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.

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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

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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.

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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/.)

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