State, Local Gov'ts Now Responsible for Hike in Jobless Rate

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(Sacramento, CA)
Thursday, September 24, 2009
When the state released the latest jobless figures last week, the headline was record-high unemployment – 12 percent in the Sacramento region. But look inside those figures and a much more telling story emerges: Overall, in July and August, the 10,000 jobs lost in El Dorado, Placer, Yolo and Sacramento Counties came entirely from the public sector. The private sector remained roughly steady.
Varshney: “Nationally, the economy is on the rebound.”
Sanjay Varshney runs the business school at Sacramento State. 
Varshney: “In California, the economy is a little slower because of what’s happening at the government level.”
Local and state budget crises are causing layoffs and hiring freezes, and Varshney says the Sacramento region is taking the biggest hit. Since the new fiscal year started in July, local school districts and state government have each lost more than 4,000 jobs. City and county jobs are down too.
Varshney: “We are much more vulnerable in that sense. We have a larger exposure to state government than any other city in California.  It will probably offset any growth that might be taking place in the private sector.”
In fact, the latest numbers show employment in private industries like real estate, construction and manufacturing have stabilized.  Janet Toppenberg with the Elk Grove Chamber of Commerce says her local economy is starting to improve.
Toppenberg: “We are seeing some new, smaller businesses come in. The housing market is starting to move again. And those are good signs.”
But the Chamber estimates that more than half of Elk Grove residents are public employees. And Toppenberg says any more government job losses would hurt.
Toppenberg: “We would hate to see any further deterioration, and hopefully it’ll balance out and not hinder the upward mobility too far, too much.”
Unfortunately, that’s exactly what Sanjay Varshney thinks could happen. His Sac State Business Review projects the region will lose as many as 30,000 government jobs, with unemployment jumping to 13.5 percent sometime next year.