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? ]

Building a Better Airport

To counteract all the gloom and doom from the previous week, here's some good news: a new campaign for a living wage for all workers at San Jose Airport.

Last week, WPUSA released a report documenting alarming security and retention challenges at Mineta San Jose International Airport, stemming from the practice of subcontracting airport duties to workers who are paid minimum wage with no benefits or time off and receive little to no training on security procedures.

Community, labor and faith leaders have now come together to call on the City of San Jose to adopt a policy that assures a living wage for all workers at the Airport, along with improved oversight of job and training standards at subcontractors.

The rapidly rising cost of living in the San Jose region makes this campaign especially timely; surviving in Silicon Valley at minimum wage, difficult at the best of times, is becoming nearly impossible.

On the scale of the regional economy, establishing a comprehensive living wage policy will help to make San Jose Airport competitive with SFO and OAK, which have been gaining air passenger market share at the expense of SJC. Both of these neighboring airports have already implemented Living Wage policies. If San Jose does the same, it will help hundreds of workers and their families climb out of poverty, and could give the local economy -- particularly the visitor and retail sectors -- a boost that we badly need.

Find out more at the campaign website: Building a Better Airport.

[ Continue reading Building a Better Airport ]

SV Jobs Report: Unemployment jumps to three-year high; job growth slows, but remains positive

Not too much good news in today's employment report from the state -- but it could be worse.

The unemployment rate for the San Jose metro region rose to 5.5% last month, reaching its highest level since July 2005.

On the bright side, employment growth remained small but positive. Unlike many regions of the state, Silicon Valley has not begun to lose jobs.

As the rising unemployment rate indicates, however, we are not adding enough new jobs to keep up with demand for work. In part, Silicon Valley may not be losing jobs because we've already lost them: the San Jose metro area remains far off of its peak employment, with 150,900 fewer jobs in the region now than in March 2001.(Continued...)

The chart at right shows which industries have gained or lost jobs over the most recent economy cycle. The only sector that has seen any substantial growth is Educational and Health Services, with 15,900 net new jobs. Most major sectors have declined, with the biggest job losses over the cycle in Manufacturing (-87,600 jobs) and Professional and Business Services (-53,200 jobs). Both of the latter sectors began to grow modestly in the past year or two, but they remain far from regaining the jobs lost.

Highlights of the local jobs report:

• Compared to the previous month, the San Jose metro area added a net 4,900 non-farm jobs in March. The largest gains for March were in leisure and hospitality, with 1,700 new jobs, and professional and business services, with 1,200 jobs. The retail sector lost jobs for the third consecutive month, shedding 400 positions.


• Over the year, the San Jose metro area added 7,200 jobs, a 0.8% increase from March 2007.


• The biggest year-over-year gains were in manufacturing (+3,400 jobs), private educational and health services (+2,000 jobs), information (+1,600 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 1,200 jobs over the year and financial activities losing 1,300 jobs. The region also lost 500 jobs over the year in leisure and hospitality.


• For March 2008, the unemployment rate stood at 5.5%, up 0.3 percentage points from February and up 1.0 points over the year. That translates to 9,100 more unemployed residents (by official measures) than in March 2007.


• Seven years after the tech crash, Silicon Valley holds 150,900 fewer jobs than it did in March 2001.

[ Continue reading SV Jobs Report: Unemployment jumps to three-year high; job growth slows, but remains positive ]

Silicon Valley companies post record profits -- but no job growth

The Mercury News yesterday published their annual feature on the "SV150" -- the top 150 public companies in Silicon Valley for 2007, ranked by worldwide sales. The top 150 companies had a good year. Both sales and profits reached record highs, with sales growing by 10.6% over the year and profits roaring ahead with growth at 35%.

So, what about jobs? It turns out that employment at the SV150 dropped in 2007 by -0.5%, down about 4,700 jobs from 2006, even as sales and profits grew. It was the first year since 2004 that total jobs among the SV150 declined. (This number represents total employment at each firm, not just jobs in Silicon Valley.)

The chart below (adapted from the Merc's chart) shows the top 10 companies that added and eliminated the most jobs, along with their sales trend and profit margin. Some of the job-losing companies performed poorly overall in 2007; it's no surprise that a company like Sanmina-SCI, with falling sales and a negative profits margin, would lay off workers. But what about the top two job eliminators -- Intel and Sun -- both with substantial profit margins and increasing sales? (Continued...)




If these companies created no new net jobs even with record profits, the prospects for job creation in 2008 look dim indeed. Many of the companies that finished strong in 2007 have been struggling in 2008, and the SV150's stock prices have been dropping for the last several months as investors shy away from tech.

While the Merc article still tried to paint a rosy picture, the story has a whiff of desperation about it. The front-page graphic lists four reasons "why Silicon Valley isn't in a recession" and leads with the line "If there's a recession going on, someone forgot to tell Silicon Valley."

Unfortunately, the people who live and work in this economy don't need anyone to tell them that times are tight. Bay Area residents now rate the economy as the region's number one problem, according to a recent poll by the Bay Area Council. Last year the economy wasn't even among the top three concerns. Silicon Valley's slowdown has also drawn the attention of the New York Times, which notes that "Job growth has slowed, start-up companies are hiring and spending more cautiously, and early-stage investors who nurture the start-ups with money and expertise are growing more frugal."


In another worrisome sign for the local economy, chip-maker Advanced Micro Devices (AMD) laid off 1,600 workers last week. One analyst suggested AMD might close its Sunnyvale headquarters altogether by the end of the year. Even the mighty Google recently laid off 300 employees

[ Continue reading Silicon Valley companies post record profits -- but no job growth ]

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% ]

Silicon Valley Jobs Report: Job growth slows, but remains positive; housing crisis impacts economy

Today's employment report from the state shows that the San Jose metro region lost 13,100 jobs last month. This isn't nearly as bad as it sounds: we always lose jobs in January, as retailers and others lay off the extra help they hired on for the holiday season.

However, with just a 1.3% increase in jobs since Jan. 2007, this month's employment continued to show evidence of a slowdown in Silicon Valley. The annual growth rate peaked in September 2006 at 2.8%, and has been on the decline ever since (see graph).(Continued...)

Job growth is still positive, but at just over 1% it is unlikely to keep up with the growth of the working-age population. The jobs picture may well continue to weaken, driven by actions like the recent layoffs at Yahoo and planned layoffs at the Mercury News, both of which won't show up in the jobs data until next month.

Sheila Bair, chair of the Federal Deposit Insurance Corp. (FDIC), warned last week that "Silicon Valley is not immune" to the economic challenges brought on by the national mortgage crisis. With foreclosures exceeding home sales in California last month, industries tied to the housing market are feeling the pain. Construction firms in Silicon Valley lost 500 jobs in January, and the financial activities sector dropped 1,200 jobs.

In more encouraging news, Silicon Valley added 4,500 manufacturing jobs in the past year: a small but significant reversal of the decade's trend of devastating losses in manufacturing, the region's largest employment sector.

Highlights of the local jobs report:

• The San Jose metro area lost 13,100 non-farm jobs in January, due in part to seasonal declines. The retail sector eliminated 3,500 jobs, accompanied by declines of 2,500 jobs in leisure and hospitality (mostly in restaurants), 1,900 jobs in construction, and 1,600 jobs in professional & business services.


• Over the year, the San Jose metro area added 11,400 jobs, a 1.3% increase from January 2007.


• The biggest year-over-year gains were in manufacturing (+4,500 jobs), educational & health services (+3,300 jobs), trade, transportation & utilities, which includes retail (+2,000 jobs), information (+1,900 jobs), and government (+1,000 jobs).


• The construction and financial activities sectors -- both strongly tied to the housing market -- continued to weaken, with construction losing 500 jobs over the year and financial activities losing 1,200 jobs. The region also lost 300 jobs in leisure & hospitality and 100 jobs in professional & business services.


• For January 2008, the unemployment rate stood at 5.3%, up 0.2 percentage points from last month and up 0.5 points over the year. That translates to 4,900 more unemployed residents (by official measures) than in January 2007.


• Seven years after the tech crash, Silicon Valley holds 151,000 fewer jobs than it did in January 2001.

[ Continue reading Silicon Valley Jobs Report: Job growth slows, but remains positive; housing crisis impacts economy ]

Bay Area private sector workers achieve highest unionization rate since 1999

Bay Area union membership was on the rise in 2007, driven by increased unionization in the private sector.

An estimated 57,000 additional private-sector workers chose to join unions last year, bringing the private-sector unionization rate for the San Jose-San Francisco-Oakland region up to 12.1%: the highest rate this decade.

Combining the public and private sectors, 18.2% of all workers in the Bay Area were covered by a union contract in 2007, up from 17.1% in 2006.

The United States as a whole saw an uptick from 12.0% to 12.1%: a small increase, but notable as the first recorded growth in the nation's unionization rate since the 1970s.

However, union membership in the Bay Area -- and the United States -- remains near historic lows following decades of decline. In the 1960s, about 30% of workers belonged to unions. Today, union coverage has been cut to the rock-bottom rate of 12%, despite the fact that survey after survey shows most U.S. workers want a union.(Continued...)

Although a majority of nonunion workers say they would vote for union representation, few ever get that opportunity, due to employer intimidation combined with ever-more-regressive federal labor laws that block workers from exercising their right to choose a union. This assault on workers intensified under the Bush administration, with the appointment of a strongly anti-labor National Labor Relations Board (NLRB) and Secretary of Labor.

The New York Times writes:

There is little doubt that American workers need unions. Wages today are almost 10 percent lower than they were in 1973, after accounting for inflation. The share of national income devoted to workers' wages and benefits is at its lowest since the late-1960s, while the share going to profits has surged. The decline in unionization has been a big part of the reason that workers have lost so much ground.

Source: Union membership data for the SJ-SF-Oakland region is from the Union Membership and Coverage Database, http://www.unionstats.com/, constructed by Barry T. Hirsch (Georgia State University) and David A. Macpherson (Florida State University). All unionization data used originates from the Bureau of Labor Statistics.

[ Continue reading Bay Area private sector workers achieve highest unionization rate since 1999 ]

Breaking news: Firefighters get paid more than cashiers

That should have been the title of this weekend's USA Today article. Instead, the front-page article was titled "Public jobs see pay gains" and purported to show a trend of "better pay and benefits for public employees" as compared to their counterparts in the private sector.

But USA Today is comparing apples to oranges. Different industries have different cost structures (think of the costs involved in running an auto plant versus a beauty salon), and the mix of skills and occupations involved in state and local government is entirely different from the mix of occupations in the private sector.

Nationwide, the top five occupations in the private sector, making up 12% of the workforce, are:

• Retail salespersons


• Cashiers


• Office clerks


• Combined food prep and serving workers, including fast food


• Waiters and waitresses

And the top three occupations employed by state and local governments, making up 15% of the workforce:

• Police and sheriff's patrol officers


• Fire fighters


• Correctional officers

Do we really want a force of firefighters and police officers who get paid minimum wage with no health care? Or maybe correctional officers should all work for tips. (Continued...)


Not only is USA Today's analysis flawed, but they can't even seem to keep their own numbers straight.

The chart accompanying the article claims to show "Average hourly wages" in the public and private sectors, revealing that public sector employees in 2007 earned an expansive-seeming average wage of $39.50. Two mistakes here. First, the article is about state and local government only, not the entire public sector; if you factored in federal employees (who aren't included in the survey), results would be different. And second, the average wage for state and local government in 2007 was not $39.50, but $26.26. (What's the difference? For a full-time worker, nearly $28 grand per year...)

That $39.50 represents not wages but total compensation, factoring in the high cost of health coverage (a nationwide problem not confined to the public sector) and retirement. The text of the article gets this right, but apparently whoever drew up the chart didn't bother to read the article. Can't say I blame them.


(All data is from the Bureau of Labor Statistics. The National Compensation Survey is available at http://www.bls.gov/ncs/; occupational employment is at http://www.bls.gov/oes/.)

[ Continue reading Breaking news: Firefighters get paid more than cashiers ]

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 ]

Silicon Valley Jobs Report: Modest growth in November, but more jobs are needed

Today's employment report from the state shows that the San Jose metro area experienced moderate job growth in November, adding 11,700 jobs over the past 12 months for an annual growth rate of 1.3%. Most of the region's major industries added some jobs over the year, with the biggest gains in educational & health services, professional & business services, and manufacturing.

While it is a positive sign that Silicon Valley is adding jobs broadly across most sectors of the economy, job growth of only 1.3% over the year is inadequate to bring employment and incomes back up to the point where Silicon Valley's working and middle-class families can make ends meet.

This is especially the case now that Santa Clara County is beginning to see more rapid population growth, perhaps spurred by people who left during the dot-com bust moving back in. With population growth for 2006-07 at 1.67% -- the highest in the Bay Area -- the demand for employment is rising faster than job creation. Even though the region added jobs over the past twelve months, unemployment rose from 4.4% in November 2006 to 5.0% in November 2007.

At the same time, home sales plunged yet again in November. Just 1,317 homes were sold in Santa Clara County, (Continued...) down 35.1% from November of last year, and far below the 2,624 homes sold in Nov. 2004.

The ongoing housing market crash may signal a decline next year in jobs in the construction and financial activities sectors -- which could put more people out of work. (Construction jobs fell by 1,000 this month, but much of that is probably a seasonal decline due to winter weather.)


Highlights of the jobs report:

• The San Jose metro area added 1,800 non-farm jobs in November. Nearly all of these jobs were in the retail sector, likely reflecting an increase in hiring for the holiday season.
  
  
• Over the year, the San Jose metro area added 11,700 jobs, a 1.3% increase from November 2006.
  
  
• The biggest year-over-year gains were in educational & health services (+3,200 jobs), professional & business services (+2,200 jobs), manufacturing (+1,700 jobs), information (+1,400 jobs), government (+1,200 jobs), and leisure & hospitality (+1,100 jobs).
  
  
• For November 2007, the region's unemployment rate stood at 5.0%, up 0.1 percentage points from last month and up 0.6 points over the year. That translates to 5,800 more unemployed residents than in Nov. 2006.
  
  
• Seven years after the tech crash, Silicon Valley still holds 153,600 fewer jobs than it did in November 2000.
  

(The San Jose Metropolitan Statistical Area (MSA) encompasses Santa Clara and San Benito Counties.)

[ Continue reading Silicon Valley Jobs Report: Modest growth in November, but more jobs are needed ]