Jobs optimism for East Bay, but not till ’09
Dateline:
08/22/2008Despite continuing East Bay job losses in July and a second quarter dubbed “bad to worse” by one economist, business owners and local industry watchers see reasons to be optimistic about 2009.
A state Employment Development Department report said the East Bay lost 2,700 jobs in July, excluding expected seasonal losses, continuing a seven-month decline led by the construction and financial services sector. The “bad to worse” description came from economist Ryan Ratcliff of the UCLA Anderson Forecast.
Alameda and Contra Costa unemployment hit 6.7 percent in July, up from 5.2 percent a year ago. During the same period, the state recorded an unadjusted unemployment rate of 7.6 percent, compared to 6 percent nationally.
The professional and business services sector reported the biggest deviation from seasonal trends, losing 300 jobs between June and July – a time when it usually adds 500 jobs, the EDD reported Aug. 15. Employment services also declined during a period that usually sees seasonal growth.
For PsiNapse Technology Ltd., a Pleasanton staffing company, growing costs led to the loss of a major San Francisco client, said Sylvia Luneau, the company’s CEO and president. Since the beginning of the year, PsiNapse has cut 50 of its 200 consultants and Luneau isn’t expecting the third quarter to offer much growth.
“But we’re positive about the future,” she said.
By going after some big new clients, Luneau is hoping to bring on enough work in 2009 to start hiring again in September, enough to employ 250 consultants a year and half from now.
Construction, which has lost 6,500 jobs year over year, mostly in specialty trade contractors and residential building, added 700 jobs in July, slightly below its usual average gain of 900 jobs in the month.
“I’m hopeful we’ll near bottom and we’ll begin to see a pickup in construction related employment in 2009,” said Joseph Perkins, president and CEO of the Home Builders Association of Northern California. Perkins said that although new-home construction has slowed substantially, he believes the underlying fundamentals of the East Bay economy – such as its highly educated work force – are still strong.
When credit loosens, Perkins expects to see prospective buyers wading back in, stimulating a return of residential construction jobs.
Another important part of the recovery will come from the retraining of workers who have lost jobs in the residential construction and financial services sectors for jobs in developing fields, said Bruce Kern, executive director of the East Bay Economic Development Alliance.
“We clearly want to continue to grow the number of jobs and support areas of strength, such as biotechnology and green tech,” he said.
The Chabot-Las Positas Community College District is finding that businesses are often courting students in some of its programs for jobs even before they complete their studies, district Chancellor Joel Kinnamon told attendees at an Aug. 13 work force development event.
Yet even optimists such as Luneau see barriers to job growth in the state. Many of her consultants are employed by companies in San Francisco. She had to raise consulting rates by $2 an hour for each consultant to cover the $1.76 an hour her company has had to save under that city’s Health Care Security ordinance on top of putting away funds to pay workers under the city’s paid sick leave ordinance, she said.
California Manufacturers & Technology Association spokesman Gino DiCaro said manufacturers also face obstacles that contribute to job losses locally and statewide. The absence of a state sales tax exemption for the purchase of manufacturing equipment, uncertainties surrounding the state’s Global Warming Solutions Act and a shortage of skilled labor have contributed to the decline of manufacturing in the state, he said.
The East Bay lost 1,400 manufacturing jobs between July 2007 and July 2008, not adjusting for seasonal shifts, compared to an unadjusted statewide gain of 6,300 jobs in the sector.
“We all read the economic reports and see the data. But one thing that’s a truism is that no one can predict the market beyond a reasonable doubt,” said Perkins.
“We heard about the housing slump, but no one timed it. So when we come out of this, it could be just as sudden,” he said.
mfitzhugh@bizjournals.com | 925-598-1425
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