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State, Local Unemployment Continue To Rise

Audio

Aired 4/23/10

Reports of the housing market and economy stabilizing would seem to contradict the fact that state and local unemployment continue to rise. Last month, the state unemployment rate rose to 12.6 percent, and the local rate hit 11 percent. How can the economy be improving while the unemployment rate continues to rise?

GLORIA PENNER (Host): Okay, Barbara, so we’ve been talking about income on and off during this housing segment. It’s been a half dozen years since the housing bubble’s irrational exuberance inflated middle class homes to six and seven figures. Homebuyers multiplied, even those who had minimal assets and inadequate earnings. The lending industry was complicit in the bubble and its implosion. Next was a drop off in business investment and then came rising unemployment. So, Barbara, in March unemployment in the county rose three-tenths of a percent to 11%. How are analysts regarding that increase?

BARBARA BRY (Assistant Publisher/Opinions Editor, SDNN.com): Well, I think analysts think we’ve probably hit the peak of unemployment but real unemployment is probably higher than that 11%. Number one, some people, you know, have given up looking for a job. I think they’re starting to go back into the, you know, looking for a job and that’s one reason analysts think the number went up in March because more people started looking for a job who hadn’t been. But, second, a lot of people are also underemployed. So last night I was talking to a local hotel executive and I said, well, you know, summer’s coming, are you going to hire more people. And he said, no. He said, most of our people like our, you know, the housekeepers and the waiters and the waitresses are hourly and we’ve just not had – been able to use them to their full capacity. So what we’re going to be doing first is giving our existing employees more shifts before we go out to look for new people. And I thought that was very telling about what’s going on with employment.

PENNER: It is telling. But the truth is that thousands of new college and university graduates are going to enter the job market locally so, you know, what effect will that have on them, Scott? You finish college, you’re graduated, you’re ready to go out and get a job and there are no jobs. What happens then? Scott.

SCOTT LEWIS (CEO, voiceofsandiego.org): Well, maybe we’re like Italy and people move back home for a little while. I, you know, there’s…

PENNER: A little while?

LEWIS: I – I don’t know. Maybe we’re entering a new era for America where you, you know, you do live at home longer. You do, you know, you – not as independent. There – Who knows what – We have to become an area that creates, a society that creates things again because there’s – the jobs of people shuffling money and the jobs of people being middle men and such are being completely wiped out and that’s why we’re so excited about things like CleanTECH and about the tech sector and other places that we need to train people to think about new things because if we rely on the old way of the old economy, then they won’t have jobs to go to.

PENNER: But the interesting thing is that some economists believe that more people will enter the job market. As people begin to believe that the economy is improving, and that there might be opportunities for – So some of those people that Barbara was talking about who basically withdrew from the employment force, they said there’s no point in looking anymore, there are no jobs out there. They might reenter the job hunt group and we’re going to see more people. The statistic will go up; more people will be looking for jobs…

LEWIS: Yeah…

PENNER: …which means that it’ll be a higher than 11%. Let me just ask our callers about that. Are you or are you familiar with somebody who has been looking for a job for a very long time or decided to pull out of the job markets, now thinking about getting in? Or perhaps a college or university graduate, what are their prospects and what are their stories? Our number is 1-888-895-5727, 895-KPBS. JW, how does San Diego compare with the rest of California and the nation?

JW AUGUST (Managing Editor, KGTV 10News): As far as unemployment, not as well as the country as a whole, better than California. But still ugly. Still ugly. Our job generation is just not happening. When you hear about 500 new jobs in Silicon Valley then you hear about job loss, you know, 1500 jobs leaving. It always seems that the net is still less for new job creation, and I think that’s the key to all of this.

BRY: Umm-hmm.

AUGUST: And as Scott said, it’s – People entering the workplace, you have to have lower expectations. I think they have to, that’s the reality. And they have to increase their skill levels. It’s different type of skill levels. Being a, I don’t know, being in mid-management and your main skill is handling human relations or something like that, you really need to have very acute skill levels in order to succeed as the market changes.

PENNER: What do you mean by lower expectations?

AUGUST: Well, if you’re coming back to work, they’re not going to be paying you 125 grand a year for sitting in an office and basically manning the phones. I don’t know if the people had jobs like that but the point being you got to be a lot more productive, you’ve got to find ways to multi-task, you’ve got to be able to do many, many different things. I tell that to people coming into the broadcast industry. You can’t be a one-trick pony anymore, and I think that’s true across many industries. You’ve got to be able to do multiple things.

PENNER: Barbara.

BRY: Yeah, what Scott and JW said’s very important in terms of looking at the other side of the equation, which is job creation. So if more people enter the job market and we’re creating new jobs, that’s okay. And where are we going to get these new jobs in San Diego? Well, hopeful – They’re probably going to come from the innovation economy. Now the innovation economy has issues right now because, you know, venture capital is very hard to come by, banks aren’t making as many loans so you can’t grow your business, it’s, you know, harder to do that. So, I mean, there’s some impediments to growing our innovation economy. Now one good thing for our innovation economy has been the substantial increase in federal research money going into, you know, our research institutes in San Diego and that’s been good.

LEWIS: Yeah. Yeah.

PENNER: So does this give you an idea of the kinds of people that would be more employable than others?

BRY: Yes, scientists, engineers. I know our company, we have four, you know, very highly skilled software engineers who earn very good salaries and we had trouble finding the right ones. So those kinds of people are in demand.

PENNER: Well, let’s find out from Ben, who’s on 805, what his situation is. Ben, you’re on with the editors.

BEN (Caller, Interstate 805): I just wanted to point out that I looked for a job for six months before I found a part time one, and I never was counted as unemployed because I hadn’t, you know, I came right out of school and I hadn’t had a job. So I don’t know if people like – what the situation is like for people like me, I don’t think we’d get counted as unemployed. We graduate from school and we don’t have a job.

PENNER: Yes, I understand what your point is and basically you’re backing up what Barbara had to say. You know, our numbers are at 11% unemployed but then we’re not counting a lot of people like Ben, so I think that’s significant as well. San Diego used to be considered recession proof because of the military and this week, Scott, KPBS reported that the military generated about 340,000 jobs in the region in 2008. That’s 23% of all jobs. How will that play out in the years ahead?

LEWIS: Well, look at what that means. When you have the housing sector being buoyed by the government, when you have research being buoyed by the government, as Barbara pointed out, when you have the government sponsoring military and then you look at the increase in jobs, I think, that SDNN reported was largely in the government sector. There’s a…

AUGUST: Yeah, right.

LEWIS: There’s a lot of government activity here and so we can pat ourselves on the back and say we have a diverse economy and such, we can point to that but also we had better prepare. As businesses prepare to diversify their income, you have to prepare and the economy has to prepare for a situation in which the government may not have as many resources to provide and to hire people and so that’s why I think that this investment has to be in the kinds of things that make people think of new ideas and create new enterprises.

PENNER: So the service sectors, for example, that hired the lower end worker, are they going to fizzle out?

LEWIS: Well, if you – that’s a – if we did focus our economy and continued to focus our economy only on attracting people to visit here and to vacation…

PENNER: Tourism, yeah.

LEWIS: …that means, again, that we’re still just trying to carve out a bigger slice of a set pie of travelers.

PENNER: Umm-hmm.

LEWIS: And I think that that’s great for the operators and owners of the hotels and such but we need to create something that makes pies bigger and that creates more pies, and that is firmly in the innovation world. And if we keep investing just in convention centers and hotels and such, then we will continue to just generate a bigger slice of a set pie.

PENNER: The time has absolutely gotten away from me, and we must go into another break. When we come back, I’m going to take as many phone calls as I can because some of the stories that I’m seeing on my screen are really engaging and I want our audience to hear them. Our number is 1-888-895-5727. This is the Editors Roundtable. I’m Gloria Penner.

PENNER: This is the Editors Roundtable. I’m Gloria Penner. We’re talking about employment and unemployment in San Diego. We started out this hour talking about the housing market and whether it’s improving or not and, of course, the two are so interrelated that it’s impossible to talk about one without the other. If you don’t have a job, you can’t make your home payments, house goes into foreclosure or some part of that scenario. So with me at the roundtable are Barbara Bry from SDNN.com and also Scott Lewis from voiceofsandiego.org and JW August from 10News. And during the break, Scott, you may as well say what it was that you were telling me during the break…

LEWIS: Yeah.

PENNER: …because that’s important.

LEWIS: Yeah, my writer just texted me. Don’t worry, I didn’t have my phone out; it came in my head. But the – I…

PENNER: I have a rule here, no phones out.

LEWIS: Yeah, yeah. Kelly Bennett wrote in and said the caller who called earlier who said that his landlord wasn’t making his mortgage payment anymore yet he was still paying rent, apparently that’s called rent skimming and it’s an illegal practice. So you should keep that in mind, anybody that’s dealing with a situation like that.

PENNER: Okay. Thank you so much for that information. Let’s take some phone calls now and see what’s going on with our listeners. Ryan in Cardiff – and thanks so much, Kelly Bennett, we appreciate you. Ryan in Cardiff is with us now. Ryan, you’re on with the editors.

RYAN (Caller, Cardiff-By-the-Sea): Hi. Thanks for taking my call.

PENNER: Sure.

RYAN: I’m a first time caller.

PENNER: Good.

RYAN: And I just wanted to present this scenario to your table there. I’m a former military Navy fighter pilot. I currently serve as a reservist here on Coronado. And I’m in the finance industry. My full time job is a financial advisor locally. And kind of in reference to employment and housing, you know, my wife and I—I’m just about to be 34 years old, just two of us. We make almost $200,000 a year and we have virtually no debt, just retirement, savings, all that. But yet to buy a house here in Southern California there is this artificial barrier to entry. We can’t get in. You know, we don’t want to take on a $5,000, $6,000 mortgage and I realize that’s probably not the average price in San Diego but in regards to housing and especially when you talk about that layer from the $500,000 to, say, $800,000 home range, you know, which would be a single family home for us as we think of having children, I don’t really see how the current housing prices justify – I mean, my income has got to be in one of the higher levels but yet I can’t even afford a mid-range home…

PENNER: Sure.

RYAN: …in California.

PENNER: I understand.

RYAN: And we’re just coming from the east coast where I was able to live in a good school district. A block from the beach is where my home is located there.

PENNER: Okay. Ryan, I’m sorry to cut you short but we’re running out of time on this issue and we kind of did talk a little bit about that. But is it true—we’ll just go back to that briefly, Scott—that if you can come in with a large down payment, that you’re golden, that you don’t have to worry so much and the banks will be very happy to take your money.

LEWIS: I don’t know. I – What’s a large – Say you had a hundred grand and maybe a hundred grand in annual income. That’s going to be still very difficult to get the kind of home that he’s talking about and it’s – and that would be considered, I think, over time as a pretty substantial and respectable financial position. And that’s the dynamic that he’s describing, that, look, if you have dual income or if you’re doing well and yet you still cannot find your way in this market whereas a decade ago you could, that dynamic has to change. And if nothing happened in San Diego that made it a better place to live or more jobs than a decade ago, it’s just something changed with all these prices and it has to come back to some kind of reasonable relationship with reality.

PENNER: Either that or we’re going to find, you know, people like Ryan saying I’m going to have to relocate someplace where perhaps I can use my skills and earn a decent salary and find cheaper housing. Let’s hear from Roni in Lakeside now. Hi, Roni, you’re on with the editors.

RONI (Caller, Lakeside): Yes, excuse me.

PENNER: And, Roni, I’m going to just ask you to be brief because we have another subject we want to tackle.

RONI: Sure. My son worked for a small newspaper in Northern California. It held on just long enough for the graphic artist to grab up any of the other jobs available, then the paper collapsed. What are these people who work for newspapers going to do?

BRY: Yeah.

PENNER: Oh, the perfect question for a bunch of journalists.

RONI: Yeah.

PENNER: Barbara, what happens.

BRY: Well, actually, well, we’ve hired journalists at, you know, SDNN.com and our other two sites over the last year. And I think digitally savvy journalists who have an entrepreneurial sort of attitude can get jobs. I think journalists who don’t have those skills will have a very hard time and I think they’ve looked for other things to do.

PENNER: Well, you know, the San Diego Press Club has been having a series of workshops. I think they’re heading for the 12th or 13th now and this next one is kind of speaking to her son, which is after journalism, what’s next? And there are other kinds of jobs. We’re going to have to sort of end it there. I’m sorry. I would love to continue this. I know that you wanted to talk specifically about venture capital, Barbara. Can you just make your point quickly?

BRY: Well, the point is that, you know, every – we’ve all said that the innovation economy is the future of our region. The issue is where is the money going to come from to grow this innovation economy, and it’s unclear right now. Venture capital is declining. The money may come from international sources, from big companies, but right now this is a major issue for our region.

PENNER: Okay. Thank you very much. Again, I urge you, if you’ve got a comment or a question, go to our website, KPBS.org/editors and register your comment.

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