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Thursday, Mar 28, 2024

Valley Posts Job Growth in Lower-Paying Positions

The greater San Fernando Valley showed some encouraging job creation statistics, but as unemployment dropped throughout the region, so did some of the highest-paying jobs. Daniel Blake, Director of the San Fernando Valley Economic Research Center at California State University, Northridge, delivered the report before over 200 attendees of the Valley Industry and Commerce Association’s annual business forecast conference on Oct. 28. Overall, the Valley posted 1.8 percent job growth in 2004, outstripping Los Angeles County (1.0 percent) and the state of California (1.3 percent). Total private-sector payrolls increased by $1.9 million, but many of the industries increasing their average payroll, which was for all industries combined $46,750, were some of the lowest paying sectors. For instance, total retail trade employment added 3.7 percent of the region’s total job growth, but average annual pay in retail jobs is, at $28,581, one of the lower paying industries. Meanwhile, higher paying sectors like manufacturing and finance or insurance industries reduced employment 1.9 percent and 2.9 percent, respectively. “These are jobs that are not coming back,” said Blake of the manufacturing industry. “But at least our projection shows minor movement down in durable (manufacturing) over the next few years, probably 400 or 500 jobs a year.” The information industry, which includes entertainment companies, continued to be one of the most important in the region. One out of seven jobs in the Valley is in the information industry, and the industry contributed $7.2 billion of a total annual payroll of $31.8 billion. Additionally, the sector proved to be highly entrepreneurial in nature. Sixty five percent of businesses in the sector employ between one and five people, although the remaining 35 percent of companies do employ 72 percent of information industry workers. At the conference, Larry Kosmont, CEO of Kosmont Industries, further detailed the economic climate throughout the Valley and in the rest of the state. “I think California very much is like the movies, it looks a lot better on screen than it is in person,” said Kosmont. “Where do all the people come from that will buy a $600,000 house or make a $1,500 mortgage payment and make $38,000 per year?” The state is in a potentially dangerous situation in which it relies on housing prices and construction to stay strong, but is increasingly offering lower-paying jobs. “The jobs we’re getting are worse than the jobs we’re losing. The jobs we’re gaining are not paying what was being paid by the industries such as real estate or manufacturing,” Kosmont said. “We are definitely, definitely gaining fat and losing muscle.” Kosmont argued that California has failed to shed its “business unfriendly” image. He said recent surveys have shown that at almost two thirds of executives in the state have considered moving out of the state. Businesses that are started in California tend to expand in other parts of the country, he said. Rohit Shukla, CEO of the Larta Institute said that California is fighting a losing battle in trying to keep manufacturing jobs from heading overseas. “We cannot expect any more to maintain the economy we’ve had,” said Shukla. “We won’t be able to compete with India and China (in labor costs),” Shukla said. State Finance Director Tom Campbell echoed Shukla and Kosmont’s fears later in the presentation and said California needs to keep its focus on higher education. “We will never out compete India, China and Russia in cost of labor,” said Campbell. “We will out compete them in the creations of our minds. That is where our comparative advantage is and thus our investment needs to be in CSU Northridge,” he said. “Our reinvestment in education is solid and growing and it is the right thing that California is doing.” Breakout sessions throughout the day provided some encouragement for the thousands of small businesses throughout the Valley. In a session on business lending trends Tom Booker, a senior vice president of Wells Fargo Bank, said that he expects banks to continue generously lending to small businesses. “It’s a very good environment for small businesses to be borrowing money from banks, all kinds of banks,” said Booker. Booker said bankers are expecting to see small businesses continuing to create new jobs and making capital expenditures. “Small businesses. . .had a very good year in 2005, and we do not expect that to slow down,” said Booker.

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