Thread: California Tech Hiring Gives State Economy a Jolt

MAY 9, 2011, 2:05 P.M. ET.

California Tech Hiring Gives State Economy a Jolt

By JIM CARLTON

SAN FRANCISCO—California's economic recovery is kicking into higher gear, with unexpectedly strong job growth propelled by a pickup in technology hiring, as the nation's biggest and richest state starts to beat back its formidable budget deficit.

The state added 90,600 jobs in the first quarter, more than the increase of 82,600 for all of 2010, according to seasonally adjusted data from its Employment Development Department that exceeded most analysts' estimates. That put California, a poster state for American economies hobbled by the housing bust, above the national average, with a year-over-year increase in employment of 1.2% in the first quarter, compared with 1% nationwide.

And it puts a balanced budget within dreaming distance. California's deficit stood at $26 billion just a few weeks ago, before lawmakers agreed to $11 billion in spending cuts. If the jobs machine keeps revving, it could shave as much as $6 billion off the remaining $15 billion deficit through fiscal 2012, said Justin Garosi, an economist for the Legislative Analyst's Office.

"If you sustain the jobs growth, we would be back to normal in the foreseeable future," Mr. Garosi said.

The 0.7% quarterly rise in nonfarm jobs from the fourth quarter was the highest percentage growth California has seen since 2004, according to the government's analysisof the data based on quarterly averages.

Economists warn that the state isn't out of the woods. California's 12% unemployment rate in March remained well above the national rate of 8.8% then, while two of the state's biggest economic sectors, construction and government, were either roughly flat or down slightly in job growth that month from a year earlier. A 1.7% decline in government workers came amid public-sector cutbacks nationwide, while a 0.5% increase in construction jobs came as that industry continued to struggle with a lackluster housing market.

National employment in April grew more than analysts expected. California's employment numbers for the month don't come out until May 25.

But the state's brightened employment picture will help Gov. Jerry Brown in his struggle to close the budget gap. As of the end of April, state tax revenue for the fiscal year ending June 30 was $2.5 billion higher than previous projections, according to estimates by the Legislative Analysts' Office.

California is subject to sharp swings in its fortunes, partly because of the volatile revenue streams of income and sales tax on which it has depended since its voters imposed a limit on property taxes in 1978. The first quarter's jump in jobs swelled those revenue streams.

For now, the job growth is largely being fueled by "the three T's—tech, trade and tourism," said Stephen Levy, director of the Center for Continuing Study of the California Economy, a think tank in Palo Alto, Calif.

The recovery has been strongest in the northern part of the state, where the technology industry is most concentrated. Southern California was hit particularly hard by the housing slump.

"It's a selective recovery so far, but there's good reason to believe those gains will lead to gains in retail and other sectors," Mr. Levy said.

An increase of 5.3% in information technology jobs in March outpaced all other industries, as companies, particularly in the San Francisco Bay Area, continued to expand amid booming demand for social networking, clean technology and other services.

LinkedIn Corp., for instance, said it had nearly tripled its global work force to 1,300 as of the end of the first quarter from 500 at the beginning of 2010, with most of the gains at the social-networking firm's headquarters in Mountain View, Calif. LinkedIn saw its revenue roughly double over the same time, said Steve Cadigan, vice president of people operations.

Solaria Corp., a maker of photovoltaic solar panels in Fremont, Calif., has boosted its payroll to 110 from 40 a year ago and plans to hire as many as 40 more people by the end of 2011, amid soaring demand for solar energy, said Chief Executive Dan Shugar.

The tech growth is boosting retail businesses in Silicon Valley. The vacancy rate for major shopping centers in Santa Clara County has dropped to 5.5% this year from 6.7% in 2010 and 7.1% in 2009, according to estimates by Terranomics, a retail research arm of commercial real-estate concern Cassidy Turley Inc.

Southern California's employment growth remains behind the Bay Area's, but economists said they were encouraged by the fact that major markets like Los Angeles County, which holds about one-third of the state's population, began adding jobs again in the first quarter after more than two years of declines. The increase of 31,300 jobs, or 0.6%, from a year earlier was heavily fueled by growth in international trade and tourism, as well as expansion in Hollywood, all due largely to the strengthening U.S. economy, said Nancy D. Sedhu, chief economist for the Los Angeles County Economic Development Corp.

The number of overnight visitors to Los Angeles County jumped 8% to 25.7 million in 2010 from 23.8 million in 2009, nearing a 2005 high of 25.8 million, according to estimates by LA Inc., the local convention and visitors bureau.

Meanwhile, the number of cargo containers handled at the ports of Los Angeles and Long Beach rose 9.8% in the first quarter from a year ago, according to the Pacific Maritime Association, a trade group based in San Francisco.

The increased business is fueling interest in vacant warehouses. Seventh Street Development is selling a 20,000-square-foot warehouse it built in the Los Angeles County city of Pomona in 2007 but hasn't been able to sell until now, said Craig Furniss, president of the Long Beach developer. "A lot of people have held off" on buying warehouses, Mr. Furniss said. "But it seems like now manufacturers are getting more confidence."

Write to Jim Carlton at jim.carlton@wsj.com

http://online.wsj.com/article/SB1000142 ... tions_news

What a SHAM!!!! This article doesn't even mention that these "so called" tech jobs are only (at most) 6 month contracts - they are NOT full-time employment positions!!!! Only MORE FODDER TO MAKE OBAMA'S EMPLOYMENT NUMBERS LOOK GOOD!!!!!!! Wait until 6 months - BOOM!!!!!!

Originally Posted by American-ized

What a SHAM!!!! This article doesn't even mention that these "so called" tech jobs are only (at most) 6 month contracts - they are NOT full-time employment positions!!!! Only MORE FODDER TO MAKE OBAMA'S EMPLOYMENT NUMBERS LOOK GOOD!!!!!!! Wait until 6 months - BOOM!!!!!! :evil: :evil: :evil: :evil: :evil: :evil:

Do you have a link to data supporting that info? Or is that just an opinion?