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." (Continued...)

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 ]