I.E. jobless rate likely to be stagnant in 2011
Mediha Fejzagic DiMartino, Staff Writer
Created: 12/28/2010 09:39:50 PM PST

The nation’s unemployment edged up to 9.8 percent last month, even though companies are performing well – all but 4 percent of the top 500 corporations reported profits this year, and the stock market is close to its highest point since the 2008 financial meltdown.

So why isn’t anyone hiring?

As the national economic pulse quickens, local employers are still not convinced the recovery is strong enough, said George Huang, an economist with the San Bernardino County Economic Development Agency.

“They want to know for sure before they make an investment, especially in labor,” Huang said. “Just because we have good orders for next two months doesn’t mean we should hire someone.”

And they should be cautious.

The Inland Empire labor market remains “anemic” with the unemployment rate not likely to return to single digits until at least 2015, according to the “Great Recession’s Toll on Inland Empire Jobs,” an economic analysis produced by Claremont McKenna College’s Lowe Institute of Political Economy and the Rose Institute of State and Local Government.

“We project a significant drop in the region’s jobless rates before the end of the year but expect that it will take quite some time for the Inland Empire to return to single- digit unemployment figures,” the report said. “The region’s unemployment rates will not reach their low pre-recession levels for the foreseeable future and certainly not for the next five years.”

During the region’s recent growing years – until late 2007 – San Bernardino and Riverside counties generated about 584,000 new jobs.

Since then, “the region has shed almost 195,000 jobs, a decline of roughly 15 percent from the peak of the economic cycle,” according to the report.

“If California’s job losses resemble an earthquake, the Inland Empire is one of two epicenters, with the other located in the Central Valley east of the San Francisco Bay Area.”

While national and state unemployment rates seem to have leveled off during the last quarter of 2009, at 9.5 percent and 12.5 percent respectively, the Inland Empire’s unemployment in July reached a record high seasonally unadjusted level of 15.1 percent.

“While the August 2010 numbers look promising for the Inland Empire, and in particular for San Bernardino County, in fact the drop in the unemployment rate was not generated by an increase in employment,” according to the report. “Instead, many workers simply gave up looking for a job in the region.”

The city of San Bernardino’s 18.9 percent unemployment rate led the pack, with Ontario coming in at 15.1 percent, Redlands at 10.5 percent and Rancho Cucamonga at 9.4 percent.

Even the region’s recession-resistant industries, such as education, health care and government, have not fared well during the recession.

“It was so harsh that even those industries have stopped growing or have laid off workers,” Huang said.

CMC’s economic outlook for the construction sector “remains bleak.”

Huang agreed. During the boom, the job growth was in the industries suffering right now which are construction and real estate, he said.

Mark Knorringa, the chief executive officer of the Building Industry of Southern California’s Riverside County chapter, also said that an uptick for region’s construction-related jobs is unlikely.

“Market is depressed, it’s difficult to sell houses, so the production is low,” Knorringa said. “Without sales, you don’t have construction.”

But things aren’t expected to get much worse in 2011.

“We are two, three years into the recession, and most companies have let go of people they absolutely don’t need,” Huang said. “But economy is a very dynamic animal. It always surprises people.”

Some unemployed people find new things to do, such as going into business for themselves, he said.

“Some of the biggest companies have been started in recession,” Huang said. “But new ideas take time and never create jobs heavily in the beginning.”

Despite the local doom and gloom, there is some good news for neighboring counties.

Indicators point to a “more advanced state of recovery in the western parts of Southern California,” according to CMC’s economic analysis.

“While it stretches one’s imagination to see high growth rates in the Inland Empire in the near term, it is plausible to expect such growth in the greater Los Angeles area. In particular, we expect to see job growth in the logistics sector.”

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