Tuesday, November 18, 2008

By EVE HIGHTOWER
ehightower@modbee.com

last updated: August 16, 2008 09:21:59 AM

The Northern San Joaquin Valley's jobless rate continued to climb in July, when harvesting and construction typically boost employment.

But the housing market collapse continues to be a drag on the region's economy, as small businesses shut their doors and major employers trim payrolls.

Stanislaus and Merced counties' unemployment rates are among the six highest in the state, according to figures released Friday by the state Employment Development Department.

Stanislaus County's jobless rate hit 11.3 percent in July, according to the EDD, with Merced County at 12.1 percent and San Joaquin at 10.6 percent.

California's unemployment rose to 7.3 percent in July.

The valley's numbers continue a recent trend of double-digit unemployment that before this year was last recorded in the region in 2004.

From June to July alone, Stanislaus County lost 2,600 jobs. Merced County lost 1,800. The counties actually lost more, but those losses were offset by job gains during the same period.

The biggest losses in July were among government employees, said Pedro Vargas, an EDD labor market analyst.

"It's happening throughout California," he added.

Merced and Stanislaus counties saw the largest gains in the manufacturing sector, the EDD reported, but those were far outpaced by job losses in government and other categories.

Problems are spreading

The valley is experiencing the ripple effect of the housing bust, which has resulted in thousands of layoffs in construction and related fields, said Jeff Michael, director of the University of the Pacific's Business Forecasting Center.

"Nothing has fallen off a cliff the way construction did last fall, but the problem is definitely spreading. Now it's a more broad-based problem, and we're watching how consumers react under this pressure," he added.

"We're in the middle of a 12- to 18-month recession," Michael said. "We saw a little boost with tax rebate checks, but home values are still declining and costs are still increasing and there's a weak job market so consumers are feeling pinched."

As people lose their jobs and consumers spend less because food and oil costs remain high, the entire country slips deeper into recession. The slumping economy has led to a weaker dollar, which actually has benefitted some sectors.

"The weak dollar is helping exports, so the ag sector is performing well," Michael said.

As are other goods produced here for export, which might explain the increase in some manufacturing jobs, said Alex Whalley, assistant professor of Economics at the University of California at Merced. But those gains are cyclical and will not lead to a stronger valley economy, he added.

Education is the key

Already this week, the dollar has posted strong gains against other currencies.

"In the long run, the answer is education," Whalley said.

About 18 percent of Northern San Joaquin Valley residents aged 25 to 64 have at least a bachelor's degree, compared to 31 percent of Californians, according to the Campaign for College Opportunity.

The most secure jobs and businesses tend to require the most education and unique skills, Whalley said. Highly skilled positions are among the last hit in hard times.

Unless the valley turns around its low-education reputation, it will not attract the most secure business and jobs, Whalley said. Even in times of growth, it will continue to attract companies that offer expendable jobs.

That's not to say everyone who has been laid off should apply for graduate school.

"You don't want to do a Ph.D. program if you aren't interested in research," he said.

Whalley suggests learning skills that will be valuable in the long run. Or taking the time to learn a trade, skill or language you've always wanted to know.

"People shouldn't make decisions based on what's happening today. Think long-term," he said.

Bee staff writer Eve Hightower can be reached at ehightower@modbee.com or 578-2382.

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