2011: We look at the top business stories of the year.
December 26, 2011 1:27 p.m.
Erik Anderson, KPBS Business Reporter
Related Story: 2011: Top Business Stories Of The Year
ST. JOHN: You're listening to Midday Edition here on KPBS. I'm Alison St. John in for Maureen Cavanaugh. It's been another long hard year for the economy, but there are signs that things could be turning around. Erik Anderson is KPBS business reporter, and he's here to talk about some of the stories he's covered this year, including things that affect all of us, jobs, the price of gas, laborer contracts, the cost of healthcare. So Erik, let's start with No.†1. Jobs. Unemployment in San Diego. We know the year-end figures have gotten a little better in San Diego and elsewhere. Tell us what that really means
ANDERSON: Well, let's talk about what those figures are. Right now, the unemployment rate in San Diego County is about 9.7%. It's only been under 10% this year for a couple of months. So it's trending in the right direction. The unemployment rate is going down. That's what you want to see.
ST. JOHN: Yes, it is.
ANDERSON: What recovery this is goes on. And just to give you a sense of perspective of where we are, eve above 10% on the unemployment rate for a little over a year.5. Things really crashed hard when the economy hits the rocks in 2008, 2009. We lost a lot of jobs in this region, somewhere in the 120,000 neighborhood, and we've made about half of those jobs back. But that suggests that we still have half of those jobs yet to get to where we were when the economy was hitting on hull cylinders. And we've been above 10% for close to two years. Typically, the San Diego economy has an arraignment rate that hovers in the 4% or 3% range. For a while, it was just a bit above 2%.
ST. JOHN: Those were the days.
ANDERSON: Those were the days. It happened, we had that little rough patch here in the economy in the early 90s, and the unemployment rate soared and then really spiked.
ST. JOHN: Is that simply because of year-end retail or because people have given up looking for jobs or do you think there really is a slight increase?
ANDERSON: I've talked to a lot of economist about this over the year. And I think that's happening in the local economy is that all of the sectors accept for a couple of notable exceptions really have started to move back in a positive direction. This year, the region gained somewhere in the neighborhood of 27,000 jobs. So we added those jobs back into the work force over the course of the the year. It wasn't all in manufacturing, it wasn't all in healthcare or retail or whatever particular sector the economy saw gains. It was a little bit in a lot of sectors. There were a couple of exceptions. Construction continues to be a problem here in San Diego County. When the economy crashed in 2007, it took the housing market with it. Or the housing market took the economy with it. And it's not really bounced back. And that's a lot of the construction work in the county. And construction work continues to lose jobs 789 and there are some dark spots on the future for the region, most notably, most economist predict we're going to be losing government jobs in the coming year, because they continue to have -- and there's a chance that military spending, which this region is known for is probably going to be rolled back over the course of the next years. The federal government deals with its budget situation as well.
ST. JOHN: I noticed one of the places jobs were being created were small business start-ups, which is something San Diego is famous for. But say, defense contractors may be affect bide this cutback also.
ANDERSON: And the thing about a small business too, there have to be a lot of small businesses to start up to make a significant impact.
ST. JOHN: Any dent on those number, yeah.
ANDERSON: By definition, the businesses are small. It's not like a factory opens that starts with 10,000 manufacturing jobs. And I think that really tells the tale of the San Diego economy. Yeah, it's going to be small businesses that sort of spark that recovery, but it's going to take a lot of them to do it.
ST. JOHN: So what is the actual percentage of growth we need in order to get out of this slump?
ANDERSON: The economists say it's about 3%. They need about 3% growth in the course of a year to be able to create enough jobs to absorb the people who are entering into the work force, to get to that full employment level. If 3% is the rate you're looking for during a good economy, it needs to be a little bit to the north of that too because you're trying to make up ground that you've lost as the economy took a downturn. And that's probably not going to be happening going forward. The national university system institute for policy research just issued a couple of weeks ago their forecast for 2012. And it's very much in line with a lot of other economist in town are saying and that is that we're going to be seeing growth over the course of the next year, the economy is going to do better than it did this year, but it's not going to be at the rate needed to sustain that recovery. It's probably going to be in in the 1% to 2% range.
ST. JOHN: And if you're one of the unfortunates who have been looking for work for a long time, is there any indication of which areas they might be able to find a job in the coming year?
ANDERSON: Healthcare is an area that continues to add jobs, and that has a lot to do with demographics, the aging population. That's going to be an area that does well. San Diego has a really vibrant life sciences industry. A biotech industry. The thing that is a roadblock for a lot of people trying to find work in that sector, those are high-paying and high-skill jobs. You need really to bring a lot to the table in order to land one of those positions, but that's an area that is also growing in San Diego County. And as I said before, the areas of concern are government and of course military spending. If that gets reduced a lot, that's going to have an impact on the local economy
ST. JOHN: Before we move on, are the jobs be created next year on the up and up, whether they're jobs that you would be able to support a family on. That's always the question in San Diego, isn't it? Do they pay enough to live to afford the lifestyle here?
ANDERSON: Well, sure. I think it's a fair question. It's not a question that I have an inquire to. It depends on what you require, and what the particular job is. There's a concern that some economist have that the economic spread in the county is becoming bifurcated. You're getting more people at the lower end and the higher end, and the people in the middle are moving either up or down. But they're -- the number of them are shrinking. There's that concern. And that has implications for the overall economy. The and exactly how that shakes out over the course of the coming year, I think it's beyond my abilities.
ST. JOHN: Tough to predict, yeah. So the shrinking middle class, that seems to be on everybody's minds. The grocery strike was a struggle of people who consider themselves to be in the middle class, decent jobs with benefits. That was quite a big story you covered. Tell us, what was at stake for tens of thousands of people affected by that strike that did not happen in the end.
ANDERSON: It's an interesting laborer story. When you talk about a laborer story usually that strung out over the course of the year, there's some sort of a standoff. But this was really kind of a strike that never really actually materialized into a strike. Although the issues I think that underlay that situation are very real. And they're very relevant to not only the workers, but the rest of the economy as well. And just to walk you back over that ground, their contract expired back in March. They started negotiating for a new contract, the unions and the stores started negotiating for a new contract in the beginning of February. So they went a couple of months, got to the old expiration date, didn't have a deal, negotiated about another month or so. And the union got frustrated with the space of progress, and they offered their members to vote whether or not they could authorize a strike. Members overwhelmingly decided, yes, we will strike if we don't get a good contract. And the feeling was, goodness, by the end of the summer, we're going to have another grocery strike like we had in 2003 for four months and the stores lost millions of dollars. But that never really happened. And I think the economy is one of the reasons why. Will remember back to last spring, we started to see some hope economically, there were those green sprouts that the president was talking about at the beginning of the year. And then by May and early June, they had been kind of smashed down. There were signs that -- and a lot of talk at the time about a double-dip recession. I think this particular laborer dispute just took a backseat. There was a lot of negotiating go onning. Both sides were talking. They weren't moving toward each other. They did that all through the summer. In August, the union became frustrated with the pace of the vote. They had another strike vote, which members overwhelmingly supported. Then it was late September when a union said look, we're going to give you 72†hours. If you don't come up with a deal, we're on the picket lines and stores were, well, we're going to close our stores and shut everything down if you go out on strike. And there was all this bad feeling. Then suddenly things moved quickly, they got to the deal they wanted to, and they settled it. And they have a new four-year contract
ST. JOHN: So it was called a win win. Would you say that really is an accurate description of what happened?
ANDERSON: I think it depends a lot on your perspective of what a win-win is. Did the union win something? Yes, they did. One of their big concerns during the course of the negotiations was the fact that they wanted their health benefits package, which under the terms of their old contract, created this sort of foundation that gets funded. In other words, the stores put a certain amount of money aside into this foundation, and then the foundation funds the healthcare benefits. They're going to take the premiums in, and pay the benefits out. Unions were concerned that the amount of money that the stores are putting into that fund wasn't going to be enough to last for the life of the contract. In other words, they were worried it was going to be underfunded, and they were really fighting hard to make sure that enough money was going to be put in there. If it gets down to brass tacks, they would have to come up with the money.
ST. JOHN: Right.
ANDERSON: And while they were negotiate business over the summer, the stores stopped paying into that fund, and the unions picked up the tab. So --
ST. JOHN: They didn't want their members to have to bear the whole burden.
>> Exactly. And they took up the cost of that, and that cost them quite a bit of money, which is another reason why they wanted that thing resolved a lot sooner. But --
ST. JOHN: But in the end, in fact, the two-tier system disappeared, didn't it?
ANDERSON: Well, that was the thing. And that's kind of where the unions gave a little bit. And that's where the stores won. You remember at the last of the -- end of the last strike in 2003, all new workers were going to be paid at a lower reality, and their healthcare benefits, they were gonna have a higher share of healthcare benefits that they were going to have to pay for. And the people were working before --
ST. JOHN: Long time employees
ANDERSON: Would keep the plan they had.
ST. JOHN: No more, huh?
ANDERSON: No more. The people who have been working there have been grandfathered in under the old contract. They moved to this one contract. So the two-tier went away at the lower rate.
ST. JOHN: So it's a mixed outcome, really.
ST. JOHN: And just another part of the story about how healthcare is becoming a source of insecurity for more and more workers
ST. JOHN: Let's just talk in the time we have left here one of your favorite subjects, and experienced in covering, which is the price of gas. So we watched it be -- stay pretty high all year this year in San Diego. Why?
ANDERSON: Well, why is a -- we'll get to in a second. Let's talk about where we are though. Right now, we're paying about $3.50 some odd cents. That is the highest price it has ever been at this time of year. We heard that a lot this year. The liest price the gas had ever been at this time of year. And the average price for the year is the average highest price for a 12-month period that we've ever had in San Diego, in California, and in the nation as a whole.
ST. JOHN: We keep breaking records
ANDERSON: Gas prices have been very high. It's not that they've spiked really high. They've sort of stayed at this very high level. And one of the reasons for this was the fact that the price of crude oil on the international market was kind of fuelling these high prices.
NEW SPEAKER: The price has been consistently high all year. And I don't have the numbers in front of me. But this'll be the record year in terms of crude oil prices paid. We've never had a year where the average cost of crude to the US is over $100 a barrel. And I think we'll probably have that when this year ends. The price of crude for most refiners who have to buy at-sea crude or whatever has been running around $110 a barrel for the last couple months or so. And there were periods in the spring where it was hutch higher than that. But we have had consistently high prices, really, for all of 2011.
ANDERSON: That is Tom closer from the oil price information service, a national analyst who follows gasoline prices. And it's interesting here because gas prices -- the price of crude was high. I understand how we get to the high crude price. A real quick primmer on how oil prices are set. But analysts look at. This you're paying a futures price, okay? You're paying what people think the price of oil is going to be based on conditions politically or economically. What the price of oil is going to be in 90†days.
ST. JOHN: A lot of guess work
ANDERSON: Right. A lot of the reason that the price of crude went up over $130 a barrel in the spring was because of the turmoil in Libya, and the Arab Spring created a lot of uncertainty. That never materialized, that there would be a shortage. But the price of gas went up because there was the fear that it would down the road. Another thing happened too. While the price of gas was going up here in California, the demand for gas was actually falling through the course of the year. So right, economist tell you, if you have a comply and demand in balance --
ST. JOHN: It should have gone down
ANDERSON: It didn't happen because refiners began to sell their excess fuel out of the country. We began to sell diesel fuel out of California.
ST. JOHN: It feels like we as consumers just cannot win. Even if we vote with our feet or the economy means we don't buy so much gas, capitalism as much doesn't work because the nations can just find a different market. So there is one way of protesting gas prices, and that's by buying an electric car. And San Diego does seem to have been a pretty hot spot for electric cars
ANDERSON: It was a big year for the plug-in vehicles, for the EVs in San Diego County. In large part because one of the major manufacturers, the Nissan company made San Diego a test market for their Leaf. So we got a lot of electric cars into the market. And it was really the first time that there has been a wide-spread consumer acceptance of the electric vehicle. And of course, if you're not tied up to the -- oil pump trough, you don't have to pay those high prices. But of course, you're tethered to a different kind of trough, which is the power company. And SDG&E looked at this, I'm sure, and thought, wow, this is great. We've got a great new market. It's going to be great for us. But there are costs to this too. Even to the utility. It's not going to be all good. Jim ravery was SDG&E vice president, and he explained why they kind of lose sleep a little bit about the electric cars.
NEW SPEAKER: In reality, every single car that comes in is about the equivalent of three quarters of a new home. We have to plan for the charging infrastructure just like we plan for the addition of a new home in our system. The infrastructure has to be this, and we have to have the energy to provide you to charge your car.
ANDERSON: So the concern for the utility, to close that loop is to provide the power to the people who want it for their electric cars at a time when it's not going to stress their ability to provide power to the grid
ST. JOHN: And in the few seconds we have left, how many more electric fuelling stations are we likely to see around San Diego in the coming year?
ANDERSON: There were about 1,500 or so that are supposed to be online by the end of this year. Finding ones that are truly public though is a bit of a challenge. Ones that are in public location, it's not quite like a gas station yet. But they are out there. And they're becoming more prominent. What you find with most owners, they also put a charging station in their house.
ST. JOHN: So most of us are still gonna be prone to going to those gas pumps
ANDERSON: At least for a little bit, I'd say
ST. JOHN: Well, thank you for that overview, Erik.
ANDERSON: My pleasure.