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California job losses keep climbing

The Bay Area, whose tech industry is gearing up, is projected to lead the state's comeback. Southern California -- hobbled by the collapse in housing and construction -- will lag, economists say.

October 17, 2009|Alana Semuels

California lost more than five times as many jobs in September as it did the month before, signaling that the state's employment woes continue despite a budding economic recovery.

Employers cut 39,300 workers from their payrolls last month, according to figures released Friday by the state Employment Development Department, led by cuts in construction and government.

A separate survey of joblessness showed that California's unemployment rate was 12.2% in September, down from a revised 12.3% in August. But that decline wasn't a reflection of a stronger job market. The rate fell only because thousands of jobless Californians gave up searching for work last month and were no longer counted as unemployed.

"It is discouraging," said Esmael Adibi, an economist at Chapman University. "We want to see job losses go down and the pace slow down, but we didn't see it."

The state's unemployment rate has climbed dramatically over the last year, up from 7.8% in September 2008. It's also significantly higher than the national rate of 9.7%.

Despite the disappointing job numbers, economists said California was in the early stages of a comeback, albeit an uneven one. Southern California, which has been hobbled by the collapse in housing and construction, is projected to lag behind the Bay Area, whose bellwether tech industry is gearing up to supply growing global demand for computers, software and mobile devices.

Intel Corp. of Santa Clara and Google Inc. of Mountain View reported encouraging earnings this week. Northern California's exports of semiconductors and electronics climbed. In August, loaded containers sailing from the Port of Oakland were up 12.8% from the same period last year, while tonnage at San Francisco International Airport was up 5.2%, according to Jock O'Connell, international trade and economics advisor at the University of California Center Sacramento.

The Bay Area also stands to benefit from growing government and private investments in alternative energy and medical records technology, said Stephen Levy, an economist with the Center for Continuing Study of the California Economy.

"That's our thing, and we're a smaller economy," said Levy, who is based in Palo Alto. "It will help us a little bit more."

The Department of Energy last month finalized a $535-million loan guarantee for Fremont solar panel maker Solyndra Inc., which will pay for the construction of a manufacturing facility that could create 3,000 jobs. And Tesla Motors Inc., a San Carlos electric car maker, raised $82.5 million in September and received a $465-million low-interest government loan in June.

Overall, the San Francisco Bay Area received $2.2 billion in venture capital funding in the third quarter of the year, up from $1.9 billion in the second quarter, according to a report scheduled to be released today by Dow Jones VentureSource. By contrast, Southern California received $458 million in venture funding in the third quarter, down from $500 million in the second quarter.

Jon Bischke moved his start-up, EduFire, from Santa Monica to the Bay Area in May. The company has since found venture capital funding and hired two more employees.

"It's certainly easier up north, with the number of venture capital funds," he said. "And in L.A. the tech scene's been tough of late."

That's a reversal from earlier in the decade, when thousands left the Bay Area for Los Angeles and San Diego after the dot-com bust. Diversification was the key to Southern California's resilience, with its broad mix of industries including construction, manufacturing, international trade, tourism and entertainment.

The trouble is that none of those sectors is doing well at present.

Los Angeles County's unemployment rate soared to 12.7% in September, up from 12.2% in August. Industries including leisure and hospitality, manufacturing and construction shed jobs over the month. So did the county's high-paying information sector, which includes motion picture and sound recording as well as publishing. It lost 2,800 jobs in September and 19,000 over the last year partly because of studio cutbacks and productions' leaving for cheaper locales.

Norton Flynn has worked one day in the last year as demand for his services as a truck driver for television productions has slowed. The 51-year-old Santa Clarita resident has driven Harrison Ford and Joan Cusack around sets, but he's now living a less glamorous life as he waits for his unemployment check, nervously counting how many weeks of jobless benefits he has left.

"If I go back to work living the so-called good life, that's great," Flynn said about his future. "But I'm a man of limited talents."

Other pillars of the Southland economy are shaky as well. The ports of Los Angeles and Long Beach together recorded their worst September for imports in nine years. Tourism and manufacturing continued to shed jobs. And the housing sector, though stabilizing, could take years to recover fully.

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