News Column

Sacramento Area Ranks Worst in Job Losses

April 29, 2011

Darrell Smith


The latest employment numbers weren't pretty Wednesday. They rarely are in Sacramento these days.

The U.S. Bureau of Labor Statistics numbers are as bleak as they are familiar:

14,600 jobs were lost from area payrolls from March 2010 to March 2011 -- double that of the second-worst Memphis metro area's 7,500-job decrease.

Area jobs disappeared at the sharpest rate among the 36 metro areas with more than 750,000 workers, down 1.8 percent.

Only Las Vegas and the Inland Empire's jobless rates were higher than the region's 12.7 percent among the 1 million-plus metro areas.

So, how did Sacramento get here and what will it take to pull itself out of the ditch?

Jeff Michael, director of the Business Forecasting Center at the University of the Pacific in Stockton, said the problem is that Sacramento's economy sits on a two-legged stool of government and real estate/construction, and both legs have been kicked out from under us.

For Sacramento to recover, "the housing and real estate markets have got to turn around. It's the only sector capable of generating the boost that's needed," Michael said.

The numbers show how the region's construction and government sectors have struggled under the weight of the housing crisis and the state's ongoing budgetary woes.

Jobs in the two sectors fell nearly 7 percent and 2 percent, respectively, from March 2010 to March 2011, according to the BLS, affecting everything from income to consumer confidence to the businesses that rely on the sectors to remain viable.

Michael said the state's budget woes, though less damaging to the region than the crippled housing sector, have still created a "substantial hole."

"It dims confidence in the future and that manifests itself in the consumer economy," he said, adding that "(government) is also a big purchaser of goods and services in the region."

Long term, the solution is to diversify, to add a third leg to the area's economic stool.

Steve Currell, dean of the Graduate School of Management at University of California, Davis, said today's tough times provide a chance to "break the tradition of relying on the government sector as the basis for our economy."

He cited Pittsburgh and Houston as cities that found ways to reinvent themselves beyond their traditional steel and oil-based economies.

"The Sacramento region is in a watershed moment," Currell said. "It's time that we must turn our attention to having a more entrepreneurial community, more knowledge-based and driven by innovation of all kinds. That model will be the engine of job creation."

Currell, whose graduate school has built its reputation on bringing technological innovation to the marketplace, looks to clean technology, sustainable agriculture and medical devices as ways to broaden the region's economy.

Expanding the local economic base has been talked about for many years, but has proved difficult to accomplish.

"We have to thoughtfully identify what we want our jobs snapshot to look like in five years and what we need to do to get there. We need a mix of strategies," said Meg Arnold, chief executive officer of regional tech incubator Sacramento Area Regional Technology Alliance.

The area's still-evolving technology sector is only one avenue toward diversifying the local economy, but the area's sluggish performance has slowed its momentum as well, Arnold said.

"It's been a challenging few years particularly from a financial perspective," Arnold said, as the slowdown has stifled the flow of venture capital and dampened the ability of companies to go public to raise money.

But money will follow talent, said Currell of UC Davis, adding that business and academic leaders have to point the way.

"Financial capital follows human capital," Currell said. "It's going to take leadership by university and business leaders to change our direction. That will be the catalyst."

Source: Copyright (c) 2011, The Sacramento Bee, Calif.

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