June 24, 2009

Construction hit hard in Silicon Valley plunge

San Francisco

With more than 100,000 people looking for work in May, Silicon Valley’s recession-gripped economy recorded the highest unemployment rate on record —11.2 percent.

There was one sign of economic life in the report issued last Friday by the state Employment Development Department: a net increase of 400 jobs in the region, mostly in stores, restaurants and bars, perhaps signaling a tentative return of the consumer. And a major employment service reported a cautious return to hiring by some area companies that had cut deep as the recession hit.

But the jobless rate still was up from a revised 11 percent in April. It was the highest in records that go back to 1990 and more than double what it was a year ago. And the valley’s key high-tech sector continued shedding jobs.

At the same time, California’s unemployment rate climbed to 11.5 percent, the highest since record-keeping began. The state lost 69,000 jobs in May. And all across the West, according to a new U.S. Labor Department report, unemployment is at record highs—above 10 percent.

“What jumps out is a continual free fall in construction” throughout the state, said Michael Bernick, a labor lawyer in San Francisco and a former EDD director. The construction industry lost 11,300 jobs statewide in May and more than 250,000 in the past two years, he said. “That’s more construction jobs than most states have.”

The economic downturn in Santa Clara and San Benito counties has claimed more than 40,000 jobs in the space of a year, with an 18 percent decline in construction jobs and losses in key areas of high tech, ranging from software publishing to computer design.

The financial services sector has also suffered.

One bright spot in the report was an increase in May in employment in leisure and hospitality, private education and retail trade. Though small, it was the first such gain since September 2008.

The monthly gain of 500 jobs in the valley’s retail sector was the first since November 2008, just after this past fall’s economic collapse. Restaurants and bars also added 500 jobs during the month.

The unemployment rate is a measure of the number of valley residents working or looking for work, a figure the EDD obtains with a survey of households. A separate survey of employers counts all the jobs in the valley, some of which are filled by people outside the region, helping explain how the county’s unemployment rate rose even as 400 jobs were added.

According to the household survey, there are 102,300 people currently unemployed in the valley and looking for work, more than twice as many as at this time last year.

“That’s the telling number,” said Janice Shriver, EDD employment specialist.

Associated Press

Spherion, a national employment service with offices in San Jose and Santa Clara, said it is seeing an uptick in hiring for clerical jobs, particularly in health care, as well as some improvement in high tech.

“It’s slowly coming back,” said Mary Lynn Bartholomew of Spherion. “Employers cut pretty deep when they did layoffs, and they are cautiously bringing people back on,” though mostly as temporary workers. “We’ve got a great pool of people looking for work. It’s sad in a sense, but if you’re an employer looking for workers, we’ve got them.”

“The Bay Area is absolutely saturated with unemployed high-tech workers,” said David Noel of San Mateo, a 27-year-old software products manager who lost his job in late February. Noel said his girlfriend was one of 300 people who recently applied for one consulting job through a single recruiter.

High-tech job losses are concentrated primarily in three areas: The manufacturing sector has lost 6.6 percent of its jobs in the past year, while information services has lost 6 percent and professional and business services lost 4.9 percent. Those three areas accounted for 22,400 of the jobs lost in the valley in the past year.

The unemployment rate of 11.2 percent is for Santa Clara and San Benito counties combined. Separately, the more rural San Benito County had a 14 percent unemployment rate in May; Santa Clara County’s was 11.1 percent.

Associated Press

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