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State caught in avalanche of job losses

After steep January cuts, more than 1 in 10 Californians is out of work. It's even worse in L.A. County.

February 28, 2009|David Pierson

Unemployment in California shot up to its highest level in nearly 26 years in January, leaving more than 1 in 10 workers without a job.

Figures released Friday show that 79,300 jobs were lost in the state last month, bringing the total number of unemployed to 1,863,000, or 10.1% of the workforce. That's the highest since the rate touched 10.4% in 1983.

Conditions are even worse in Los Angeles County, which saw its unemployment rate jump to 10.5% in January from 9.2% the month before.

The deep job losses follow a sharp drop in the gross domestic product -- the value of all goods and services produced -- in the waning months of 2008. Nationwide, GDP shrank at an annual rate of 6.2% in the fourth quarter, the Commerce Department said Friday. That was far worse than the 3.8% drop the agency had estimated, and the biggest decrease since 1982.

Paul Policarpio knew it was only a matter of time before he would be laid off.

In his final months as a sales associate at a Nordstrom store in Canoga Park he spent most of his time straightening out the piles of unsold clothes. A couple of weeks ago, the ax fell.

Policarpio's experience has been repeated across L.A. County, where retail jobs have taken the hardest hit in an ever-growing wave of layoffs and downsizing.

The outlook for Southern California is considerably worse than the national forecast presented by President Obama's budget team this week because the economy here -- usually considered resilient because of its diversity -- relies on sectors battered by this particular recession, said economist Jack Kyser of the Los Angeles County Economic Development Corp.

L.A. County alone, his group projects, will lose 89,000 jobs in 2009, and Kyser suggested the unemployment rate could surpass 10.5% for the year. In the Inland Empire, the group predicts the unemployment rate will rise to 11.1%, while Orange County, which lost 41,400 jobs last year, is projected to see unemployment climb to 7.3%, the highest rate in 16 years. January figures for those counties will be released next month.

Los Angeles County lost a net 41,900 jobs last year and nearly all of them -- about 41,000 -- were in retail, manufacturing and construction, in that order. In January, retail shed 15,100 jobs, manufacturing lost 6,800, and construction, 4,800. The three sectors were caught in the collapse of the housing boom and recession.

To make matters worse, another key California industry -- the film business -- lost 22,300 jobs in January, leading L.A. County layoffs for the month.

Sally Wang found out she was losing her job the day she returned from a New Year's vacation.

The mother of one managed a high-end women's clothing showroom in the garment district in downtown Los Angeles selling wholesale to department stores such as Barneys and Neiman Marcus. She said 2008 started poorly and got progressively worse.

"First, very few people were coming in," Wang, 36, said. "Buyers stopped traveling so they asked us to send pictures. Then people wanted to return stuff because it wasn't selling. And then they started canceling orders."

Wang agreed to a $25,000 cut from her $80,000 salary before the winter holidays. But that wasn't enough to save her job. She was fired after four years with the company.

"It doesn't look like I'll be able to get a job in the same industry for the same salary," said Wang, who is concerned she'll have to scrap her plans to enroll her 5-year-old daughter in private school. "The only things available are very skilled jobs where you need lots of experience or $10-an-hour jobs."

Hollywood studios and television networks have been slashing payrolls as financing and revenue ebb. Although box-office sales are up 23% for the first few weeks of the year, other parts of the entertainment business, such as DVD sales, have been struggling.

Warner Bros. announced last month it would eliminate 800 jobs. Other entertainment heavyweights, including Viacom Inc., video game giant Electronic Arts Inc. and Hollywood's largest independent studio, Lionsgate, have also downsized.

Economic pressures have forced studios to scale back the number of films they are shooting, further eroding the number of available jobs.

With more competition in the job market, the chances of finding employment declines.

Anthony Azucar was laid off twice last year and has spent the last six months looking for work.

The former printing press technician has sent out dozens of resumes, applying for jobs far afield from his trade such as customer service call center representative and office assistant. Desperate to help support his wife and 10-year-old daughter, he's willing to accept a fraction of his former pay, but still hasn't received any offers.

"It's overwhelming," Azucar, 52, said. "I feel like there's too much competition. And you don't see any improvement in the near future. That's what it boils down to."

Economists say that, even if the economy begins to improve later this year, employment will lag behind.

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