It’s time to loosen the tourniquet. The bleeding has stopped. With unemployment in the North Bay at its lowest point since 2001, staffing executives in Marin, Sonoma and Napa say 2005 was a banner year for job seekers—by far the best jobs climate since the calendar flipped its pages to the 21st century (not that that’s saying much). But hold the champagne and don’t set off the celebratory fireworks quite yet. With apologies to the rock group Timbuk 3, while things are looking up, “the future is not so bright that you’re gonna have to wear shades.”
First of all, high-paying jobs are not plentiful, and many of the new jobs pay less than the average wage. Second, there is a disparity between the competency of the available workforce and the specific skills required for many of the new jobs. And finally, the economy is not firing on all cylinders yet and may suffer temporary setbacks, according to a report prepared for the Sonoma County Economic Development Board by Economy.com. In short, it isn’t the best of times, but it certainly isn’t the worst of times either.
“We won’t see 1999 or 2000 again,” says Ben Stone, executive director of the Sonoma County Economic Development Board, referring to an era of nearly full employment and top-dollar salaries. “That was a unique confluence of events that created a level of prosperity that wasn’t based in reality and certainly wasn’t sustainable. However, we see Sonoma County outperforming the nation in both job and economic growth over the next five years, and relatively speaking, we’re better off than most parts of California and the U.S.”
Marin and Sonoma, more so than Napa, have economies that depend on a healthy technology sector. When the tech bubble burst, the Bay Area, according to a study by the San Francisco Chronicle, lost more than 400,000 jobs from 2001 to 2003. In Marin, the unemployment rate doubled—from 1.5 percent to 3 percent. Meanwhile, telecom-centric Sonoma County lost jobs faster than a game of dominoes. Even today, after a modest tech rebound, the county still has 6,500 fewer jobs than it did in 2001, according to the California Employment Development Department (CEDD). And roughly one-third of the higher-paying tech jobs that existed in 2001 have sailed offshore to cheaper labor pools.
The poor get poorer…
In a sense, the story of the North Bay job rebound is a classic example of the rich get richer and the poor get poorer. An analysis of state job and wage reports by the Santa Rosa Press Democrat in September, using figures through March of 2005, found that wages for many workers at the higher end of the pay scale are rising, but those on the low end are falling further behind and are not even keeping up with inflation.
Average California wages, adjusted for inflation, fell 0.7 percent in 2005, according to the CEDD. That drop followed a decline of 0.5 percent the year before. In Sonoma County, the average wage is $42,171, but the Press Democrat study found that 58 percent of the new jobs created between 2003 and 2005 paid below the average wage.
Jerry Dunn, director of the Sonoma County Human Services Department Employment and Training Division, says the county’s dislocated worker program has been able to place 88 percent of workers who completed special training programs to teach them new job skills. On average, however, those workers are earning 25 percent less in their new positions, Dunn says.
Displaced tech workers are among the hardest hit. Even though it has been five years since the massive layoffs started, many of those left in the wake of the storm have yet to regain their previous wage footing, and it’s common belief among many—whether they be headhunters or job seekers—that they never will.
“Technical skills are not as needed as they once were because those jobs have shifted offshore,” says Jennifer Vidkjer, vice president of sales and marketing for Alkar, a full-service human resources agency serving Sonoma, Napa and Solano counties. “What we’re seeing is more research and development work in the U.S. while technical execution is being sent overseas because of the cost. Many of the positions we are filling are actually requiring softer management skills with an emphasis on critical thinking and communication.”
Tech workers and their families, who wanted to stay in the North Bay because of their ties to the community, have had to face the reality that those jobs are gone, and much like Bruce Springsteen sings, “they’re not coming back.”
“They’ve adjusted,” says Carolyn Silvestri, founder of The Personnel Perspective, a human resources consulting, training and recruiting firm based in Santa Rosa. “They have decided what they need to do in their lives in order to stay. Many of them have taken lower-paying jobs that they enjoy and that utilize their skills while keeping their eyes and ears open for new opportunities.”
Silvestri points out that many of the people who worked at the larger tech companies—Hewlett-Packard, Agilent and JDS Uniphase, for example—were long-term employees, who spent 10, 12, 15 years or more with the same company.
“They formed allegiances and alliances, and they are networking and helping each other out,” she explains. “These are well-trained, entrepreneurial and creative people who didn’t want to take the first thing that came along. Many are consulting on an independent basis in the area, and they are very receptive to getting calls from each other to find opportunities. It must be working because they seem to be paying their bills and making ends meet.”
Margaret Baez, direct hire recruiter for Adecco in Santa Rosa, says many of the former high-tech workers have gone into more “concrete” careers, such as accounting and finance, because they are “recession-proof and outsourcing-proof.”
Many companies offered displaced workers severance packages, which allowed them time to refocus, Baez says. “A lot of the workers re-trained and went into safer job sectors. Some of these people had been burned more than once. They don’t want to go through it again.”
Baez says her firm placed several tech refugees through temporary or “temp-to-hire” positions with reasonable success in securing decent salaries. “These were flexible and open-minded people who got actual on-the-job experience and fit right in,” she says. “Over time, many of them have told me it was actually a great experience in the end. What started out as something really awful turned out to be the best thing that could have happened for some of them.”
A helping hand
One of the programs with considerable success in helping tech workers regroup and redeploy is Job Link, funded by the Sonoma County Human Services Department Employment and Training Division. It consists of two offices—a Job Seekers Center located at 2245 Challenger Way in Santa Rosa and an Employer Resource Center at 606 Healdsburg Avenue in Healdsburg.
Much like a library, Job Link is open to anyone in the county. Its manager, Kathy Young, estimates 30,000 workers have used the Job Seekers Center over the past five years. And while the numbers have slowed somewhat, “We still have lots of people coming in,” she says.
The center offers a full menu of services for those who are job hunting, whether they currently are unemployed or just on the watch for something better. Workshops help people learn to write effective résumés, fill out job applications, improve their interviewing skills and conduct self-assessments that highlight transferable expertise that might lead to jobs in completely different fields. The center has a computer lab for those who don’t have ready access to a home computer, a resource room for research and job listings from hiring companies from throughout the region.
Meanwhile, the program’s Employer Resource Center helps potential employers connect with the job seekers by organizing job fairs, among other things. One new program initiated a few months ago takes potential employers directly to the Job Seekers Center to meet up with displaced workers immediately after their first orientation session, just in case there might be a ready match-up.
Three of Job Link’s most successful programs have directed former tech workers toward human services work. These include a Caregiver Training Program, which enabled people to find nursing assistant positions; a Nurse Workforce Initiative, which has licensed more than 100 new nurses; and a “Tech to Teach” program that took laid-off tech workers and trained them to be teachers in math, science and related subjects.
The new job landscape
As the economy slowly rebounds and companies venture forth into a hiring mode, staffing executives are optimistic about prospects in the North Bay but with one caveat: finding the talent to fill the jobs.
“We have well-paying jobs out there,” says Mark Nelson, president of the Nelson Family of Companies, which owns Nelson Staffing Solutions in San Rafael and other locations throughout Northern California. “But what’s happening right now is that there is a significant disparity between the talent required for many jobs and the skill set of those currently seeking work. That’s not to say these people aren’t talented—they are. But the specific talent required for many positions and the talent available are not one and the same. Finding the right talent is very difficult and getting more pronounced each year because greater numbers of Baby Boomers are retiring, and we, in the United States, are not creating the appropriate numbers of skill-ready college graduates.”
Particularly unsettling to Nelson is the dearth of technologists (computer programmers, software engineers, network administrators, accountants, etc.) with skill sets to handle today’s jobs. “We may be graduating smarter and more educated people, but they are not skill- and work-ready for the types of positions that businesses are demanding,” he says. “In 1975, the United States was the No. 1 country in the world in producing the best-trained science and engineering graduates. Thirty years later, we’re projected to land south of fifteenth on the list. And that’s a problem.”
Neil Kreuzberger, president of Kreuzberger Associates in San Rafael, an executive search and contract staffing firm that specializes in filling high-level finance and accounting positions, also sees a gap in the availability of worker expertise and job requirements, and he is once again feeling the supply side of labor tightening up.
“We’ve been buried with job searches since the beginning of the year,” he says. “One of the things that is fueling workplace demand in our sector is the Sarbanes-Oxley Act. It requires people with highly specialized skill sets to take a company through the implementation and monitoring of the requirements of the Act, and there aren’t a lot of people out there with that knowledge.”
The Sarbanes-Oxley Act of 2002 is an outgrowth of the Enron accounting fiasco. Officially titled the Public Company Accounting Reform and Investor Protection Act of 2002, the law was created to protect investors by improving the accuracy and reliability of corporate disclosures. A comprehensive compliance spending study by Boston-based AMR Research indicates that companies spent nearly $15.5 billion on Sarbanes-Oxley compliance-related activities in 2005 alone.
The strong demand for experienced people with Sarbanes-Oxley knowledge and the overall high demand for employees in the financial and accounting sector is actually bringing back something that placement executives haven’t seen in a long time—signing bonuses. “I’m seeing people get multiple job offers and signing bonuses,” says Kreuzberger. “In our niche, companies held back on hiring full-time and contract workers for so long during the economic downturn that they built up a backlog of project work. As they came out of the downturn, they released the brakes, but at the same time, the supply side tightened up as many of the workers had been absorbed into the marketplace. It’s not quite like it was in the late ’90s when it was incredibly difficult to find people, but it’s close. It’s getting challenging again to find good people.”
Kreuzberger and other staffing executives also point out that employers are very demanding, wanting a perfect match between the job requirements and the worker’s expertise. “It’s a market where they are looking for a Perfect 10,” he says. “That doesn’t make things any easier.”
Vidkjer believes employers are demanding more quality because the scope of work has been expanded. “When the companies downsized, it didn’t eliminate their needs or their business. Work still needed to be done, but middle management took a big hit. Now, when companies hire, they are asking people to take on more duties, and it takes a certain person to manage it in a healthy, positive way. Companies want to be absolutely sure they’ve got the right person. They want people who can deliver positive results and leaders who can motivate,” she says.
Growing opportunities
In addition to the growth in specialized tech, finance and accounting, placement agencies are seeing increased demand for new employees in the wine and food industries and continued demand in the medical sector. Having the name Napa or Sonoma on a label is a major selling point for a product, whether it be wine or food, according to Silvestri, and after several years of consolidation, the wine industry is starting to breathe again. “The internal marketing and public relations positions were hard hit in the consolidations,” says Silvestri. “We’re still not seeing growth there, but we are getting lots of requests for national sales managers, finance personnel, people with general management skills and visitor center managers.”
“The wine business is booming,” echoes Vidkjer. “We’re seeing more demand for winery workers across the board.”
Meanwhile, the food industry “continues to blossom,” says Silvestri. Adecco’s Baez agrees with Silvestri’s observation. “Fairfield, American Canyon and Napa are on fire with manufacturing jobs—food, in particular,” she says. “It’s very exciting, and the salaries are good.”
Despite the well-publicized out-of-state expansion by Amy’s Kitchen, the specialty food market across all of the North Bay is growing. La Tortilla Factory moved into new facilities near the Sonoma County Airport last summer. Redwood Hill Farm built a new creamery outside Sebastopol. The natural/organic food for which the area is famous is the fastest growing segment of the food industry, according to the National Association for the Specialty Food Trade. Several small, new food companies have popped up in the North Bay over the last two years, many started by laid-off workers seeking to reinvent themselves by following their passion for food.
And don’t count out the medical profession, which is in demand more as Baby Boomers age. “At Job Link, 48 of our 114 placements between April and October of 2005 were in the medical field, and it’s a trend that’s going to continue,” says Young.
Maura Harrington is an account manager for Volt Services Group’s A&I division in Santa Rosa, which places both temporary and permanent accounting, finance, light industrial and production workers throughout the North Bay. She reports that her company is thriving and has continued to increase business as a result of more businesses expanding to the North Bay, increased hiring in local businesses and a greater selection of service offerings to new and existing clients. “We had a phenomenal year in 2005. Clients are acutely aware of the value of great hiring decisions and the expense of unsuccessful ones. They are recognizing that this is truly our area of expertise and that utilizing a service to provide top talent can allow them to focus on their areas of expertise,” she says. “Also, a large portion of our workforce is in the manufacturing environment. Many of our North Bay clients are engineering and producing top-of-the-line products and have succeeded in securing long-term contracts for production and distribution.”
Harrington expects to see continued growth in the North Bay economy in 2006, and that will make accessing the right talent a little more challenging. “It’s going to shift back to an employees’ market, and the need for services such as ours will become extremely critical because you’ll have to dig deeper to find out why a person is unemployed or seeking a job change and match them with the right company, both culturally and in terms of skill sets. You don’t want to make a bad hiring decision because it might cause you to miss the perfect match. It’s a true blessing to find the right person for the right job because then it’s win-win for everybody and, ultimately, win-win for the economy,” she says.
Harrington also says the North Bay is well-positioned to draw talent from other areas. “People want to come to this area, so this allows us to access talent from Sacramento, Redding, the East Bay and the South Bay. We can recruit the talent and present them with opportunities here.”
It’s the economy, stupid.
While hiring seems to have gotten a green light, experts still believe most North Bay firms will proceed with caution into the new year. The reason is the fluctuating economy. A fairly bright outlook last summer from Economy.com described the economy as “expanding, with moderate growth in employment and industrial production.” That same study three months later noted that growth had slowed and predicted the area’s economy likely would lag that of the U.S. through the middle of 2006.
In the Fall 2005 Local Economic Report, Steve Cochrane, managing director of Economy.com, wrote that leading indicators were giving off “mixed signals.” For example, Cochrane’s analysis showed that employment is essentially unchanged from a year ago even though industrial production in the area is rising. And while some firms, like Boston Science, Alcatel and Medtronic are hiring people for research and development positions in the tech sector, Agilent shipped 300 jobs overseas just in the third quarter.
Cochrane’s study indicates that income growth will exceed 5 percent for the first time since 2001, which he believes will revive demand for retailing, particularly for high-end retailers that are currently not in plentiful supply. Over at Sonoma County’s Job Link, however, Young noticed a drop-off in retail hiring for this past holiday season. “They definitely did not hire in the same numbers they have in the past,” she says. “That signals to me that there still is some apprehension out there. Back in April, May and June, we had lots of placements in retail. Since then, I’ve seen a definite slowdown.”
Economic gurus worry that the impact of Hurricanes Katrina and Rita on the nation’s energy supply will continue to ravage consumers’ budgets. Cochrane writes that this could negatively impact the North Bay’s travel and tourism industries—and conceivably could hurt local wineries that produce lower-priced wines because demand for wine could be diminished by the loss of disposable income once consumers pay their higher energy bills. Higher-priced wines would not be impacted as much, he writes, because the people who buy them generally have more disposable income and are not equally impacted by higher energy costs.
In his Fall 2005 economic outlook, Dr. Robert Eyler, chairman of the Economics Department at Sonoma State University, says the local economy is in a “tug-of-war,” with local forces moving forward while state and national forces are trying to pull it toward stagnation.
While he agrees that oil prices play an important role in everyone’s economic life, he writes that “we cannot make trends in gas prices the culpable party for all economic woes,” pointing out that in past eras, consumer behavior has continued unabated without parallel income growth during times of rising gas prices.
Eyler also is concerned about local real estate prices, which he predicts will contract somewhat if the Federal Reserve continues to increase interest rates and general economic uncertainty rises. People “falsely watch home prices as an indicator that the economy is going to be okay,” he writes in the report.
“Our local high-tech industries, especially biotechnology, and the wine industry are poised to continue growing. Watching their hiring and their trends will tell you more about this economy than any other indicator. Their hiring reflects their forecasts of demand for their goods and services, and the more they hire, the more they intend to produce in the future. While our financial markets trends do not reflect much confidence in the economy, these hiring trends will show confidence or not.”
Reflecting on the economy, Jerry Dunn of the Sonoma County Human Services Department Employment and Training Division cites the inevitable—ebb and flow, yin and yang, coming and going.
“To be certain, it’s not all hearts and flowers out there,” says Dunn. “But one of our strengths is our diversity. We have tourism, we have agriculture, we have a strong health care industry, growing construction and emerging biotech. When one thing leaves, other things come in to fill the gaps. We’re diversified, and we have a balanced workforce. Are the jobs coming in paying as well as the jobs going out? No, they’re probably not. But by the same token, the economy just keeps going.”
For Eyler, the answer is simple. If the national economy moves into recession, the North Bay will follow suit. If not, we will likely continue moderate growth upward, “even if real estate prices contract and gas prices remain relatively high,” he writes.
And when looking at the job market, keep this thought in mind. According to Young, “Tech workers can transfer to biotech. Almost everyone we train in accounting gets a job. And no matter what happens, we always need truck drivers.”
