With almost daily reports of massive layoffs and warnings of economic softening, L.A. employers who have struggled in recent years to fill their staffing needs might logically conclude that they’re back in the catbird seat when it comes to recruiting top talent.
They’d be wrong.
The layoff announcements, carefully crafted to sound drastic to appease shareholders, are in reality much less severe. In most cases, staff reductions are being spread out over many years and achieved largely through attrition rather than outright firings. And the able-bodied workers who are being let go are being snapped up almost immediately, according to economists and employment experts.
“Everybody jumps on the bandwagon, saying ‘the economy is in the toilet,’ but the current situation has to do with over-inflation of the dot-coms and the tech sector,” said Steve Finnick, vice president of operations for DNA Research Inc., one of the largest local executive search firms. “The best way to describe the layoffs is to compare them to a plane crash. When a plane crashes, it’s all over the news and everybody reacts. What you don’t hear about is the 3 million planes that landed safely that day.”
Evidence that local job growth is absorbing dot-com casualties and other pink-slip recipients can be seen in the L.A. County unemployment rate, which actually dipped slightly in March to 4.7 percent from 4.8 percent in February. In addition, February’s unemployment rate was down 0.7 percent from January, which tied the biggest single monthly drop in almost 20 years, according to the state Economic Development Department.
“Sure, we’re having slower growth than maybe we had in the past couple of years, but we still have a strong employment market,” said Nancy Treadwell, a regional economist for the U.S. Bureau of Labor Statistics. “So far, the people who are being laid off are being absorbed back into the labor force pretty quickly.”
Short-term jobless rise
That view tends to fly in the face of a variety of economic indicators that show unemployment is likely to rise in the near term as fallout from the tech wreck and stock market woes trickles down through the labor force. But many employment experts say that softening will turn out to be little more than a blip on the local radar screen.
A far more serious problem, they assert, will be finding enough warm bodies to fill the thousands of new jobs that will be created in Los Angeles County during the coming years in nursing, marketing, government, international trade, tourism and other growing sectors of the economy.
And that trend is likely to hold true even in the battered tech sector, where the Arlington, Va.-based Information Technology Association of America reported in April that 425,000 information technology jobs are likely to go unfilled this year. That is down from its estimation of 850,000 unfilled jobs in 2000, but nonetheless illustrates that the national economic slowdown is unlikely to shift the labor dynamic between employers and employees nearly as much as layoff announcements have led some to believe.
Much depends on the direction of the national economy, but many believe a shortage of skilled workers is likely to become more severe over the next decade, as baby boomers retire en masse and fewer and less educated workers replace them in the labor force.
Too few workers
Jack Kyser, chief economist for the Los Angeles Economic Development Corp., said his agency projects that there will be 4,709,500 jobs in Los Angeles County in 2010, up more than 600,000 from the current total of 4,084,500 jobs.
“Based on what I’ve seen, there will be significant problems filling about one-third of those jobs,” Kyser said. “You have two forces at work the graying of the Los Angeles County workforce…and the constant evolution of technologies into new industries that will require a different skills set.”
Those different skills mean that employees in a wide range of businesses will need to become more tech savvy, from engineers and architects who use computer design programs to hotel workers who are faced with increasingly complex databases to keep track of guests.
“The reality is technology never sleeps,” Kyser said. “There will be new industries popping up, and there will be a constant evolution of new technologies in these industries.”
When Mayor Richard Riordan announced at the end of April that a six-month strike by Hollywood writers and actors would cost the region 82,000 jobs and up to $6.9 billion, it came as the latest in a prolonged string of sobering economic news.
But while Riordan’s statistics might very well be on target and there is little doubt that strikes could have a significant impact locally most economists and employment experts disagree with the underlying premise that strikes would spur a recession and have a long-term effect on the local labor market.
“Southern California is so much more diversified than it was 10 years ago when we had an economy that was heavily dependent on financial companies and defense. Combined with real estate, slumps in those industries made it a very difficult employment environment,” said Jeff Warren, executive director and manager of executive recruitment firm Russell Reynolds in Los Angeles.
L.A.’s the place
Predicting long-term employment trends is an inexact science, but there is no disputing that the economic boom of the late 1990s led to record-low unemployment, not just locally and in California but nationwide. Even with the slowdown, total employment in the county grew by 71,700 jobs between March 2000 and March 2001, according to the Employment Development Department.
“(Los Angeles) is still a good place to be if you’re looking for a job or want to improve the one you have,” said Marc Drizin, vice president of business alliances for Indianapolis-based research firm Walker Information. “Before (employers) get too excited about a pendulum swing in employment, we have to recognize that it’s still an employees’ market.”
Drizin and others point out that the large number of layoffs announced this year are somewhat misleading because many are phased reductions, and a good portion of those being let go are opting for early retirement or voluntary severance packages.
“(Meanwhile,) you’ve got a large number of mid-market companies in Southern California, particularly in Los Angeles, which have continued to be resilient in this economy,” Warren said.
Executive recruiter Finnick said that the only thing preventing his company from taking on more work is its own shortage of recruiters. And, barring a complete meltdown in the national economy, Finnick predicts that dearth of skilled talent will continue to be the case in Los Angeles for a long time to come.
“If someone can’t get a job in this economy, they don’t want to work,” he said.