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 much does it cost to raise a family in Santa Clara County?

The Insight Center just released the new Family Economic Self-Sufficiency Standard for 2008, which lays out how much it costs to maintain a basic standard of living for workers in every county in California.

Detailed tables with the cost of living in Santa Clara County can be found here (pdf). It's expensive -- okay, no surprise there -- but the Self-Sufficiency Standard shows us just how big that gap is between the cost of basic needs and what jobs actually pay.

A single parent with two kids could be working three full-time minimum-wage jobs and still not have enough to cover housing, food, health care, child care, transportation, and other necessities. No wonder our County's safety net services are strained beyond capacity: as taxpayers, we are subsidizing the social cost of low-wage work.

The list below shows the "self-sufficiency wage" for several different household types. This is the minimum wage needed to get by in Santa Clara County if you work full-time year-round, don't get any outside assistance, and have a minimally adequate standard of living (i.e., you live in an apartment with at least one bedroom for every two people, have enough to eat, and can get medical care when you need it):

• Single adult: $13.37/hr



• Single adult with one infant: $23.55/hr



• Two adults with one preschooler and one teenager (both parents working): $14.70/hr

And compare these to the median wages for some of the most common occupations in Silicon Valley:

• Retail salespersons (25,990 employees, largest single occupation in the region): $10.98/hr



• Office clerks (18.860 employees): $15.85/hr



• Cashiers (17,550 employees): $9.89/hr



• Janitors and cleaners (14,340 employees): $10.78/hr

(Continued...)
Keep in mind that self-sufficiency only measures whether a family can support themselves right now; it doesn't allow for costs of college education, retirement savings, unemployment, or other situations for which you might need to put some money aside. Also no meals out, entertainment, or vacations. But even at that minimum standard, too many jobs simply don't pay enough for a working family to make ends meet.

Here's a breakdown of the Self-Sufficiency Standard by budget item for a two-parent family with a preschooler and a teenager:

One more key point: the Self-Sufficiency Standard assumes that all working families are covered by job-based health insurance, which is increasingly not the case. Without access to job-based coverage, health care costs in the pie chart above shoot up from $348/month to an average $943/month, adding $7,140 to a family's annual expenses.

And of course this problem isn't confined to Silicon Valley. While the Valley does have some of the highest costs in the country, workers nationwide are feeling the sting of stagnant or declining real wages. We urgently need a new national direction towards economic policies that support families and make work pay. Check out EPI's Agenda for Shared Prosperity for some good ideas on how to make this happen.

[ Continue reading How much does it cost to raise a family in Santa Clara County? ]

The Merc is asking: How is the recession affecting you?

The U.S. may not officially be in a recession yet, but with four straight months of job losses, an imploding housing market, gas at nearly $4 a gallon, and food prices spiraling up so quickly that some stores are rationing rice, most Americans don't need anyone to tell them that times are tight.

Columnist Mike Cassidy at the San Jose Mercury News wants Silicon Valley residents to tell him how the downturn is affecting their lives. Read all about it on his "Loose Ends" blog -- and send him your stories.

Some possible discussion sparkers:

• On top of immediate strains to your household budget, how is the recession affecting you through its impacts on your neighborhood and community?


• What fallout are you feeling from the housing market collapse and the credit crunch?


• Do you worry about being affected by recession-inspired budget cuts to services like schools, health care, parks, libraries, public safety, and other proposed cuts?


• In the longer term, do you see a hopeful future for your kids if they stay in Silicon Valley?

[ Continue reading The Merc is asking: How is the recession affecting you? ]

Inflation Hits Home

According to Forbes Magazine, San Jose boasts the highest cost of living of any major metro region in the country.

If you've been to the grocery store or stopped at a gas station recently, you know that prices are headed higher still. Inflation indexes released today revealed big jumps in the prices of energy and food in March, leading to the second-largest monthly increase in wholesale inflation since 1975 (the largest increase was last November).

Apparel prices were down, though. Food, gas, housing and healthcare may all be unaffordable, but at least you can buy new clothes!

Here are the price increases for major household budget items since 2000[1] (not including the last couple months):(Continued...)
Healthcare costs lead the pack; in the past seven years, insurance premiums have more than doubled, up 110 percent. Gas isn't far behind, with an 86% increase (and the price is rising so fast that that's already out of date). Childcare is incredibly expensive; the average annual cost at a center for one preschooler is $10,200. Even food -- which has historically been cheap in the U.S. -- has started to shoot up. And then, of course, there's housing (see yesterday's blog post on the thankless tradeoff of renting vs. owning.)

The cost of living is rapidly becoming a worldwide problem. In recent months, the costs of basic necessities have been rising rapidly in international markets, leaving millions of people without enough to eat. Escalating prices for staple foods including wheat, rice, corn and soy are crating a global food crisis.

Here in the U.S., wobbly financial markets, overstretched banks and bankrupt mortgage companies are still getting more attention. But given the choice between a starving family or a Bear Sterns shareholder -- which one is more in need of government aid, and which one should be left to the mercies of the free market?




[1] Data from multiple sources. Food cost is an average for the U.S., based on USDA Moderate-Cost Food Plan. Health care cost is an average for California, based on worker's share of premium for job-based family health coverage. Electricity cost is based on residential rates in the PG&E service area. Gasoline cost is for regular unleaded in the SF-Oakland-San Jose metro area. All other items are based on costs in the Silicon Valley region. Housing costs reflect only the trend through 2006, as 2007 data is not available. Childcare cost reflects the trend from 1998-2006 as costs for 2000 and 2007 were not available.

[ Continue reading Inflation Hits Home ]

Rent vs. own: Between a rock and a hard place

Finding affordable housing may be the toughest financial challenge that most Silicon Valley residents face. Whether you rent or own your home, the last few months have not been good.

Caught by the nationwide mortgage meltdown, in Santa Clara County alone tens of thousands of homeowners are at risk of losing their homes. This chart pretty much says it all:

According to foreclosures.com, 3,133 Santa Clara County homeowners received notices of default on their mortgages in the first quarter on 2008 -- an increase of 64% over the first quarter of last year, and five times the number of defaults in Q1 of 2001. (A notice of default is the first step in the foreclosure process; not all of these homes will end up in foreclosure.)

Renters are feeling the pain too.(Continued...)
To afford a modest 2-bedroom apartment for their family, a worker in Santa Clara County must earn a minimum of $24.87 per hour, according to a study released last week by Housing California and the National Low Income Housing Coalition. That's $51,720 annually. At least a third of all county households had incomes below that standard last year.

And there's worse: these numbers are based on the "Fair Market Rent" for 2008, which was set by federal agency HUD at 40% of median rent last year -- $1,293 for a 2-BR in Santa Clara County. But as more families lose their homes or are reluctant to buy, there are more folks looking to rent, so rents have been shooting up. In San Jose, rents rose by an estimated 14.5% last year and are projected to grow another 7.8% this year, according to the Business Journal.

In addition to rising rents, renters are also being hit by the fallout of the mortgage crisis. The New York Times reported on Sunday that even renters are not immune from the mortgage crisis; as landlords are hit by foreclosures, tenants are increasingly being forced out of their homes. The NYT quotes Mark Zandi, chief economist for Moody's Economy.com, saying, "Landlords of all stripes could potentially get caught up in this very severe downturn. I suspect that it's going to be more of a problem for lower- to middle-income markets."

Local nonprofit organizations like Neighborhood Housing Services Silicon Valley, Project Sentinel, and ACORN Housing are urgently trying to help homeowners avoid foreclosure. If you are having trouble keeping up with your mortgage, or believe you may have been the victim of predatory lending, contact one of these agencies -- they may be able to help. Project Sentinel also helps renters.

[ Continue reading Rent vs. own: Between a rock and a hard place ]

Silicon Valley Jobs Report: Annual job growth falls below 1%

Just a quick note on the February job numbers. Friday's employment report from the state showed that job growth in the San Jose metro region fell to 0.8% over the year, as the region added just 7,600 nonfarm jobs between February 2007 and February 2008. That puts our job growth rate below 1%: not a recession, but not a good sign either.

The graph below shows annual growth rates over the past three years.

While job growth is slowing, working families continue to face rising prices for basic goods, especially food and gas. The Mercury News reports that prices for flour, milk, and eggs have all risen more than 24% just in the past year. Gas is up to $3.66 per gallon for regular unleaded and a shocking $4.24 for diesel.

And don't think you can drown your sorrows -- thanks to a worldwide hops shortage, the price of beer is up too.(Continued...)

Highlights of the local jobs report:

• The San Jose metro area added a net 2,900 non-farm jobs in February, with major industries showing a mixed picture. The largest gains for the month were in private educational and health services, which added 2,000 jobs (largely in higher education); leisure and hospitality, with 1,300 new jobs; and professional and business services, with 1,100 jobs. Meanwhile the retail sector lost jobs for the second consecutive month, shedding 2,100 positions. The government sector lost 800 jobs in February, due largely to school staffing reductions made in anticipation of state funding cuts for K-12 education.


• Over the year, the San Jose metro area added 7,600 jobs, a 0.8% increase from February 2007.


• The biggest year-over-year gains were in manufacturing (+3,300 jobs), private educational & health services (+2,400 jobs), information (+1,700 jobs), government (+1,300 jobs), and trade, transportation & utilities, which includes retail (+1,100 jobs).


• The construction and financial activities sectors -- both strongly tied to the housing market -- continued to weaken, with construction losing 800 jobs over the year and financial activities losing 1,300 jobs. The region also lost 400 jobs in leisure & hospitality and 400 jobs in professional & business services.


• For February 2008, the unemployment rate stood at 5.2%, down 0.1 percentage points from January (which normally has the highest unemployment rate of the year) and up 0.5 points over the year. That translates to 4,500 more unemployed residents (by official measures) than in February 2007.


• Seven years after the tech crash, Silicon Valley holds 148,800 fewer jobs than it did in February 2001.

[ Continue reading Silicon Valley Jobs Report: Annual job growth falls below 1% ]

3 out of 10 elders face inadequate incomes in Santa Clara County

In high-priced Silicon Valley, families of all types and ages find it hard to make ends meet. But older adults face particular challenges.

A new standard developed by UCLA indicates that the basic costs of living for elders (age 65+) in Santa Clara County range from $17,632 for a single senior homeowner with no mortgage, up to $47,354 for a couple with a mortgage -- and at least 31% of elder households in the county do not have enough income to meet these minimum standards of living.

The Elder Economic Security Standard Index, released today by the UCLA Center for Health Policy Research and the California Elder Economic Security Initiative, measures the costs for older adults of meeting their basic needs for housing, food, transportation and other necessities.

Here are the annual costs of basic needs for older adults living in Santa Clara County:

Elder Standard Per Year

Elder Person:
Owner w/o mortgage: $17,632

Owner w/ mortgage: $37,641

Renter, one bedroom: $25,391

Elder Couple:
Owner w/o mortgage: $27,345
Owner w/ mortgage: $47,354
Renter, one bedroom: $35,104

Source: UCLA Center for Health Policy Research. Standard per year is based on basic monthly costs for housing, food, transportation, health care (assuming good health), and miscellaneous needs.

(Continued...) As of 2006, at least 31% of households including elders had incomes below these standards, meaning that they face serious challenges in affording the basic necessities of life.

This points at the urgent need in Silicon Valley for initiatives to tackle the high cost of living, including affordable housing for families of all types and income levels; affordable and accessible health care providers; public transit that meets the needs not only of commuters, but also of retirees and transit-dependent residents; and planning future development so that grocery stores, pharmacies, clinics, hospitals, parks, community centers, and other amenities are nearby and accessible by walking or transit for all neighborhoods. We've made progress on many of these fronts, but with more than three out of ten elder households still struggling to make ends meet, it's clear we need to do more.


Source: Elder Standard Index from UCLA/WOW. Housing and population data from the American Community Survey was used to approximate the number of Santa Clara County households containing seniors which fall below the income levels provided in the Elder Standard Index. Because the Index does not provide standards for elders living in larger households, the standard for an elder couple was also used for elders in households of three or more, resulting in a conservative estimate of elders living below the standard.

[ Continue reading 3 out of 10 elders face inadequate incomes in Santa Clara County ]

Silicon Valley Jobs Report: Unemployment rises as housing crash, national slowdown hit home

Great news, folks -- our economic indicators are all headed up!

Within the last month:

• Silicon Valley's unemployment rate rose to 5.1%;


• the Labor Dept. reported U.S. inflation for the year reached a record 4.1% (highest in 17 years);


• and the San Jose region won back our #1 spot (tied with L.A.) for the most expensive rents in the state.

Doesn't sound so great? Part of the problem is that the U.S. economy appears to be headed for a recession -- if we're not already in one. However, not everything can be blamed on the national economy. Silicon Valley faces a unique set of challenges, from familiar problems like the high cost of living to emerging issues like a shortage of affordable child care.

Today's employment report from the state shows that the San Jose metro region added 1,900 nonfarm jobs last month: the weakest performance for December since 2002. While 1,800 jobs were added in retail, several other sectors lost jobs over the month, including construction (-300 jobs), information (-400 jobs), and education & health services (-400 jobs).

Employment growth remained moderately strong over the year, with 1.4% more nonfarm jobs than in Dec. 2006. However, the declines in these three critical industries may be an indicator of troubled times ahead. (Continued...)

In another troubling sign, more people were forced into bankruptcy, with personal (non-business) bankruptcy filings in Northern California up 51% in the third quarter of 2007, compared to the same period in 2006. Even with new stricter laws making it harder for individuals to declare bankruptcy, we've seen 8,482 personal bankruptcies in No. Cal just during Jan-Sept 2007: another indicator that expensive debts, high cost of living, and inadequate wages are forcing families to take drastic measures.

Is there a silver lining in all this gloomy economic news for working families?

How about a green lining? The idea of investing public and private funds to create "green-collar jobs" is gaining more and more momentum in California and nationally. When the federal Energy Bill was passed late last month, it included a provision calling for $150 million to create the Green Jobs Corps, which aims to recruit and train Americans needing work for careers in the new green economy. Just this past week, state leaders from labor, business, government, environmental groups, and community-based organizations came together for "Advancing the New Energy Economy in California", a summit focused on how our state can take the lead in both fighting climate change and creating green jobs that will lift people out of poverty.

And economists at the Center for Economic and Policy Research suggest that the national economic slowdown may in fact provide an opportunity for creating new green jobs and helping low-income consumers save energy, through including credits for energy conservation, support for public transit operations, and heating assistance for low-income households as part of a targeted economic stimulus package. President Bush today joined in the call for an economic stimulus, but many of his proposals would do more to reward his wealthy supporters than to help the economy; hopefully more sensible heads will prevail in developing an effective plan that stimulates economic growth and helps those who most need it.

Highlights of the local jobs report:

• The San Jose metro area added 1,900 non-farm jobs in December. Similar to November, nearly all of these jobs were added in the retail sector, likely reflecting an increase in hiring for the holiday season.



• Over the year, the San Jose metro area added 12,800 jobs, a 1.4% increase from December 2006.



• The biggest year-over-year gains were in educational & health services (+3,000 jobs), leisure & hospitality (+2,200 jobs), manufacturing (+2,300 jobs), trade, transportation & utilities, which includes retail (+1,700 jobs), government (+1,400 jobs), and professional & business services (+1,400 jobs).



• The construction and financial activities sectors – both strongly tied to the housing market – showed signs of weakness, with construction adding just 100 jobs over the year and financial activities losing 100 jobs.



• For December 2007, the region's unemployment rate stood at 5.1%, up 0.1 percentage points from last month and up 1.0 points over the year. That translates to 9,500 more unemployed residents than in December 2006.



• Seven years after the tech crash, Silicon Valley holds 158,600 fewer jobs than it did in December 2000.

[ Continue reading Silicon Valley Jobs Report: Unemployment rises as housing crash, national slowdown hit home ]

The ballooning housing crisis: San Jose, Morgan Hill and Gilroy most at risk

Thousands of Silicon Valley families have lost their homes to the ongoing housing crisis, with ten of thousands more impacted as the ripple effects of the crisis continue to spread. Sunday's Mercury News mapped out foreclosures in Santa Clara County so far this year, focusing on the hard-hit East Side neighborhoods of San Jose. Unfortunately, the picture of the housing crisis in Silicon Valley is even worse than revealed by foreclosures alone.

A Working Partnerships analysis of houses currently in foreclosure or pre-foreclosure shows where we can expect more families to face losing their homes in the coming months.

San Jose and South County both have reason for concern: in San Jose, 38.7 houses per every 10,000 residents are currently in foreclosure or pre-foreclosure, with an even higher rate of 43.9 per 10,000 in Morgan Hill and a shocking 62.3 per 10,000 in Gilroy. (Los Altos, on the other hand, is getting along fine with just 3.6 per 10,000.)

Not everyone who's currently in pre-foreclosure (those who, after one or more payments, have received a Notice of Default on their loan) will ultimately have their home foreclosed upon. Some will be able to sell and pay off the mortgage, work out a deal to give up the house without a formal foreclosure, or in the best case scenario, find the money to bring the mortgage current and keep their house. But unless they get help, all of the homeowners currently in pre-foreclosure will be struggling to pay their bills and save their homes.

And the problem won't end there; the biggest wave of ARM (Adjustable Rate Mortgage) rate resets is projected to continue through the end of 2008 and possibly the first half of 2009, sparking still more foreclosures.

Given how many American families have been or will be impacted by the housing crisis, President Bush's proposal for selective, voluntary rate freezes by lenders is wholly inadequate to the scope of the problem. The Federal Reserve's proposal today looks like it may help to curb some of the worst abuses (something the Fed should have stepped forward to do a long time ago), but also does not adequately tackle the big picture. We need to help those currently affected, fix the laws and practices that encouraged irresponsible or predatory mortgage loans, and make homeownership affordable for working families. The Center for Responsible Lending discusses proposals that could help embattled homeowners and help prevent this crisis from recurring.

On a local scale, homeowners who need help can contact Neighborhood Housing Services Silicon Valley, Project Sentinel, or ACORN Housing.

(Thanks to Brian Darrow for the map.)

[ Continue reading The ballooning housing crisis: San Jose, Morgan Hill and Gilroy most at risk ]

Child Care Costs Skyrocket for Valley Families

Are families with kids being priced out of Santa Clara County?

A new report by the California Child Care Resource & Referral Network reveals that the average cost of care for one preschooler in the county is up to $10,597 per year, a 45 percent increase since 2001. Working parents are increasingly hard pressed to keep up with the cost (have you gotten a 45% raise recently?)

The first five years of a child's life are a time of critical intellectual, emotional and physical development. They learn to walk, talk, explore their world and interact socially with adults and other children.

Quality care and early childhood education may be the single most important investment we can make for our community's future. Research overwhelmingly shows that early education is critical to children's success in school and later on in life. Yet right now, kids, parents and providers are all suffering from the under-resourcing of child care and early education.

The cost for infant or toddler care is even further out of reach: $14,454 per year. A minimum wage earner working full-time makes just $15,600 per year. There's simply no way most low-wage workers can afford the market rate for quality child care.

Ironically, the people who are providing care and early education for our youngest kids are themselves in the ranks of low-wage workers. The median wage for child care workers in Silicon Valley is $11.41/hr. No wonder we've got such a shortage of child care (only 50,551 available slots for 195,871 kids, according to the Resource & Referral report.)

Over the next year our region will be making critical decisions about economic development, public budgets, and investments. A key topic in those discussions needs to be figuring out how to make early education work for all kids, parents, and providers.

[ Continue reading Child Care Costs Skyrocket for Valley Families ]