Though Valley economy seems healthy, some jobs lost in the Great Recession are still gone

In 2007, more people in Fresno County had jobs than at any previous point in the county’s history. The central San Joaquin Valley’s economy was relatively healthy, and the county’s annual unemployment rate was 8.6 percent – higher than the state average but the third-lowest measurement of any year since 1990.

But there were harbingers of an economic storm that would batter the region. A year earlier, the unemployment rate was only 8 percent. The construction industry, confronted by the bursting bubble of the housing market, was starting to hemorrhage jobs. In manufacturing, employment in the production of durable goods was already well below its peak levels of 2000.

The Great Recession of 2007-2009 was not kind to Fresno County and the Valley. In the span of three years, more than 32,000 jobs were shed across Fresno, Kings, Madera and Tulare counties. And even now, 10 years since the start of the recession, full-year figures from the state Employment Development Department for 2017 reveal that some industries have yet to fully recover all of the jobs that were lost.

“If you look back a decade, which was pretty much the end of the previous economic cycle, to today, most industries have recovered,” said Jeff Michael, an economist and director of the Center for Business and Policy Research at the University of the Pacific in Stockton. “In Fresno County, the unemployment rate is in the mid-8 (percent) range, which is historically strong” for the region.

Fresno County’s annual unemployment rate last year was 8.6 percent – the same as it was 10 years earlier. In neighboring Kings, Madera and Tulare counties, the annual unemployment rate in 2017 remained higher than in 2007. And while the overall number of people working Valley-wide is greater than 10 years ago, Kings and Madera counties still had fewer people working on average each month than before the wheels fell off the economy.

“There’s a lot of dynamics that go into some of these industries that allow them to grow or not to grow,” said Steven Gutierrez, a labor market specialist with the Employment Development Department’s Fresno office. “Some industries were able to weather (the recession) a little easier than others.”

The national unemployment rate in December was estimated at 4.1 percent, while California’s was 4.3 percent. The state’s figures for industry employment don’t distinguish between part-time and full-time positions. The official unemployment rate does not account for what labor experts call “discouraged workers” – people who have given up a search for a job and dropped out of the labor force. Nor does the labor force include students, retirees or others who are neither available nor looking for work.

Building and manufacturing still down

Construction remains in the largest job deficit compared to its pre-recession status in Fresno County. In 2007, the industry employed about 21,100 workers. By 2010, it had lost more than 45 percent of its employees, reaching a low of 11,500. As of last year, construction still had 20 percent fewer workers than before the recession.

The collapse of the housing market had an effect on related sectors, taking a toll on finance industries such as mortgage lending and real estate sales that are tightly coupled with home building and construction, Michael said. “In housing, activity in new construction is about half of what it was prior to the recession,” he said.

“There are some big public works going on, and that’s helped, but it has not completely made up for the lower level of private construction,” Michael added.

Gutierrez said one factor in a less robust housing market could be a younger generation that is more inclined to rent rather than buy. “There’s a younger generation that doesn’t want to do yard work, and may be more into staying in an apartment more than buying a house,” he said. “Some of them have college debt coming out of their ears, and they may not be getting the kinds of jobs, wage-wise, that they anticipated.”

Moving forward, Gutierrez added, the scaling back of mortgage interest deductions for home buyers in the Republican tax-reform bill could also affect the housing market.

Manufacturing is also well off its pre-recession employment levels, with about 3,000 fewer jobs in Fresno County than in 2007. Most of that deficit is in the production of durable goods, but food manufacturing – tightly linked to the agriculture industry in Fresno County and the Valley – also had about 425 fewer employees than before the recession.

“Yes, manufacturing is down, but it’s not as dramatic as we’ve seen in some other parts of the country,” Michael said. “That’s not really unexpected. We’re seeing long-term declines in employment in manufacturing, even as output increases. There is just a lot less labor in production lines than there used to be.”

City and county government agencies in Fresno County also continue to feel the employment pinch – the result of budgets that were stretched almost to the breaking point during the depths of the recession and have yet to recover. Collectively, about 1,200 fewer workers are employed with local government offices than 10 years ago.

“Local government continues to be under a lot of pressure,” Michael said. “Rising pension costs are making it difficult to expand employment much more even as their revenues recover.

“Schools are where we’ve seen growth, with the population growing and better budgets,” he added.

Jobs are in education, retail

Indeed, local public schools in Fresno County are following the pattern Michael described. From a peak of more than 31,000 teachers, administrators and other school employees in 2008 (a year after the recession is considered to have started), employment dipped by more than 2,000 by 2013 but had rebounded to pre-recession levels by 2015 and continues to grow.

Some private-sector industries took a hit during the recession, but within the past few years have recovered their job losses and are expanding. Retailers in Fresno County shed about 3,500 jobs between 2007 and 2010. It took until 2014 to regain those jobs. Now, the state estimates the number of retail employees at more than 39,200, or about 2,900 more than 10 years ago. The leisure/hospitality industry, including workers at hotels and motels, restaurants, fast-food eateries and bars, lost about 1,600 jobs by 2009, but now has 3,600 more employees than in 2007.

Whether the gains in retail and leisure/hospitality – typically industry sectors on the lower range of the wage spectrum – will be sustained could be in doubt.

“The real gains in the last couple of years, in restaurants and hospitality employment and in retail, are going to be affected by the minimum wage,” said Michael, noting annual $1-per-year increases in the minimum hourly wage for workers to reach $15 per hour by 2022. Right now, minimum wage is $11 hourly for companies with 26 or more employees. “One dollar an hour each year is not a creep; it’s pretty substantial at that end of the wage scale.”

Gutierrez added that the continuing growth of e-commerce and online shopping is likely to eat into jobs in retail. “Some retailers, nationally and locally, hired more people to provide better customer service during the holiday season,” he said. Their staffing increases represented boosting hours for part-time workers as well as new seasonal part-time hires. “It will be interesting to see if that will carry beyond the holiday season or continue that strategy year-round.”

Health care strong

Private-sector health care services is one area that experienced sustained growth in jobs even in the teeth of the recession. Driven at least in part by an aging population, the health industry added nearly 18,000 employees in Fresno County between 2007 and 2017, growing to more than 62,500 workers. “I don’t want to say it’s recession proof, but as the labor force continues to age, people need medical services and still need to go to the doctor,” Gutierrez said. He added that while some of the growth was in the number of registered nurses, physical therapists and other higher-skilled jobs, many of the jobs added in the industry were lower-wage, lower-skill positions including housekeeping, janitorial and in-home support and caregiving jobs.

Michael said that changing federal policies are likely to affect growth in health-care jobs. “The pace of hiring is probably going to decrease a little,” he said. “Even if Obamacare is not totally repealed, hiring is leveling out and there’s some risk that it could really flatten out over the next couple of years.”

Still, Michael said he expects that Fresno’s unemployment rate will dip below 8 percent for 2018 “and stay there for the next couple of years, really record low territory in the mid-7s for the next two or three years.”

This story was originally published February 8, 2018 at 8:50 AM with the headline "Though Valley economy seems healthy, some jobs lost in the Great Recession are still gone."