Author: Michael Bernick

Based on the job numbers we’ve seen over the past nine months, I would agree with recent projections coming from our California-based economists that unemployment in California will continue to be above 10.5% throughout 2011 (higher throughout most of the year). However, there are four employment dynamics that may impact the pace of recovery, and that we need to keep an eye on.

The UCLA Anderson School in December projected that unemployment will go down slowly in 2011 from the current 12.4% only to 10.9% by the end of 2011. Anderson economists also projected that the state would gain a net of 183,000 jobs. Chapman University economists in December projected that the state would gain a net 167,000 jobs and that the California unemployment rate would remain above 10%.

These projections are consistent with the no-significant-hiring trend we’ve seen in California in 2010. The most recent monthly state job numbers, released on December 17,2010, showed a very modest net 1600 jobs, with a number of the major job sectors (trade, transportation and utilities; financial services; manufacturing) registering net job losses.

The California High Speed Rail Authority this past week approved moving forward on the first segment of final design and construction, a $4.15 billion 65 mile segment from the Central Valley town of Corcoran to Madera, with stations to be built in Fresno and Hanford.

Despite the criticisms of building a Train to Nowhere, this was the only segment that made sense in terms of the requirements accompanying the federal funds and in terms of the community support and community investment in the Central Valley. Further, there is no question that the Valley should be focus of the next funds: completing the Merced to Fresno segment and Fresno to Bakersfield segment.

Though the job recovery in California will be a multi-year process, it is not too early to start thinking of what the job world will look like in California after the Great Recession. In this posting, I’d like to start by addressing the structure of jobs we are likely to see in California. In future postings I will address the likely impacts of the Great Recession on other dynamics of California jobs, including our job creation/destruction, movement among jobs, and breakdown of the traditional employer-employee relation.

Over the past 20 years in California we have had numerous ups and downs in our unemployment rate, and three major recessions. Yet, the industry structure has not changed dramatically. In 1990, California had a highly diverse economy, and it continues to have such an economy today. New employment sub-sectors will expand, such as alternative energy, energy conservation, and forms of information technology. But the great majority of jobs will continue to be spread among the 11 sectors that have formed the basis of California employment.

The Legislative Analyst’s Office recently released its
report on the state Unemployment Insurance (UI) fund ("California’s Other Budget
Deficit: The Unemployment Insurance Fund Insolvency"). It is a well-written
report, summarizing the current insolvency ($8.5 billion and growing), the
staggering imbalance in revenues and benefit payments ($11.3 billion in
benefits paid to workers in 2009, with only $4.5 billion collected), and the absence
of legislative agreement on how to address the insolvency.  

By most recent count, the Great Recession has resulted in a loss of more than 1.4 million payroll jobs in California ($15.2 million payroll jobs in December 2006, and 13.8 million payroll jobs in September 2010). Beyond the job losses, though, the Great Recession also has brought changes in the structure of work in California. It will be some time before we recognize the full extent of these changes. But one is likely to be the continued weakening of the employer-employee structure that characterized work in California for more than four decades after World War II.

Leandro Soto passed away last week in Marin at the age of 89. Though his passing attracted little attention in California’s media, Lee was an important figure in California’s community job training world. His career started in California’s tumultuous job training of the 1960s and continued to the more business-oriented training model of the 1990s and today.

Lee, as he was widely known, was born in Los Angeles in 1921. Lee often referred to the variety of jobs he held growing up in the California of the 1920s and 1930s, including as a shoe shiner and as a farm worker in the San Joaquin Valley. Lee graduated from Fresno State and worked for a time as a newspaperman for a series of small newspapers.

He was in his forties before he became involved in job training, starting as a job developer with the Urban League. On May 13, 1965, Lee, Herman Gallegos and James McAllister founded the Organization for Business, Education and Community Advancement in San Francisco’s Mission District, initially as a social services/job training agency for the Mission’s growing Latino population. The agency’s name was changed in 1967 to Arriba Juntos (Upward Together).

The state monthly job numbers released last Friday show
California falling further behind the nation in employment growth. The
California unemployment rate throughout the Great Recession has been well above
the national rate, and at 12.4%, the  current state unemployment rate continues to be above the
national rate of 9.6%. However, the main storyline of last week’s job numbers
is California’s payroll job losses.

Overall, the nation lost a net 95,000 payroll jobs in
September 2010. Of this amount, California accounted for a loss of 63,600 net
payroll jobs, far above any other state. New York suffered the second largest
loss at 37,600 jobs. In contrast, several states showed net job gains,
including North Carolina (+10,100 jobs), 

When employment professionals in California meet today, as at the recent California Workforce Association gathering in Monterey, a central issue is the following: To what extent is the job losses brought by the Great Recession cyclical, representing the ups and downs of the business cycle? To what extent do these job losses represent structural change in a California economy that will need fewer workers?

We won’t know the answer to this for some time. However, some perspective on this discussion can be gained from going back nearly 50 years in California when we had a similar discussion in state government about technology. In the mid-1960s, California state government was up in arms about the march of automation, and the job losses following automation.

This
past week, the California Workforce Investment Board along with the state
Office of Statewide Health
Planning and Development formed the state Health Workforce Development Council
(HWDC) to map the future of health care employment in the state.

Over
the past decade, health care has been the one sector in California that job
training professionals could always count on to continue to generate jobs. Even
in the past 36 months of this Recession, while other job sectors in California
were shedding jobs at a rapid rate,  health care continued to hold its own each month, and
sometimes gain jobs. This job growth is shown in the chart below, compiled from
payroll job data provided by Mr. Spencer Wong of the Employment Development
Department.