Silicon Valley Jobs Report: No recession in the Valley, but job growth falls to lowest point in three years

Quote of the week from the City of San Jose's chief development officer Paul Krutko: "So far, we [San Jose] don't seem to be impacted by the recession."

It's true that the capital of Silicon Valley has yet to experience the severe job losses plaguing some regions of the country. But "not impacted by the recession"? Try telling that to the 5,000+ households facing foreclosure, or the construction workers who've watched 1,300 jobs slip away in the last year, or pretty much everyone who's seeing their real wages eaten up by inflation in gas and food prices. Earlier this month, Mercury News columnist Mike Cassidy talked to a few of these folks and got an earful about the impacts of the "Big Squeeze of '08."

Friday's employment report for the San Jose area underscored this squeeze, with annual job growth for May dropping to just 0.7% -- the lowest level since June of 2005. Unemployment took a leap from 5.2% last month to 5.6% this month, well above the May 2007 rate of 4.4%.

The good news (so to speak) is that we're not doing as badly as much of the rest of the state. While the San Jose region has higher unemployment that neighboring areas San Mateo and San Francisco, our unemployment is considerably less than the statewide rate, which in May reached 6.5%. And even though the state as a whole lost jobs last month, the San Jose region added 4,200 nonfarm positions in May. (Some of this, though, may be an adjustment from last month's data, which showed the region losing 100 jobs in April.)

Part of the reason why the Valley is not losing jobs may be that we've already lost them. Most of the jobs that vanished in the wake of the 2001 crash have yet to return.

Highlights of the local jobs report:

• Compared to the previous month, the San Jose metro area added 4,200 non-farm jobs in May. These included 1,400 jobs in leisure and hospitality, predominantly at restaurants; 900 jobs in professional and business services; 700 jobs in educational and health services; and 500 jobs in construction. Remaining sectors showed little or no change.


• Over the year, the San Jose metro area added 6,700 non-farm jobs, a 0.7% increase from May 2007.


• The biggest year-over-year gains were in manufacturing (+2,700 jobs), private educational & health services (+2,200 jobs), professional and business services (+1,600 jobs), information (+1,300 jobs), trade, transportation & utilities, which includes retail (+1,100 jobs), and government (+300 jobs).


• The construction and financial activities sectors continued to lose jobs due to the housing market crash and credit crunch. The construction industry saw a decrease of 1,300 jobs over the year, and financial activities lost 1,100 jobs. The region also lost 600 jobs over the year in leisure & hospitality.


• For May 2008, the unemployment rate stood at 5.6%, up 0.4 percentage points from April and up 1.2 points over the year. That translates to 11,800 more unemployed residents (by official measures) than in May 2007.


• Seven years after the tech crash, Silicon Valley holds 124,400 fewer jobs than it did in May 2001.

[ Continue reading Silicon Valley Jobs Report: No recession in the Valley, but job growth falls to lowest point in three years ]

Foreclosures drop slightly in Silicon Valley, but remain near record high

Early data from Foreclosures.com shows initial foreclosure notices edging down slightly last month for Santa Clara County, from 1,381 notices issued in April to 1,058 issued in May. This is still an extraordinarily high rate of foreclosure; in May of 2006, by contrast, only178 homeowners received notices of default.

The chart below shows notices of default issued to Santa Clara County homeowners in each month for the past two-and-a-half years.


So far in 2008, 5,573 homeowners have received notices of default on their mortgages -- nearly one out of every 100 households in the county.

Even those who are not yet at risk of foreclosure are suffering the effects of a drop in home values as the housing bubble deflates -- translating to major losses in what for most middle-class families is their biggest asset: their home. Nationwide, the total equity Americans own in their homes dropped last quarter to its lowest point since the 1940s.

[ Continue reading Foreclosures drop slightly in Silicon Valley, but remain near record high ]

What not to do when your economy is tanking

On Friday, the U.S. Bureau of Labor Statistics reported that the nation lost 49,000 jobs in May, while unemployment jumped to 5.5%: the biggest one-month jobless increase in 22 years. The U.S. economy has now lost a total of 324,000 jobs since this past December, and 8.5 million Americans are out of work.

Between the housing market meltdown, rising prices, and falling consumer spending, the state of California has been one of the hardest hit by the nation's economic woes. Millions of Californians are struggling to afford gas and food, make the mortgage payment, and generally keep their heads above water.

So how is our Governor proposing to respond to an economy in crisis? (Continued...)

By cutting back on work supports, making it harder to get health care, pushing big cuts for schools, and dropping services for elderly and the disabled.

Here's an analysis from the California Budget Project showing how many Californians would be impacted by a few of the Governor's May Revise budget proposals. I've also pulled out the impacts just on Santa Clara County. K-12 isn't included; statewide, the cuts there would total $665 per student for 2008-09.



If the raw numbers aren't convincing, check out Patty Fisher's column in the Merc last week for the story of one working mom's struggle to navigate the system.

Not only are these proposals a recipe for short-term disaster -- cutting off work and family supports just when we need them the most -- but by hacking away at education and aid for children, short-sighted reductions like these threaten our state's future economic competitiveness. And as the New York Times points out, looming cutbacks in state and local government spending will deal another major blow to the national economy, possibly even prolonging the recession into 2009. Let's hope Schwarzenegger wises up.

Maybe Arnold is taking a page from George Bush's playbook: in an equally baffling move in the middle of a recession, Bush is threatening to veto an extension of federal jobless benefits for the 1.6 million people who have been looking for work for more than 6 months and are about to exhaust their state unemployment benefits.

[ Continue reading What not to do when your economy is tanking ]

Building a Better Airport: Living wage campaign steps up this Monday

The drive for a Living Wage for all workers at Mineta San Jose International Airport is poised to move ahead on Monday, when the living wage proposal will be heard by the Transportation & Environment Committee of the San Jose City Council.

If all goes well, Monday's hearing will put the policy on track for the final step -- the full City Council -- to raise service standards at the Airport and give over five hundred workers a much-needed raise.

Below is an article on the Airport Living Wage from today's Partnership for Working Families newsletter.


Working Partnerships USA Launches Campaign to Extend Living Wage to San Jose International Airport

Last month, community, labor and faith leaders came together to call for the City of San Jose to assure that it is truly building a better airport -- by ensuring a living wage, establishing increased oversight of subcontractors, and guaranteeing the highest quality, most skilled employees serving the airport's millions of annual passengers.

Stemming from a report by Working Partnerships USA which documented alarming security and retention challenges at Mineta San Jose International Airport, Vice Mayor Dave Cortese and Councilmember Forrest Williams asked the Council's Transportation committee to consider extending a living wage to all airport employees. The report found that over half of airport employees responding to a survey weren't trained in critical emergency procedures, such as facility evacuation. Additionally, while over half of employees earning a living wage had been at the Airport for over three years, the percentage of those earning less who remained that long was 6% or lower.

Members of the community joined elected officials in support of the policy. Pastor Kenny Foreman, of the Cathedral of Faith in Willow Glen, stated:

Our City has been richly blessed, and now should continue its leadership in maintaining the standard that has already been set; ensuring that San Jose will continue to lead the way in providing employees that serve the City a living wage -- including everyone who works at the San Jose Mineta Airport.

(Continued...)

Wheelchair attendant Dwayne Green, an employee at the airport who earns a minimum wage, related his story, including being forced into homelessness for an inability to afford even a basic rent. "I struggled, I fought, and today I see a brighter future. For our safety, we can't afford to churn through employees," Green stated. "The City I live in and love cannot afford to lose good employees simply because they can't afford to live here, to have families."

Dr. Steven Pitts of UC Berkeley relayed the findings of a study conducted by researchers following San Francisco's application of a living wage to its airport. The study found that the living wage did not negatively impact the function of the airport, and that cost to employers was less than a penny on the dollar. In fact, due to decreases in employee turn-over, some employers saw cost savings of up to 11%.

The Living Wage campaign will be discussed at the San Jose City Council's Transportation and Environment Committee on June 2nd and will likely go before the full City Council in the fall.

Copies of the Working Partnerships report, the UC Berkeley study and event photos can be found at the campaign website: http://www.buildingabetterairport.com/


Working Partnerships USA is a public policy and research institute that builds partnerships with community groups, labor unions, and faith based organizations to improve the lives of working families in Silicon Valley. For more information, visit the WPUSA website at http://www.wpusa.org/.

[ Continue reading Building a Better Airport: Living wage campaign steps up this Monday ]

Silicon Valley Jobs Report: Mixed Messages

Friday's employment report for the San Jose area showed little change since last month, with employment virtually stagnant: only 100 new non-farm jobs were added in April.

The unemployment rate dropped somewhat, from its high point of 5.5% in March down to 5.2% in April, but this was mainly due to unemployed workers dropping out of the labor force.

Comparing to April of 2007 gives a slightly rosier picture. Silicon Valley added 12,100 jobs over the year, for an annual growth rate of 1.3%, up from an adjusted annual rate of 1.0% last month.

Overall, this month's job numbers give us little new information to determine how much employment in the Valley is being affected by the national recession. April is normally a slow month for job growth here, so the lack of growth this month doesn't necessarily mean the local economy has stalled. Next month's job figures are likely to shed more light.

One thing's certain: the rising cost of living, lacking a corresponding increase in wages, is hitting Silicon Valley residents hard. Yesterday, the average price for regular unleaded gasoline in San Jose officially broke $4.00/gallon.(Continued...)

Highlights of the local jobs report:

• Compared to the previous month, the San Jose metro area added just 100 non-farm jobs in April.





• 800 jobs were lost in educational and health services, due entirely to job declines at colleges and universities.



• This loss was balanced by a gain of 800 jobs in leisure and hospitality, including 500 jobs in arts, entertainment and recreation and 300 jobs in food service.



• Employment in retail trade dropped by 400 jobs, marking the fourth straight month of retail job losses.



• The government sector added 400 jobs, including 200 jobs in local education -- growth which is unlikely to be sustained as funding for public education is cut.



• Over the year, the San Jose metro area added 12,100 non-farm jobs, a 1.3% increase from April 2007.



• The biggest year-over-year gains were in manufacturing (+4,200 jobs), private educational & health services (+3,100 jobs), professional and business services (+1,700 jobs), government (+1,500 jobs), information (+1,500 jobs), and trade, transportation & utilities, which includes retail (+1,500 jobs).



• Once again, employment fell over the year in the construction and financial activities sectors due to the impacts of the housing market crash, although construction benefited somewhat from milder weather in April. The construction industry saw a decrease of 600 jobs over the year, and financial activities lost 1,200 jobs. The region also lost 500 jobs over the year in leisure & hospitality.



• For March 2008, the unemployment rate stood at 5.2%, down 0.3 percentage points from its high in March, but up 0.7 points over the year. That translates to 7,200 more unemployed residents (by official measures) than in April 2007.



• Seven years after the tech crash, Silicon Valley holds 131,400 fewer jobs than it did in April 2001.

[ Continue reading Silicon Valley Jobs Report: Mixed Messages ]

How to fight back against the middle-class squeeze? Form a union, says new study

With wages for most workers failing to keep up with the cost of living, families in Silicon Valley, California and throughout the nation are feeling the "middle-class squeeze": working hard but unable to make ends meet.

Perhaps the most at risk are families who have been squeezed right out of the middle class -- trapped in the low-wage, dead-end jobs that are increasingly becoming the only jobs available (a recent analysis concluded that only one out of every four jobs in the U.S. can be considered a "good job".)

How can a community (or a nation) reverse a trend like this, and turn its low-wage jobs back into good jobs? There's no single answer, but a new study performed by the Center for Economic and Policy Research (CEPR) makes a powerful case for the wage-raising effects of one strategy: unions.

CEPR looked at five years' worth of wages for union and nonunion workers in every state, adjusting for differences in education, age, experience, gender, and race to make sure they were comparing workers with similar characteristics. They broke it down further by examining the impact of unionization on workers at different wage levels.(Continued...)

Their findings:

• In every state and in the District of Columbia, unionization significantly improves workers' wages.


• Nationwide, low-wage workers gain the largest benefit from joining a union. The typical union wage premium for a low-wage worker (10th percentile wage level) is 20.7 percent: the equivalent of a raise from $10.00/hr.to $12.07/hr.


• In California:


• the lowest-wage workers (10th percentile) see a 16.5% wage increase from unionization;


• middle-wage workers (50th percentile) see a 15.9% wage increase;


• and higher-wage workers (90th percentile) see a 6.0% wage increase.

Unfortunately, joining a union isn't as easy as signing up on the dotted line. Workers who want to organize a union are usually subjected to intimidation, threats, harassment, mandatory anti-union meetings, or even being fired for speaking up (the latter is illegal, but it still happens, and even employers who get caught illegally firing employees for organizing don't face high enough penalties to be deterred.) The system currently in place, overseen by a National Labor Relations Board comprised of political appointees, is heavily slanted towards making it extremely difficult for workers to stand up for their rights while giving a free pass to unscrupulous employers, and indirectly penalizing those employers who try to treat their workers fairly and do the right thing.

Legislation currently in Congress, titled the Employee Free Choice Act, would help restore the rights that have been eroded by making it easier for a majority of employees in a workplace to form a union. Based on the findings of the CEPR study, this legislation would not only restore lost rights, but could also go a long way towards helping workers restore their eroded paychecks.

[ Continue reading How to fight back against the middle-class squeeze? Form a union, says new study ]

Foreclosure sales in Silicon Valley up 585% in one year

The April foreclosure numbers are in, and it doesn't look good. In April 2008, 1,412 Santa Clara County homeowners received Notices of Default on their mortgages, 713 got a Notice of Trustee Sale, and 500 homes went to foreclosure auction, according to ForeclosureRadar.

The latter number -- 500 foreclosure auctions, representing homeowners who were unable to sell their homes or work out any arrangement with the bank to avoid foreclosure -- grew by an astounding 585% in just the past twelve months. The foreclosure crisis is (to say the least) showing no signs of slowing.

And a look into the future: here's a map from the Federal Reserve showing the frequency of homeowners with Alt-A loans (in between subprime and prime) by zip code in Santa Clara County. Colors represent the number of Alt-A loans per 1,000 housing units; the darker the color, the more Alt-As.

(Continued...)
The highest rates (areas in black) are zip codes 95127, 95148, and 95140 up in the east foothills / Mount Hamilton area, along with 95046 in San Martin. Most of these homeowners are still current on their payments, but 17.6% have had a late payment in the last twelve months; and as the recession deepens and home prices fall further, more families may find themselves having trouble paying the mortgage.

How did we get into such a state? The FBI and the IRS are stepping up a criminal investigation of more than a dozen mortgage companies over their lending practices and bundling of loans. Better late that never, I suppose, but more fundamental reforms are needed to restore families' security and make sure homeownership does not become an impossible dream.

[ Continue reading Foreclosure sales in Silicon Valley up 585% in one year ]