Friday, August 29th, 2008

Outlook positive for state’s slowly recovering economy

Job market likely to become friendly just in time for UCLA students graduating in June

A stunted national economy and improvements in labor productivity have kept California and national unemployment high, economic experts said.

But many insist advancements in productivity will not have a long-term effect on the number of available jobs, and that future college graduates will find a friendly job market in California.

California employers shed another 16,600 payroll jobs in September – the largest single-month slide this year – bringing the total of jobs lost since January to 51,300, according to an Employment Development Department report released last month.

Decreases in payroll jobs were not consistent with the state’s unemployment rate, which dipped to 6.4 percent, the lowest level since January 2002.

Some economists attributed the contradiction between the unemployment rate and payroll job numbers to many Californians having gotten tired of searching for a job and no longer considering themselves in the job market.

Despite a trend of disappearing jobs in California, the state economy seems ready to turn the corner. It will likely do so before many UCLA students graduate in June, said Tom Lieser, senior economist with the UCLA Anderson Forecast.

“The outlook is for the economy to slowly get better,” said Stephen Levy, director of the Center for Continuing Study of the California Economy.

Last month, Levy said California’s economy was bad but better than the national economy, and that once the national engine picks up, California will likely follow.

Though economists say a national recovery officially began in November 2001 – almost two years ago – the economy has been slow to resurge.

Last month’s Anderson Forecast predicted the economy would grow approximately 2.5 percent between October and the end of the year. Average quarterly growth is 3 percent.

But although the economy has begun to show gains in recent months, it has done so without adding jobs.

Levy attributed the “jobless recovery” to a reluctance among employers to maintain large staffs. Hoping to improve productivity and cut payroll costs, many industries are restructuring their operations and cutting jobs in the process.

“Those jobs that are lost are lost permanently,” said Jack Kyser, chief economist for the Los Angeles County Economic Development Corporation.

Because of rising costs in health care and workers’ compensation, Kyser said it is cheaper for companies to invest in new technology, demand more from their employees, or hire temporary workers who are exempt from company health coverage.

Workers’ compensation costs have tripled statewide since 1995.

Despite general downsizing, the EDD is predicting significant growth in various industries, specifically information technology – which was crippled by the technology bust of 2001 – and personal and home care assistants.

Kyser is optimistic that Californians will aid an economic recovery by starting their own businesses.

“There is always the entrepreneurial spirit in California,” he said. “That is the beauty of California.”