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Saturday, Dec 2, 2023

ECONOMY—Impact of Economic Slowdown Affects Workers Most

Signs that job growth is slowing markedly are appearing throughout the San Fernando Valley. Data from the state’s Employment Development Department show that job postings at the agency have dropped dramatically over the past six months. And another survey from a national employment agency reveals that Valley businesses have pulled back considerably on their hiring expectations. Although those who track economic indicators say they are waiting for a Los Angeles County report on employment due to be released Feb. 23 before drawing any hard and fast conclusions, they also concede that the upcoming data will likely do little to contradict the signs already present. “I think you’ll probably see a slowing in the pace of job growth,” said Jack Kyser, chief economist for the Los Angeles Economic Development Corp. of the upcoming January figures. “But employment is a lagging indicator. The February and March numbers are going to be a little more interesting.” The Feb. 23 employment report will detail January employment in L.A. County and provide revised data for full year 1999 and 2000 employment. But other indications of a slowdown are already present in the Valley. At the state’s EDD, which runs a job service connecting employers with applicants, job orders declined an average of nearly 20 percent each month from July 2000 through January of this year for the San Fernando and Antelope valleys. The agency posted an average of 10,615 jobs each month in the period, compared with an average 13,256 postings per month for the like period last year. Officials at the EDD were hard pressed to explain the sudden downturn, but noted that it may reflect the slowdown in consumer spending overall. “In essence, the Valley is like L.A.’s bedroom, and a lot of the employment is serving people’s needs for living,” said Thomas Neuberger, regional manager for the San Fernando and Antelope valley regions at the EDD. “It’s just speculation, but what you get is the employment is affected by consumer spending, and if that cuts back, then employment cuts back.” Neuberger noted that while job orders have dropped off, there have not been any unusual corporate downsizings in the area. The EDD tracks what it calls “mass layoffs,” those made by companies with 100 or more employees where downsizing or closure affects one-third or more of the total workforce or, in the case of the largest companies, at least 500 workers. Through January, the EDD logged 35 mass layoffs for the San Fernando Valley/Antelope Valley region, involving 2,535 employees, about the same as the totals logged for the comparable period last year. While the Valley economy has been bolstered recently by the entertainment industry, where studios and production houses are hiring aggressively as they try to rush through projects before the strikes expected to hit the sector this spring, time there is running out. A bright spot has been the tech sector. Unlike the Westside, where many dot-coms make their headquarters, the tech sector in the Valley is largely composed of hardware and other technology infrastructure companies that remained relatively unscathed in the Internet meltdown. Still, there are signs of problems ahead. Employment in the entertainment industry is expected to slow dramatically once the projects currently in the pipeline are completed. “I think you’re going to see the unemployment rate in the county go up in the next couple of months, and then the real kicker is what happens in the motion picture industry,” Kyser said. A recently released report by Manpower Inc., a Milwaukee-based employment agency that tracks the employment outlook nationwide, showed a steep drop in hiring expectations among Valley businesses. According to the company’s survey, about 22 percent of employers in the Valley anticipated they would be bringing on new hires in the first quarter of the year, compared with about 40 percent who expected to add staff three months earlier. A number of store closures recently announced by national retailers may also affect the Valley’s employment picture. The area is home to two Montgomery Ward stores (in Panorama City and Westfield’s Shoppingtown at Topanga Plaza) and a JC Penney Outlet (in the Fallbrook Mall in Canoga Park), which are closing. Strouds Inc., the home furnishings retailer that has been negotiating to sell its assets to iHome Inc., has plans to close about 16 California stores, including one in Encino as part of its Chapter 11 reorganization. And Lechters Inc., as part of a plan to close 166 stores and cut its workforce by 30 percent nationwide, plans to close stores in Valencia Town Center and Palmdale. Officials at Montgomery Ward headquarters did not return phone calls, but Michael Lande, the general manager of Ward’s Panorama City store, said that unit has had some success in trying to place its employees at other retail stores. “We are getting a lot of inquiries from a lot of retailers,” Lande said. Even as some large retailers are restructuring, expansion at some retail chains could offset some of the downturn in that sector, Kyser pointed out. Target, for example, is set to open a new store in Van Nuys this summer. But certain job sectors, particularly those at the low end of the pay scale, could feel the pinch of the economic downturn more severely in coming months. Signs began to pop up at Panorama Mall, which serves a largely blue-collar community, this Christmas. Sales at the center were up a mere 4 percent for the holiday season, compared with double digit increases last year, said Louise Marquez, general manager at the mall. Marquez points out that the transit strike earlier last year has had a lingering effect on that community. “There are people who scrimp and save to be sure they have money for the holidays and they spent it on getting to work,” Marquez said. “So it was a struggle and it continues to be. A simple thing like transportation can make them lose their jobs. And they’re more cautious now than ever.”

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