Mass layoffs wane in Valley after 2009 peak

The Fresno BeeFebruary 11, 2012 

Unemployment remains a significant problem in the central San Joaquin Valley, running at about double the national average. But mass layoffs have tailed off sharply over the past two years after peaking in 2009.

That trend, along with a slow improvement in unemployment rates, modest increases in average wages, and fewer people relying on unemployment benefits, points toward slow, albeit meager, improvement in the Valley's economic prospects.

The figures on layoffs and unemployment mirror recent observations by economist Jeff Michael, director of the Business Forecasting Center at Stockton's University of the Pacific. In a quarterly forecast issued last month, Michael said 2011 represented "another year of scraping along the bottom" for the Valley economy, but added that he expected 2012 to offer the beginnings of recovery.

In 2009, employers in Fresno, Kings, Madera, Merced and Tulare counties announced mass layoffs of nearly 2,600 workers under California's Worker Adjustment and Retraining Notification (WARN) Act. That fell to 1,525 in 2010 and 1,440 last year.

California's WARN Act requires companies that let go 50 or more workers within a 30-day period to notify the state Employment Development Department. That means that individual layoffs and cutbacks by smaller companies or family-owned businesses -- which are less splashy but represent by far the bulk of job losses in the Valley -- aren't accounted for in the mass-layoff figures.

Major layoffs that triggered WARN notices in the Valley last year included nearly 150 positions in two rounds of cuts at Pelco by Schneider Electric in Clovis and 153 jobs at Saint Agnes Medical Center in Fresno. But the single largest layoff was 404 positions at Z Foods, a dried-fruit processing company in Madera that went out of business last summer.

That pales in comparison to the height of the recession in 2009, when the bankruptcy of the Fresno-based Gottschalks department-store chain resulted in the layoffs of more than 1,400 people in the five-county region and hundreds more jobs around the state.

There are other indications that the recession's effects have crested.

The average annual unemployment rate across the Valley was 16.9% in 2010, dipping slightly to 16.6% last year. Also topping out in 2010 were the number of people out of work, the number of people receiving unemployment benefits and the total paid out for those benefits.

An estimated 149,400 people were out of work in the Valley in 2010, according to the Employment Development Department. Unemployment benefits amounting to more than $1.1 billion were paid to about 87,400 claimants.

Those figures dipped last year to an estimated 145,700 jobless workers, with unemployment benefits of $932 million paid to just more than 78,000 recipients.

The jobless numbers do not account for people who are not seeking employment.

The improvements are welcome, but economists say there still is a long way to go for the region to regain its pre-recession vitality.

"In the Valley, in California, and even nationwide ... statistics suggest a slight improvement in labor market conditions, but the fact is that the economy remains depressed," said Antonio Avalos, an economics professor at California State University, Fresno, and director of research for the university's Center for Economic Research and Education of Central California.

Avalos said the labor trends give him reason to be "cautiously optimistic."

Michael's UOP forecast reported that nonfarm employment in Fresno County plunged from more than 306,000 in 2007 to less than 279,000 in 2010 and 2011. It predicts that jobs will recover slowly, to nearly 304,000 by 2016.

Similarly, the San Joaquin Valley Business Conditions Index, prepared by Colorado economist Ernie Goss for Fresno State's Craig School of Business, also suggests the prospects for recovery are fragile.

"While the region is not losing jobs, it has not yet begun to add to employment levels, particularly for manufacturing and construction," Goss said.

The report, which is based on monthly surveys of purchasing executives from across the region, stated that while jobs have increased nationwide, "employment for the Valley has been basically flat the past year and the four-county area's current employment level is approximately 25,000 lower than pre-recession levels."

Goss reported that business confidence rose between December and January but remained weak.

"Thus far," Goss said, "a slowly improving national job picture has failed to boost business confidence in the Valley."



The reporter can be reached at tsheehan@fresnobee.com or (559) 441-6319.

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