News Column

Public-sector Cuts Hurt Job Recovery

Sept. 24, 2012

Dale Kasler

Teacher layoffs and other cutbacks in the classroom are rippling through California's job market.

After several months of fairly brisk hiring, employers added just 12,000 jobs across California in August, the Employment Development Department said Friday. Unemployment fell a tenth of a point, to 10.6 percent, mainly because thousands of people stopped looking for work and so were no longer counted as jobless.

The recent shakiness in the national and global economies isn't helping California, but a bigger factor is the public sector, where budget woes continue to press down on payrolls.

"That's still the big anchor on the boat," said Dennis Meyers, principal economist at the state Department of Finance.

Public-sector blues are particularly an issue in Sacramento. While the unemployment rate fell four-tenths of a point, to 10.3 percent, the area added just 400 jobs. Encouraging gains in retailing and construction were almost completely canceled out by cutbacks in state and local government.

School districts may be suffering the most. For the past several years, they issued thousands of pink slips, only to rescind many of the layoff notices. Workers got a reprieve in 2011 when tax payments improved and the Legislature passed a law temporarily curbing teacher layoffs.

This year is a different story.

Sacramento City Unified School District has laid off 318 workers -- about eight times as many as last year. Almost half the pink slips translated into actual layoffs.

"It's a massive difference," said district spokesman Gabe Ross.

All told, school districts in greater Sacramento eliminated 2,800 jobs last month. They've cut 7,000 jobs in the last two months combined, mirroring a trend across the state.

"It was a tough year," said Mike Myslinski, spokesman for the California Teachers Association. "A lot of districts, because of the uncertainties about the budget, about Prop. 30, made some pretty deep cuts."

Proposition 30 is Gov. Jerry Brown's proposal to raise taxes. If it fails at the ballot box in November, about $6 billion in additional spending cuts would kick in -- mostly to public education.

Despite the troubles in the public sector, economists said California's economy is still generally on the right track.

"The California economy is still improving -- not strongly, but at a decent pace," said Sung Won Sohn, an economist at California State University, Channel Islands. "We are doing better than the U.S. economy."

But there were signs that the wobbly national and international economies -- particularly in Asia and Europe -- are starting to catch up with California. Exports from the state declined in July, the first time that's happened in almost three years.

The statewide job growth for July, originally reported at 25,200, was revised downward to 17,900.

The latest job figures "may just reflect the national effects," Meyers said. "We've got some slowing in demand."

Analysts took comfort in growth in the construction industry, a testament to the slow but unmistakable recovery of the housing market. In Sacramento, construction employment grew by 1,800 in August.

"It's been so far down for so long, it's finally beginning to pick up," said economist Jeff Michael of the University of the Pacific.

Michael noted that payrolls in greater Sacramento have grown by 2.2 percent in the past year, a pace that's slightly faster than the statewide average. The Sacramento area, which lagged the recovery for years, is "heading in the right direction," he said.

"I don't think Sacramento is going to leap to the front of the recovery anytime soon," he said. "But it's part of it."

Source: (c)2012 The Sacramento Bee (Sacramento, Calif.). Distributed by MCT Information Services

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