Saturday, October 22, 2011

Sacramento Bee: Modest job growth seen in Sacramento, state economy

'Modest growth' sees state add 11,800 jobs

Published: Saturday, Oct. 22, 2011 - 12:00 am | Page 6B
  © Copyright The Sacramento Bee. All rights reserved.
Hold off on those obituaries about the California job market for now.
California employers perked up a little in September, adding 11,800 jobs and driving unemployment down to 11.9 percent, state officials said Friday. The unemployment rate had been 12.1 percent.

What's more, the Employment Development Department said payrolls also grew by 21,100 in August – a big swing from what was previously reported as a loss of 8,400 jobs.

Although Sacramento continues to struggle, the state has added 32,900 jobs in two months. While hardly a major growth spurt, the performance is welcome news following a summer slowdown that had some economists talking about the possibility of a double-dip recession.

"We're kind of back on the modest growth trend," said Dennis Meyers, an economist at the state Department of Finance. "Not really exciting, but in the right direction."

California still has the nation's second highest unemployment rate, after Nevada's 13.4 percent. But it's also something of a job dynamo, relatively speaking.

California has created 250,700 jobs in the past 12 months, more than any other state. The growth rate of 1.8 percent is significantly higher than the U.S. average.

But much of the state's job growth is concentrated on the urban coast. Sacramento's economy isn't keeping pace.

True, area unemployment fell four-tenths of a point to 11.5 percent in September. But the decline was due in part to a shrinkage in the labor force, as many would-be job seekers returned to school.

Payrolls actually fell by 4,000 jobs. Payroll statistics are based on a different survey and are considered more reliable than the unemployment rate.

Some of the Sacramento job loss was seasonal, as the construction, restaurant and tourism industries tailed off.

But the numbers also reflected economic factors. The 1,800 layoffs in construction, for example, were six times the usual cutback for September.

And Sacramento's state workforce is starting to pare back because of budget problems. Some 200 state jobs disappeared last month and 2,500 have been cut in the past year.

Those reductions include 1,000 jobs eliminated in September in state higher education. Usually that sector adds 500 jobs as fall classes resume, said EDD labor market analyst Diane Patterson.

The cuts in higher educatiion aren't surprising to economist Jeff Michael of the University of the Pacific.
"We've got two pretty large state universities that clearly have lower employment," he said.

Michael said Sacramento's labor market should improve later this fall, when retailers ramp up for the holidays. Last year's hiring was hurt by the giant arson fire in October at the Westfield Galleria at Roseville. The mall has fully reopened.

"We'll have a better holiday hiring season … if for no other reason than the mall is open," Michael said.
But sometime after the first of the year, more cutbacks in government are likely, he said. The state budget calls for additional cuts unless California sees a $4 billion surge in tax revenue. Hitting that target seems extremely unlikely, as tax revenue is actually down slightly from a year ago.

Nevertheless, there are signs that the California economy is perking up. Exports have been booming for the past two years. New car sales jumped 9.4 percent in the third quarter, the California New Car Dealers Association reported Friday.

And the latest job numbers reflect a recovery.

"While these numbers do not show an economy in rapid upswing, they do show an economy that is not heading back into recession," San Francisco labor lawyer Michael Bernick, a former EDD director, said in an email.

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