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.

A recent report on Linens n Things noted that it had closed 589 stores nationwide in the past few years. But it has not disappeared. Rather, the Linens n Things brand was acquired by Gordon Brothers Brands and Hilco Consumer Capital, and turned into a Web-only enterprise. This new enterprise is in its initial stage, but appears to be heading to profitability. It does not need real estate or many workers. In fact, the operation of the Web business has been outsourced to a San Diego firm, TorreyCommerce, that does e-commerce for several home-furnishing companies.

Further, this past weekend, Joni Evans, formerly an executive with Simon & Schuster and currently C.E.O. of wowOwow.com, described as “a website for women”, reflected on changes in the publishing industry since the 1970s. Chief among these changes has been the disappearance of employees. Evans noted: “BookScan used bar codes to measure book sales, doing some work that sales managers used to do.Quicken started doing some of the accountants’ work. Google search replaced work of researchers. Spell-check and TextEdit did some of what copy editors and proofreaders had done.” A publishing model in development without the cost of workers.

On the plus side, the fear of permanent higher unemployment in California due to technology has been present for more than 40 years. In the 1960s, EDD worried that the state would have unemployment over 20% on a permanent basis, as automation was eliminating jobs, especially in manufacturing. Of course, many of these jobs were eliminated, and never returned; but other jobs, not foreseen in the 1960s emerged.

When I started in the job training world in 1979 on a local job training agency, our first training program was in business machine repair, which meant mainly typewriter repair. There were typewriter repair shops throughout the South of Market area of San Francisco. Within twenty years, all of these shops were gone, and their jobs eliminated. But other businesses in web design, software engineering, on-line education, have come into the area.

This has to be our hope on the day after Labor Day 2009.

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