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Sacramento-area unemployment soars to highest level in a generation
(Sacramento Bee, The (CA) Via Acquire Media NewsEdge) Mar. 6--Unemployment in Sacramento soared to 10.4 percent in January, a level not seen in a generation, as practically every economic sector faltered.
The crisis in retailing was the leading culprit, state officials reported Thursday, and the layoffs went beyond the usual post-holiday cutbacks. Construction was weak, too.
January is typically a bad month for unemployment, as Sacramento's jobless level is not adjusted for normal seasonal variations. But this was worse than usual. "Most of the industries are just cutting back at higher percentages," said Diane Patterson, labor market consultant with the Employment Development Department.
The rate for December was 8.8 percent. Unemployment has risen four percentage points in a year.
Technically, the new rate erases the area record of 9.3 percent unemployment set in February 1993. But that's because comparable data for years prior to 1990 aren't available.
The rate actually reached 12.9 percent in January 1983. Back then, the official metro area covered only Sacramento, Placer and Yolo counties. Since then El Dorado County has been added.
By practically any measure, the new numbers are bad. Only a few weeks ago, the most pessimistic professional forecasts had unemployment reaching 10 percent in Sacramento sometime this year. Now there's no telling how high it will get.
Jeff Michael, director of business forecasting at the University of the Pacific, said the economy appears to be worse than in the early 1980s. Already the statewide unemployment rate, released last week, has risen to 10.1 percent, a level consistent with numbers seen in the early 1980s. The national rate for January was 7.6 percent; the February numbers will be released today.
One small ray of hope emerged Thursday when the government said initial nationwide claims for unemployment benefits fell last week. But the four-week average of new claims increased slightly to its highest point since 1982.
Across greater Sacramento, the EDD said 19,700 jobs vanished in January, or 2.3 percent of the total.
"Losing almost 20,000 jobs in a month is very serious," said economist Suzanne O'Keefe of California State University, Sacramento. "That does not bode well."
Area retailers cut 5,600 jobs. That isn't a shocking number for the month after Christmas -- except that retailers hired barely half that many workers in the run-up to the holidays. That means the layoffs extended to workers with supposedly permanent jobs.
"This isn't just the holiday help," Michael said.
The sector has eliminated 9 percent of its Sacramento payroll in the past year, a total of 8,800 jobs. Retailing accounted for one-fourth of all the jobs that disappeared in Sacramento the past year.
The suffering continues. On Thursday almost every big retailer except Wal-Mart reported a decline in February sales.
Circuit City is wrapping up its liquidation sale, which will eliminate 250 or so jobs in greater Sacramento. Fresno's Gottschalks Inc., operating in Chapter 11, faces a bank-imposed March 30 deadline to sell out or go under. Gottschalks owns four stores in the area.
The weak retailing climate will claim an additional 230 jobs when J.C. Penney closes its Carmichael call center this month.
"It's going to get a lot uglier before it gets better," said Colliers International's Garrick Brown, who said vacancies at area shopping centers will top 14 percent this year. "We're basically overbuilt in the retail world. There's not going to be the consumer dollars."
The opening of the long-delayed Elk Grove Promenade mall was just put off indefinitely. Smaller centers are struggling, too: Elk Grove's 2-year-old Stonelake Landing is in receivership.
Dan Nethercott of Redfern Development, which built Stonelake, said he's encouraging his remaining tenants to stay positive. "My instinct is things will turn around in 12 months or so," he said.
Examples of stress are seemingly everywhere. Although the new budget agreement staved off mass layoffs, state-worker furloughs are depressing incomes and hurting downtown and midtown restaurants. Today is the final "Furlough Friday" shutting down virtually the whole state government, although unpaid days off will continue.
Real estate is still troubled. About 3,800 construction jobs disappeared in January and 8,400 in the past year. That's nearly a quarter of the area's total loss since January 2008. The slowdown has spread from housing to commercial.
Dennis Morin of the Sacramento Area Electrical Training Center, a management-labor program for budding electricians, said he's stopped hiring apprentices. One-fourth of Local 340 of the International Brotherhood of Electrical Workers is out of work, said president Greg Larkins.
"Certain big projects that we had on the boards -- have been pulled back," Larkins said. He hopes the public works spending included in the federal economic stimulus plan will help.
For now, the only sectors adding jobs on a sustained basis in Sacramento are health care and private education. But another growth sector, green-tech, has hit a plateau. One of its biggest players, OptiSolar Inc., just laid off 105 workers at McClellan Park.
Job fairs have become a Sacramento pastime. Last week 2,000 people showed up for one at McClellan. RecruitMilitary, a national company that held one for military personnel in Sacramento in November, is coming back to the region. Its latest job fair is 11 a.m. to 3 p.m. March 26 at the University of Phoenix campus in Rancho Cordova.
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Call The Bee's Dale Kasler at (916) 321-1066. Read his blog on the economy, Home Front, at www.sacbee.com/blogs.
To see more of The Sacramento Bee, or to subscribe to the newspaper, go to http://www.sacbee.com/.
Copyright (c) 2009, The Sacramento Bee, Calif.
Distributed by McClatchy-Tribune Information Services.
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