Hill: Valley job news getting no better

By David W. Hill
dhill@modbee.com

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The housing market in the Northern San Joaquin Valley seems to be at or near the bottom, finally, according to the latest sales and home price figures.

Banks, especially the largest financial institutions, are reporting surprisingly strong second-quarter profits, an amazing turnaround given how beaten down they were.

GM and Chrysler, which had been considered by many to be too big to fail even in a toxic economy, exited bankruptcy quickly and supposedly are better prepared to take on the competition.

There's even money in the pipeline to stimulate auto sales, as well as federal dollars for building roads and other infrastructure projects.

Happy days must be here again, unless of course you're unemployed.

The sobering news for valley residents is that unemployment isn't getting any better. In fact, it's worse.

The just-released figures showed unemployment in Stanislaus County jumped up from 16.3 percent in May to 16.6 percent in June. That's nearly a return to the peak rate for the year -- 16.8 percent, hit back in April. The numbers are just as bad or worse in Merced and San Joaquin counties.

While California held steady at 11.6 percent, that's the highest unemployment rate since modern record-keeping began in the state. Nationally, the rate is 9.5 percent, but the Federal Reserve expects it to hit 10 percent later this year -- and stay there well into next year.

Still, that's a long way from the joblessness the valley is experiencing, and as long as unemployment stays at or near current levels, any significant recovery isn't likely to happen anytime soon.

Agriculture, which was credited for giving employment a boost in May, can give the region a shot in the arm for only a short period. It takes just so many people to work the fields, farms and canneries during the harvest. Once those jobs are filled, that's it. When the harvest ends, unemployment is likely to spike even higher.

It was hoped that ag could give the valley enough of a lift through the summer and into the fall to provide a bridge to a larger and stronger national recovery.

Though the Fed is predicting the U.S. economy won't contract as much as expected, it also foresees a relatively small expansion coming out the recession. It could be a while before the positive effects of a national recovery reaches folks here.

The ag-driven valley economy provides a strong foundation, but it can't provide the diversity of jobs needed to see the region through protracted and deep downturns. Efforts to attract new types of employers have had some success, but not enough to offset current conditions. It's a long, slow process.

Even with a more diversified economy, there's no guarantee things in the valley would be better. After all, manufacturers nationwide are hurting and cutting back, just as they have been locally. The shift from a manufacturing economy to more of a service economy isn't helping either. Service businesses such as restaurants aren't in hiring mode these days. Even if they were, many of those jobs are part time and don't provide the kind of income needed to spur a recovery and carry it onto solid footing. These days, people are often taking part-time jobs for survival, not so they will have disposable income.

In other recessions, the housing industry helped fuel recoveries, but that likely won't be the case this time around, at least not in the valley.

New home construction has been at a standstill for months. Even if conditions improve enough to get builders to jump back into the valley housing market, any projects they have in mind would take months to start. Besides, the valley housing market is still working through its large inventory of foreclosed properties, and more are coming.

Another problem for the valley is the state budget. UCLA's quarterly Anderson Forecast of the state economy predicted that 60,000 government positions would be eliminated as lawmakers try to reduce the state's $24.3 billion deficit. Basically, if all those jobs are cut, then there will be even fewer people with money to spend on the things businesses large and small need to sell. The report predicts elimination of those jobs will be a drag on the economy in 2010.

In the meantime, our friends and neighbors who are out of work will be the people who suffer most while awaiting a recovery.

I recently saw a friend and former colleague who came into the office. After a warm greeting and some idle chatter, I asked how he was doing.

"I really miss this place," he said. "You guys have no idea how bad it is out there."

I mistakenly replied that I did because my son, to whom I preached the value of a college education for years, is back home looking for a job after graduation. I related how frustrating that was for us as family.

"Yeah," my friend said, "but he doesn't have a mortgage."

Right, got it.

Bee business editor David W. Hill can be reached at dhill@modbee.com or 578-2336.