Jump-starting job creation: What works?

The Bee consults experts, readers in effort to find out

March 1, 2009 

MB Mervyns 3

The parking lot was full at Mervyn's California on McHenry Ave. in Modesto Saturday 11/01/08 afternoon as signs read the store was closing and everything was 25-50% off. Marty Bicek/The Modesto Bee

MODESTO BEE

Creating jobs during a recession is hard work.

Employers no doubt would love to hire back the people they have laid off.

But that will only happen if business picks up and employers gain confidence about the future.

"As a business owner, you aren't going to be hiring anybody if you don't have the revenue or the productivity to support that hiring," said Mark Plovnick, a management professor and director of economic development at the University of the Pacific in Stockton.

He was one of the people The Bee consulted in an effort to get to the fundamentals of job creation. Most of the others are regular readers who offered a range of ideas for putting people to work.

It's a significant question for people who have lost jobs in and near Stanislaus County, where the jobless rate was 13.6 percent in January -- and the February number to be released Thursday is likely to be much worse.

Jobs come about in a few general ways. One is by turning an area's natural assets into useful products for the rest of the world, as the San Joaquin Valley long has done with its unrivaled farmland and food-processing industry.

"If we take care of the basic industries, everything else will fall into place," said retired educator George Car- doza of Turlock, one of the readers offering job-creating ideas in a story in today's Work & Money section.

Another way is to latch on to an emerging industry, as the Silicon Valley did with computers in the 1970s. The San Joaquin Valley could do the same with solar and other renewable energy.

Jobs also come from businesses that spring up to serve the primary industries, such as feed and fuel suppliers for farmers. And jobs emerge at businesses -- such as supermarkets, hair salons and real estate agencies -- that meet the needs of all these people.

Many retail jobs are low-paying, but they can be valuable for students or for families needing a second income, said Kelvin Jasek-Rysdahl, an economics professor at California State University, Stanislaus. And a new store can boost an area's economy if it means shoppers no longer go elsewhere for those goods, he said.

Jobs also can come from government, via either day-to-day spending or massive influxes such as the $787 billion stimulus package signed by President Barack Obama.

Smaller stimuli also help

The stimulus could help keep even more jobs from being lost during the recession, Jasek-Rysdahl said. The spending will keep people working in construction, education and other fields, and these people will then save other jobs by spending what they earn, he said.

A stimulus on a smaller but still sizable scale comes along whenever a factory or other job-rich development comes to an area and sends out its ripples.

Stanislaus County's largest private employer, E.&J. Gallo Winery, has an annual impact of about $2 billion a year, according to the Stanislaus Economic Development and Work Force Alliance.

The Hershey chocolate plant in Oakdale provided about $167.4 million in annual impact -- and hundreds of jobs at other businesses -- before its closure last year, according to the alliance.

Economic development experts say the big employers are important, but adding a few jobs at a time helps, too.

"The vast majority of net new job creation comes from small business," Plovnick said. "They are the growth engines."

That takes confidence in the marketplace, something in short supply these days. It also can require loans from a financial system that has been hobbled by the housing collapse and related troubles.

"It really is an essential part of our system," Jasek-Rysdahl said, "and we see that when it isn't working well, it doesn't affect just the bankers. It affects everyone."

Plovnick noted a dilemma at the heart of any recession. Individuals tend to reduce spending and increase savings, which might be good for them but not so good for a national economy that depends on consumer spending for two-thirds of its activity.

The experts and the public are waiting to see what the stimulus does -- and how long it will take for factories to rehire by the thousands and small businesses to add an employee or two.

Economists also advise people to remember the basics.

"You've got to have a product that people want to buy," Jasek-Rysdahl said, "and once you get beyond that, you need to have a way to bring it to market."

Bee staff writer John Holland can be reached at jholland@modbee.com or 578-2385.

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