WIB of Tulare County

MANUFACTURING AND THE STATE OF THE UNION

The President’s State of the Union proposal to reinvigorate manufacturing domestically was welcome news, and there have been many thoughtful pieces written since that speech, both critical and supportive.  Many contentious issues will be clarified as this discussion eventually leads to a clear policy, and some of those issues are discussed below.

 

First, it should be understood that the vision of manufacturing that many still hold – the picture of a large plant employing hundreds repeating the same action on an assembly line – is much less prevalent today than decades ago.  A more accurate picture is a much smaller facility, with more automation, and fewer employees producing a much more sophisticated product, and earning a significantly higher wage.  Terms like “Agile Manufacturing” or “Advanced Assembly” are increasingly used to describe this new vision.

 

The classic image of U.S. manufacturing is one that has been eroding for many years, but the picture that is emerging is not necessarily a less-preferred alternative.  While it is very true that manufacturing jobs have decreased consistently – in Tulare County the number is about 60% of the peak of manufacturing during the mid-1990’s – overall output and productivity have consistently increased over the last few decades.  Higher productivity leads to higher wages.

 

Second, that classic picture will likely never return, but that’s not necessarily a bad thing.  The U.S. and global economy have been in continuous, gradual shift for many decades, and the Great Recession could be described as an economic earthquake creating a more sudden, extensive, and permanent change.

 

The manufacturing companies that exist domestically tend to be smaller, more agile, more automated, but still need employees with broad job skills and extensive training – and the wages those firms pay reflect that need, and compensate for that training.  Of the approximately 300 manufacturing firms in Tulare County, roughly one-third employ five or fewer employees, according to the Census Bureau, more than half employ 10 or fewer.  Only a handful of companies employ more than 200.  Yes, jobs have been lost, but it might help to understand the kind of jobs that were lost: low-skill, low-wage jobs from high-volume manufacturers. 

 

Looking at the most recent data and the overall composition of the industrial sector in Tulare County, there are some interesting realities.  The average manufacturer in Tulare County is a dairy processor or ag-related durables goods manufacturer, employs about 38 full-time, and the average wage paid is about $28/hour.  In 2010, the overall Gross Product of the manufacturing sector in Tulare County was $1.1 billion… with a “B.” 

 

Manufacturing also has one of the highest economic impact and jobs multiplier of all business sectors.  In Tulare County, manufacturing results in a jobs multiplier of nearly 4.0, with an earnings multiplier of 2.8, and a sales multiplier of 1.6.  Other than Government, there is no other business sector in the County that offers this high of an economic impact, while also paying high wages and attracting capital to the region.  In fact, manufacturing, as a sector, exports more value than even the ag sector.

 

Many experts agree there can be a resurgence of the manufacturing sector in the U.S., but when any advocate of manufacturing growth talks about a renaissance in domestic manufacturing, this new vision should be kept in perspective.  The reality of the smaller, more agile manufacturing firm must be prominent when developing any kind of policy to support the sector. 

 

Below is a sample of the recent articles on Manufacturing and policy since the State of the Union.  While they represent very different viewpoints, there are common threads running through all of them, which we’ve attempted to summarize. 

 

Why Most U.S. Manufacturing Jobs are Gone Forever

http://www.thefiscaltimes.com/Articles/2012/02/03/Why-Most-US-Manufacturing-Jobs-Are-Gone-Forever.aspx#page1

 

Manufacturing Jobs Start Year With Strong Gains

http://www.usatoday.com/money/economy/story/2012-02-05/manufacturing-job-gains/52976568/1

 

Do Manufacturers Need Special Treatment

http://www.nytimes.com/2012/02/05/business/do-manufacturers-need-special-treatment-economic-view.html?_r=2&ref=business

 

Why We Don't Need a New Program...

http://www.huffingtonpost.com/michele-nashhoff/obama-manufacturing-training-_b_1245796.html

Manufacturing's Big Comeback

http://www.theatlantic.com/business/archive/2011/12/get-ready-for-manufacturings-big-comeback/250291/

How to Bring Back Manufacturing

http://www.huffingtonpost.com/devon-swezey/us-manufacturing-jobs_b_1237782.html?view=print&comm_ref=false

 

Manufacturing Jobs Going to...

http://www.forbes.com/sites/timworstall/2012/02/03/that-giant-sucking-sound-of-manufacturing-jobs-going-to-china/?feed=rss_home

Why America Shouldn't Focus on Manufacturing

http://www.thefiscaltimes.com/Articles/2012/01/30/Why-America-Shouldnt-Focus-on-Manufacturing.aspx#page1

 

How Many Manufacturing Jobs Can the U.S. Realistically Sustain?

http://www.pbs.org/newshour/bb/business/jan-june12/manufacturing_01-26.html

 

Chris Anderson -- One-Off Manufacturing

http://www.socialmedia.biz/2009/12/01/lowering-the-barrier-to-manufacturing-and-distribution/

This article is from 2009, but still very interesting -- regards a new trend in manufacturing with the advent of 3-D printers.

THE STRUCTURAL UNEMPLOYMENT DEBATE RAGES ON

The issue of structural unemployment has been on the minds of numerous economists and bloggers throughout the year, but particularly in the last few months, after the Bureau of Labor Statistics revised its job openings data lower for 2009 and 2010, and data covering average length of unemployment. The debate centers around whether or not structural unemployment exists in the current U.S. economy, and if so, how best to address the issue.

Long-term unemployment, measured by the average amount of time a worker remains unemployed, is at an all-time high. Between 1981 and 2001, the average length of time an unemployed worker was out of work was about 15.4 weeks. In 2011, the average stands at more than 40 weeks.

Structural unemployment, roughly defined, is unemployment due to a mismatch or disconnect between the hiring needs of employers and the available workforce. This disconnect can result from a geographic mismatch, or a skills gap, or other factors. Lately, more economists are asserting that the recent recession was not just cyclical – like previous recessions – but structural, meaning there was a permanent shift in the composition of our economy.

As an example, Economic Modeling Specialists, Inc., leans toward a stance saying that despite the recent BLS data revision, structural unemployment is becoming more identifiable and the response should be investment in re-training workers. Economist Bill Watkins, of the Center for Economic Research and Forecasting at California Lutheran University, says structural unemployment is real and will continue on a long-term basis. Watkins, who specializes in economic forecasting in California and Oregon, has a strong grasp of the issues facing the Western U.S.

Likewise, Christopher Thornberg of Beacon Economics says the long-term unemployment results from fundamental shifts in the economy, such as the move from traditional shopping to online purchasing, and the increased automation in the manufacturing sector. Thornberg says the unemployment problem is more of a social than economic problem, and that we should be using social policy to solve social problems, and economic policy to solve economic problems.

In the Central Valley, this disconnect is best exemplified in the former construction workers who have been unable to find work due to current unavailability of those jobs and lack of skills needed to shift into new careers.

This structural unemployment is visualized in the Beveridge Curve, an economics graph that measures job openings and unemployment. A curve going outward means more job openings remain unfilled, even if unemployment is up. Ideally, points in the middle- to left-side of the chart show a healthy unemployment rate with stable turnover.



Contrarily, economists like Dean Baker, Paul Krugman, and Christina Romer, former Chair of the President’s Council of Economic Advisers, have argued since last year there is no real structural unemployment, simply a lack of hiring demand brought on by a lack of consumer demand. The argument focuses on evidence that unemployment is different sectors is proportionate to other sectors, e.g. construction unemployment isn’t significantly higher than any other sector.

They argue that the recent BLS revision confirms this condition, and their response is to advocate for more government investment to stimulate consumer demand.

As with all things regarding economics, there are numerous viewpoints, and this Atlantic Monthly piece from June, this one from July, and this one from January, confirm Watkins’ and Thornberg’s conclusions.

Locally, there is growing anecdotal evidence of this structural unemployment, while solid, empirical data is slowly building, too. As an example, at the peak of the housing bubble, approximately 8,600 were employed in the construction sector in Tulare County. As of June, 2011, about 3,800 construction jobs existed in the County.

This debate could potentially impact WIA reauthorization and funding. The U.S. Senate Committee on Health, Education, Labor, and Pensions (HELP) recently released a discussion draft of a proposed WIA reauthorization bill, and potentially includes funding to support innovative workforce development programs with a regional scope. Rep. Buck McKeon (R-CA) also recently introduced WIA Reauthorization in the House.

Whether or not structural unemployment debate is ever settled among economists, it is still very clear skills gaps loom large in Tulare County, with thousands of jobseekers in the region still unable to find meaningful careers.

The WIB’s conclusion is, yes, there is a growing structural unemployment problem that will require a continuing monitoring of which higher-paying occupations are growing, and the organizational flexibility within the workforce development field to adapt training and other job services to close this structural gap.

In the meantime, the WIB will continue to utilize the resources available to augment the skills of the regional workforce so businesses can compete and prosper.

WIB 2011 Annual Meeting is October 12

On behalf of all the members, staff and One-Stop partners of the Workforce Investment Board of Tulare County, I would like to personally invite you to attend our 2011 Annual Meeting.

This year's event features Bill Watkins, a dynamic, unflinching economist who has appeared often on cable news networks discussing the economy of California and the Western U.S.

Registering the WIB Annual Meeting is now easier than ever - just log on to the WIB's website, www.tularewib.org , and follow the link to register online. Tickets are $40 per person, or a table of 8 for $280.

I look forward to seeing you October 12.

Sincerely,

Adam Peck, Executive Director
Workforce Investment Board of Tulare County

Local Partnerships Offer Summer Jobs for Tulare County Youth

Congratulations to the Tulare County Office of Education, Harmony Magnet Academy, Mangini Associates, and Magnet Academy seniors Doug Murdock and Raymond Almanza for putting together an impressive summer work project that place 128 individuals into summer jobs. Just one example of the fine work done with the WIB's investment in preparing young people for meaningful careers in partnership with local industry.

http://www.tcoe.org/FrontPageFeatures/110801StudentEmployment.shtm

It’s Past Time to Reauthorize the Workforce Investment Act

"It’s Past Time to Reauthorize the Workforce Investment Act"

Our nation’s workforce is recovering in fits and starts from the lingering recession and it’s long past time to update our employment and job-training system to better prepare American workers for the economic opportunities of the coming decade.

www.americanprogress.org

Annual Speech for Those Entering the Job Market

ANNUAL SPEECH FOR THOSE ENTERING THE JOB MARKET...

Every Summer brings a new wave of participants in the workforce. Whether graduating from high school, community college, university, or vocational school, there will be many people eager to apply their knowledge and training towards a new (or renewed) career. Though recent job figures have shown a very small degree of improvement, entering the workforce at a time when unemployment rates are the highest since the Great Depression can be a very distressing experience.

To paraphrase Thomas Jefferson, those who qualify themselves well for their calling will never fail of employment in it. More recently, experts ranging from Robert Reich to Peter Drucker – who coined the term “knowledge worker” – have advocated for decades that knowledge, education, and training are the map and compass leading to career success.

Though we wish these notions could be entirely true in all economic times, we know from recent experience there are no guarantees. Economic realities have shown that even the most well-trained, competitively-skilled workers can be placed into the ranks of the unemployed, sometimes for brief periods, sometimes for much longer. But even in the toughest economic times, in the most competitive of job markets, those who prepared themselves well have the best chance of success.

Decades ago, the idea of getting a job in the local mill or manufacturing plant, and keeping that job until retirement, was common and realistic. Today, however, its estimated people will not only change jobs, but completely change their careers, many times over. Our economy, whether in good or bad times, is changing faster than ever before. The best way to be able to adapt to that change is to prepare ourselves well – by continually learning and applying new skills.

As a part of that ability to adapt, it’s important to understand that different jobs are in demand at different times, and being willing to adapt to new career opportunities is a trait that will serve jobseekers well. The Workforce Investment Board of Tulare County has current economic and employment data available, including salary projections and educational requirements, to help jobseekers determine current and future “in demand” jobs.

The WIB is dedicated to improving the existing workforce as a means to reduce poverty, support economic development, and increase family incomes – in short, preparing the county workforce for success. From getting input from the private sector their workforce needs, to collaborating with community colleges, adult schools, non-profit training providers, and school districts, to developing clearly defined career pathways for youth and adults, to creating and implementing work readiness standards for all clients, the WIB will continue to utilize all available resources to prepare our workforce for success.

New Federal Hiring Credit Available to Tulare County Businesses

There’s an important new tax credit available to businesses that may not be well known, but could potentially assist thousands of Tulare County businesses.  The new Federal Hiring Incentives to Restore Employment (HIRE) Act was signed into law in March of this year, giving most employers an incentive to hire long-term unemployed.  This credit generated quite a bit of interest the WIB’s quarterly Manufacturing Forum last month.

The HIRE credit allows employers an exemption on their portion of an employee’s Social Security contribution, starting on March 19, 2010 through the end of 2010, if:

· The employee was hired after February 3, 2010, and

· The employee had been unemployed for the previous 60 days from the date of hire.

The exemption, 6.2% of the employee’s wages, would equal nearly $1,300 for an employee hired July 1 of this year and works through the end of the year. The credit is applicable to all private employers, both for-profit and non-profit.  Public colleges and universities also qualify to take advantage of the credit.

Additionally, for any qualifying employee who remains employed with the business for a full year, the business qualifies for an additional tax credit of $1,000. 

Of course, a business should always consult their accountant or CPA when dealing with tax credits, but the process for claiming the credit is fairly simple – the employee at time of hire fills out a W-11 form.  The business will have to file an additional Form 941 with its quarterly payroll taxes. 

For more information, the IRS website has details of the program. 

This program is in addition to other hiring incentives currently available in Tulare County, the Work Opportunity Tax Credit (WOTC), a federal credit available to all employers, and the Business Incentive Zone (BIZ), a lucrative state hiring credit currently available to industrial firms (manufacturing, warehouse/distribution, trucking/transportation) in the county. 

The WOTC program offers credits for new employees who qualify in one of several possible “target groups who experience barriers to employment.” This includes long-term unemployed, those who receive federal assistance, ex-offenders, and similar areas.  Forms that would need to be filed would include an IRS Form 8850, Employment and Training Administration (ETA) Form 9061, and ETA Form 9062.

The BIZ program seeks to employ similar types of workers, but offers a much higher credit.  Any manufacturer, distribution center, trucking company, or machine shop in Tulare County not currently taking advantage of the BIZ credit should consider it.  Though the program will sunset in 2011, it will be replaced by the Sequoia Valley Enterprise Zone, which will provide similar state tax credits. 

The WIB has developed a PowerPoint presentation outlining these credits, or log on to the WIB’s website, www.tularewib.org, for more information.

2010 Graduation Season

Every June brings with it graduation season, which also brings a new wave of participants in the workforce.  Whether graduating from high school, community college, university, or vocational school, there will be many people eager to apply their knowledge and training towards a new (or renewed) career.  Though recent job figures have shown a very small degree of improvement, entering the workforce at a time when unemployment rates are the highest since the Great Depression can be a very distressing experience.

To paraphrase Thomas Jefferson, those who qualify themselves well for their calling will never fail of employment in it.  More recently, experts ranging from Robert Reich to Peter Drucker – who coined the term “knowledge worker” – have advocated for decades that knowledge, education, and training are the map and compass leading to career success. 

Though we wish these notions could be entirely true in all economic times, we know from recent experience there are no guarantees.  Economic realities have shown that even the most well-trained, competitively-skilled workers can be placed into the ranks of the unemployed, sometimes for brief periods, sometimes for much longer.  But even in the toughest economic times, in the most competitive of job markets, those who prepared themselves well have the best chance of success.

Decades ago, the idea of getting a job in the local mill or manufacturing plant, and keeping that job until retirement, was common and realistic.  Today, however, its estimated people will not only change jobs, but completely change their careers, many times over.  Our economy, whether in good or bad times, is changing faster than ever before. The best way to be able to adapt to that change is to prepare ourselves well – by continually learning and applying new skills.

As a part of that ability to adapt, it’s important to understand that different jobs are in demand at different times, and being willing to adapt to new career opportunities is a trait that will serve jobseekers well.  The Workforce Investment Board of Tulare County has current economic and employment data available, including salary projections and educational requirements,  to help jobseekers determine current and future “in demand” jobs.

The WIB is dedicated to improving the existing workforce as a means to reduce poverty, support economic development, and increase family incomes – in short, preparing the county workforce for success.  From getting input from the private sector their workforce needs, to collaborating with community colleges, adult schools, non-profit training providers, and school districts, to developing clearly defined career pathways for youth and adults, to creating and implementing work readiness standards for all clients, the WIB will continue to utilize all available resources to prepare our workforce for success.

2010 Tulare County Career Fair

There are clearly a lot of motivated people in Tulare County looking for work.

The Tulare County Career Fair, an annual networking event linking jobseekers with employers, is a strong collaboration between the Workforce Investment Board of Tulare County, the California Employment Development Department (EDD), Community Service Employment Training (CSET), Tulare County Department of Child Support Services, Tulare County Office of Education, and other partners.

 This year’s Career Fair was held April 21, and while there wasn’t a significant increase in attendance like had been forecasted, more than 1,300 jobseekers attended this year.  A line was forming to enter the event a full two hours before the doors were scheduled to open. By the time doors opened, the line stretched nearly two full city blocks. 

Observations from this year’s Career Fair indicated that there was a slight demographic shift in the participants.  In previous years, attendees often were younger and more ethnically diverse.  This year’s attendees represented a much broader economic spectrum, further indication that many of the job cuts in the last two years have affected all levels of jobs, including mid- and upper-level management.

Nearly 100 businesses, non-profits, vocational schools, and public sector employers rented booths at the Career Fair, indicating that even in a recessed economy, there are still job opportunities in the region.   In this case, however, the competition for those jobs has increased substantially, making it important for jobseekers to know not only how to do a job and perform well in their chosen careers, but now just as important is to know to get a job.

Career coaching is one of the services provided to job seekers at the four Employment Connection offices located in Tulare County.  Those services include a wide variety of workshops in the areas of resume writing, interviewing techniques, personal financial management, dealing with a layoff, job search strategies, and many other important job search skills.  Additionally, WIB clients (jobseekers) start to receive immediate, one-on-one career coaching on their first visit.

Participating in the Career Fair, whether as an organizer, employer, jobseeker, or casual observer, is a good exercise in reminding oneself that unemployment figures, and all economic numbers, really, have a human face, too.  For every one percentage point change in the unemployment rate in Tulare County, that represents about 2,000 individuals – a single mom trying to pay rent and hoping she can keep the kids in soccer this year, a recent retiree realizing Social Security won’t pay all the bills, a soon-to-be college graduate hoping the job market turns around before the student loans become due, or a husband and father wrestling with the distress of wanting but unable to provide for his family.

The Career Fair occurs every April, and as long as the needs exist and the resources are available, the Workforce Investment Board of Tulare County and the Employment Connection will continue trying to match businesses with jobseekers who are trained, prepared, and ready to work.

Little-Known Facts About the Unemployment Numbers

The January unemployment numbers will be released very soon, and if the unemployment rate goes down, it might not be all good news.  Conversely, if unemployment were to go up, it may point to a little more optimism in the workforce.  It’s important to look deeper into the numbers to get a clearer picture, and to understand how unemployment numbers are figured.   It also helps to know why “seasonally adjusted” unemployment figures are more useful than “raw” data.

The reality is unemployment in California and the nation is measured by a very strict definition: all workers who are available to work, currently unemployed, and who have looked for work in the last 30 days.  So anyone who may be out of work for more than a month and hasn’t looked for work in the 4 weeks prior to the survey isn’t counted.  These people are called “discouraged workers,” meaning they most likely have given up on the job search, at least temporarily.

That is why the County’s unemployment rate can go down even when the number of unemployed workers, as they are counted by the state and federal government, goes down, too.  It means more people have ended their job search, so they’re not counted anymore for statistical purposes.

That is also why, if unemployment were to go up, it could mean that more workers are starting to view the job market as more favorable, and therefore are starting to look for work again.  If more long-term unemployed people are renewing their job searches, it then raises the unemployment rate.

Accuracy in counting discouraged workers is difficult to achieve, but the U.S. Department of Labor (DOL) has estimates for this definition of unemployment at the state and national level.  DOL believes this number to be relatively small compared to the larger unemployment number, but that may not be accurate today, given the number of long-term unemployed and the current job market.

In addition, DOL measures “marginally attached workers,” referring to long-term unemployed who have looked for work in the last year, but not in the last month.  They estimate this number to be significantly larger than the discouraged worker category.

Actually, there are several definitions for unemployment, or “labor underutilization,” as the DOL likes to call it:

· U-1 – is persons unemployed 15 weeks or longer, as a percent of the civilian labor force, who have looked for work in the previous 4 weeks;

· U-2 – is persons laid off and persons who completed temporary jobs, as a percent of the civilian labor force, who have looked for work in the last month;

· U-3 – is the total unemployed, as a percent of the civilian labor force (this is the definition used for the official unemployment rate);

· U-4 – is the total unemployed plus discouraged workers, as a percent of the civilian labor force;

· U-5 – is the total unemployed, plus discouraged workers, plus all other marginally attached workers, as a percent of the civilian labor force; and

· U-6 – total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons – meaning they would like to work more hours, but don’t have the opportunity to  – as a percent of the civilian labor force plus all marginally attached workers.

At the state and national level, using these definitions significantly increases the “unemployment” number.  On average, the U-6 measurement adds roughly 3/4ths to the unemployment rate.  The December, 2009 unemployment rate was 17.5%. 

So using the U-6 definition of unemployment in Tulare County – unemployed, discouraged workers, marginally attached workers, and underemployed – gives us a rough estimate of 30-31% unemployed and underemployed.  Translated, that means more than 50,000 people in the County can’t find work, whether they’ve been looking or not, or are working less than they would like.

People who track unemployment numbers often see that seasonally adjusted data is different from the non-seasonally adjusted numbers.  The reason why economists and statisticians place importance on this calculation is because it balances out the information from year to year, which is a much better gauge of employment trends than measuring month-to-month.

For example, we all know that retail businesses add jobs during December, so measuring jobs from November to December is always going to show an increase in jobs.  But, if we look at the November-December trend from year to year, we can see if businesses may have added more jobs in one year relative to other years. 

Using this method, we can see that Tulare County retailers actually added fewer jobs in 2009 than they had in previous years.  Not really good news, but we know 2009 was rough year for businesses and jobseekers. 

The WIB is confident that 2010 will be a better year, though not much.  The recovery will be long and slow, but using our ARRA funding, we can help those unemployed to use this time to broaden their job skills.  When the economy is ready to rebound, Tulare County will have a ready workforce.