Don’t Look Now: Bureaucrats Best Factory Jobs
By RAJIV VYAS
A libertarian’s nightmare or inevitable evolution?
Recent numbers from the California Employment Development Department show Orange County now has more government bureaucrats than workers in durable goods manufacturing. And the gap has been widening for the past few months.
Government jobs stood at 161,100 in November vs. 141,600 workers in durable goods,products such as computers or industrial machinery that aren’t consumed or quickly disposed of. Durable goods workers are about two-thirds of the county’s manufacturing sector. OC has 1.5 million workers in total.
The jobs crossover happened in September, with the gap between government and durable goods workers about half as much as November’s difference.
In the past year and a half, the two have flip-flopped several times, mainly for seasonal reasons,teaching jobs decline in the summer months, for one. The first time OC government jobs surpassed workers in durable goods manufacturing was May 2001.
“This is the way the way the world is going,” said Jack Kyser, chief economist with the Los Angeles County Economic Development Corp. “It’s a sign of the times.”
Don’t fret: OC isn’t becoming a state of Orwellian size.
There are several factors at play, including manufacturing layoffs in the face of a sluggish economy, and, more importantly, growth in the county’s population, which has ballooned 18% in the past decade to become California’s second biggest, behind Los Angeles.
As a region matures, it prompts more government jobs in state and local education, fire, police and other departments serving the growing population.
Speaking to its relative infancy, OC, with its services-dominated economy, is the last major county in Southern California to see government jobs outnumber those in durable goods manufacturing.
Los Angeles leads the region with 615,600 government jobs vs. 312,900 in durable goods manufacturing. Smaller San Diego has an even higher spread on a percentage basis: 224,300 government jobs and 90,300 in durable goods.
Even Riverside County, whose low-end manufacturing base is humming, has many more bureaucrats than blue-collar workers: 214,800 vs. 84,400.
Overall, California has more than 2.4 million workers earning a government paycheck, compared to about 1.1 million in durable goods.
In the past two years, most of OC’s growth in government payroll has been in local education.
Efforts to reduce class sizes and the growing number of children have led to a boost in the number of teachers. State and local governments have added 10,800 jobs in the past two years, with 40% of those in local education. Federal jobs in the same period declined by 400 to 12,000.
As the state grapples with its budget crisis, look for all levels of government to cut back on their labor growth, or cut workers altogether, said Keitaro Matsuda, senior vice president of economic research at Union Bank of California in San Francisco.
Manufacturers, meanwhile, have cut their OC workforces by about 1.5% a year in the past decade. While manufacturing employment should bounce back once the economy shows sustained growth, some economists say OC face some long-term challenges.
Part of the problem is stiff competition from global manufacturers, said Gerd-Ulf “G.U.” Krueger, vice president of market research at Institutional Housing Partners Inc., an Irvine-based real estate investment company. In the past few years, global manufacturers have benefited from a strong dollar, which has made their goods cheaper to sell here,
“Asian countries are very nimble and very dynamic,” he said.
Ironically, it’s some of the Asia-based companies that have made the biggest manufacturing cuts here. Toshiba Corp. cut about 760 workers from its Irvine computer assembly facility and Canon Inc. slashed 320 jobs from its OC operations in the past few years.
And Toronto-based contract electronics maker Celestica Inc. recently closed its Foothill Ranch plant and laid off 381 workers.
Another problem: OC’s cost of living is high, Krueger said, making it tough for some manufacturers to attract workers here.
And some say the state’s hands-on regulatory and tax environment hurts manufacturing.
“California is a very activist state,” said Peter Schiff, president of Newport Beach-based Euro Pacific Capital Inc., a global investing company. “The more government bureaucracy there is, the more difficult it is to be competitive in manufacturing.”
Don’t look for durable goods manufacturers to take back its lead over the government labor force,at least not permanently.
“There could be a period when it flip-flops, but overall it’s going to be a secular period,” Krueger said.
