Saturday, March 26, 2011

Sacramento Bee: State Jobs Up, Sacramento Region Lags

Surge in jobs a state record

Published: Saturday, Mar. 26, 2011 - 12:00 am | Page 1A
California's job market sprang to life in historic fashion last month, while Sacramento's continued to plod along.

After months of caution, California employers created 96,500 jobs during February, the best one-month gain in at least 21 years. The explosion in hiring dropped the unemployment rate two-tenths of a point, to 12.2 percent, the Employment Development Department said Friday.

"Wow, huh?" said a pleased Howard Roth, chief economist at the state Department of Finance.

The numbers were so strong, Roth said he believes they'll be revised downward somewhat next month. Such revisions are common.

Even so, the numbers suggest the state's recovery is finally hitting its stride, he said. The hiring was spread across nearly every economic sector, from technology to construction. Only one category, government, went in reverse.

Sacramento's news wasn't as cheery.

The region's unemployment rate did fall three-tenths of a point, to 12.6 percent. And about 1,400 jobs were created during the month. But the job gains were less than half the typical increase for February, said EDD consultant Alex Alvarado.

"The Sacramento area is definitely the caboose in the recovery," said economist Jeff Michael of the University of the Pacific. "California is recovering; Sacramento's not."

Despite February's gains, the Sacramento area has lost 1.6 percent of its job base in the past year. That's the worst of any metro area in the state, Michael said.

Employment in state government – the region's largest category – has actually increased slightly in the past year. But furloughs and spending cuts have rippled through the private sector. Restaurants and other businesses that cater to state workers have been hurt; so have companies that sell goods and services to the state.

Sacramento Technology Group, a hardware and software vendor in Folsom, has seen its state business erode in the past couple of years, and is bracing for more cuts.

"Many of our state contacts have told us, in the coming months their budgets will be cut," said George Usi, the company's president. He hasn't had to cut staff but has had to seek out other clients "to keep things going," he said.

Things are likely to get worse for businesses that depend on the state. Even with the $11.2 billion worth of budget cuts Gov. Jerry Brown signed Thursday, California still faces a deficit of around $15 billion. Job growth around the state will produce more tax revenue, but not yet in the volume needed to fix the budget.
And Sacramento faces another problem: The local sectors connected to housing haven't turned around yet.

Construction employment is 7 percent below a year ago in Sacramento, a loss of 2,500 jobs. The financial sector also has lost 7 percent of its jobs since last February.

In contrast, the statewide construction industry has actually grown 1 percent in the past year, while the financial sector is down only a minimal amount.

All told, the state has created 196,300 jobs in the past year. Despite getting hit harder than almost any other state during the recession, California has been adding jobs more quickly than the U.S. average for the past 18 months, according to Stephen Levy of the Center for Continuing Study of the California Economy.

February's job growth in California was the best in the country, said the U.S. Bureau of Labor Statistics.

It was also the strongest monthly job growth in California since modern record keeping began in 1990, Roth said. The previous high was 84,200 jobs created in July 1999, during the dot-com boom.

In the past 12 months, Silicon Valley has added 17,400 jobs. The Los Angeles area has added 40,000.
Key industries like technology, trade and tourism "are in growth mode again," Levy said in an e-mail.

But the state still has a long way to go. It has 1.1 million fewer jobs than when the recession began in late 2007. At 12.2 percent, it has the nation's second worst unemployment, trailing only Nevada's 13.6 percent.
And Roth said it's unrealistic to expect the economy to duplicate its February performance.

"I don't think we'll have a string of numbers like this," he said.

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