Rescue California

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Job Cutbacks Accelerating in California
The state is faring worse than the nation, reports show. Analysts say the budget crisis and the tech industry slump will hamper a recovery

June 14, 2003

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1.2 million jobless residents are confronting in the face of a stingy labor market. The state's long-term unemployment has been climbing for 20 straight months, with 22.6% of all jobless Californians now out of work for 27 weeks or more.

Former software executive Brett Trusko is among them. Laid off two years ago, the 42-year-old Danville resident has been unable to find a full-time technology position, even though he holds a doctorate and is a certified public accountant. He said refinancing has helped his family hang on to its house, but he's not sure how much longer they can hold out on his wife's salary alone.

"We've thought about moving to Vegas," Trusko said. "We'd like to stay here, but we'd leave if the right opportunity came up."

There were some bright spots in the May employment data. Five of 11 large industry clusters tracked by state analysts added jobs last month, including the so-called financial-activities sector, which includes California's red-hot real estate industry.

Anthony Hsieh, founder and chief executive of HomeLoanCenter.com, said business is so brisk at the Irvine mortgage lender, thanks to record-low rates, that the company is looking to beef up its staff of 400.

"People in the mortgage business are very busy these days," Hsieh said. "We're lucky to be among them."

Economists say most other industries in the state are grappling with sluggish sales and soaring business costs, a combination that's slamming the brakes on hiring. Particularly nettlesome is workers' compensation. The state's system is in chaos, with premiums doubling and even tripling for many companies over the last few years, leading some to freeze hiring or lay off employees to keep costs down.

"A lot of businesses are in a precarious profit position," said Jack Kyser, chief economist with the Los Angeles County Economic Development Corp. "They are trying their darndest not to add workers because it hits their bottom line."

Richard Pocrass, chief executive of Chocolates a la Carte Inc., a Valencia maker of specialty chocolates, said his firm laid off nine of his 150 workers after his workers' compensation premiums doubled to $500,000. To expand his family's business, which will post $12 million in sales this year, Pocrass said he will automate more of the production process and outsource to Asia. What he won't do, Pocrass said, is hire more people.

"This is a complete change of direction for us," Pocrass said. "We have to find a way to grow without adding employees. California makes it too expensive."

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