Training in California

Michael Bernick
Counsel with the international law firm of Duane Morris LLP, a Milken Institute Fellow and former Director of the California Employment Development Department

In the more than 30 years I’ve been involved with job training in California, there’s never been a situation like the present. Due to the American Recovery and Reinvestment Act (ARRA), the job training world has seen an unprecedented increase in funds for skills training, retraining and youth job placement. At the same time, with the recession’s elimination of more than 737,000 payroll jobs in California over the year, job training groups are struggling to identify job opportunities for training.

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What’s Going On with California Public Works Projects and Job Creation

Michael Bernick
Counsel with the international law firm of Duane Morris LLP, a Milken Institute Fellow and former Director of the California Employment Development Department

The state Employment Development Department’s Labor Market Information Division (LMID) has a wealth of data on employment in California (www.labormarketinfo.edd.ca.gov) . LMID is a starting point for most employment issues, including the current construction employment meltdown, and the impacts of transportation, infrastructure and other public works projects.


The numbers on construction employment are striking. In December 2006 California had 937,000 construction jobs. Over the past 30 months that number has steadily declined, so that the state was down to 642.000 construction jobs in June 2009.


The more revealing LMID numbers are in the sub-sectors. LMID divides construction employment into three main subsectors: (i) “Construction of Buildings” (residential and commercial buildings) (ii)“Specialty Trade Contractors” (building equipment contractors, building foundation, finishing and exterior contractors) and (iii) “Heavy and Civil Engineering Construction” (the public works jobs). Although it is often thought that most construction jobs are in public works, this is the smallest of the three sub-sectors by wide margin.

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What’s Going on With Job Creation/Job Destruction in California?

Michael Bernick
Counsel with the international law firm of Duane Morris LLP, a Milken Institute Fellow and former Director of the California Employment Development Department

One of the least recognized employment dynamics in California is the enormous job creation and destruction that occurs reach month, in good times and bad. The monthly unemployment rate states the net number of job gains or losses, which usually number in the tens of thousands. But beneath the surface, each month hundreds of thousands of jobs are being added or subtracted.

For example. for the three months of January-March 2008, the state lost 86,698 jobs according to the net monthly employment numbers. In fact, during this three-month period, 883,486 jobs were added and 970,184 were destroyed, for a net of -86.698.

What has been happening to job creation/destruction during the current recession?

The job creation/destruction numbers are generated by the United States Bureau of Labor Statistics, and the most recent numbers are for the third quarter of 2008, the months of July, August and September. This was a period when job layoffs were starting to pick up force, but before the enormous job shedding of the period October 2008-February 2009.

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What’s Going On in the California Job Market?

Michael Bernick
Counsel with the international law firm of Duane Morris LLP, a Milken Institute Fellow and former Director of the California Employment Development Department

The latest state unemployment numbers were released last Friday, July 17. The unemployment rate stayed at 11.6%, consistent with the revised 11.6% rate for May. However, as usual, the key indicators of California’s employment situation were elsewhere: in the nonfarm payroll numbers, the sector breakdowns, and the breakdowns by counties. These all showed a state economy that is dead-in-the-water relative to hiring.

Here are the 5 key points:

1. Hiring in California has not turned around, and net job losses continue to mount: Between November 2008 and February 2009, the state saw widespread job shedding. In February 2009, alone, the state lost 119,000 jobs. In March, the net job loss was 62,100, suggesting that we may have begun to turn the corner. The last three months, though, job losses have increased, rather than decreased, and June showed a net loss of 66,500 jobs.

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