Employment bandwagon (Oct'06)

October 25, 2006

Employment bandwagon (Oct'06)

There was another round of headlines over the last week claiming job growth in Silicon Valley was strong. The proclamation was this "proves" we are "recovered" from the dot-com bust. (The implication was this allegedly-strong job growth would lead to continued strong housing prices.)

We last wrote about this nonsense June 1, 2006: http://www.viewfromsiliconvalley.com/id228.html comparing April, 1996, 2001 and 2006 jobs numbers.

At the time, 78% of Santa Clara County's 2,700 new (non-farm) jobs were in construction, hotels, restaurants, health care or government. Let's call this category "CHRG" or "Charge"

Today, let's compare September, 1996, 2001, 2006 and 2006 job numbers. These are the figures from California's own database:

Sep'96 Sep'01 Sep'05 Sep'06

Total Jobs 888.0 996.1 877.9 886.4

Nonfarm Jobs 881.6 987.1 870.0 878.4

Construction 35.5 49.3 46.5 46.8

Manufacturing 249.1 237.9 171.2 171.4

Semiconductor Mfg. 71.1 68.9 50.9 51.6

Trade, Transport & Utils 139.2 145.6 132.5 134.2

Information 26.3 39.6 34.8 35.8

Financial Activities 31.9 36.1 36.2 36.8

Prof & Bus Services 159.7 192.4 160.5 162.1

Real Estate 23.7 26.6 26.1 27.0

Education & Health Svcs 76.3 89.4 95.0 95.7

Leisure & Hospitality 65.1 73.2 73.9 75.9

Government 87.7 96.7 93.8 94.1

Just for fun:

Federal Government 13.5 11.8 11.3 11.0

State/Local Gov't 74.2 77.4 75.1 75.6

Ratio 5.5x 6.6x 6.6x 6.9x

Adding private sector jobs (tracked by the state but not reported locally):

Total Private 809.5 890.4 776.2 784.3

89.5% 89.4% 88.4% 88.5%

"Charge" Jobs 264.6 308.6 309.2 312.5

29.8% 31.0% 35.2% 35.3%

Unfortunately, this format masks Sep'06 y-o-y total job growth was +8.5Ku (+0.97%) but y-o-y CHARGE growth at +3.3K accounted for 39%(!!) these new jobs.

Just like mainstream media, we reserve the right to invent new statistics when it suits our purposes. Today's newly-invented statistic will be "decade-over-decade" (or d-o-d) growth.

Running the same table for d-o-d we get:

Sep'06 d-o-d d-o-d%

Total Jobs 886.4 -1.6K -0.2% (=-0.0018)

Nonfarm Jobs 878.4 -3.2K -0.4%

Construction 46.8 +11.3K +31.8%

Manufacturing 171.4 -77.7K -31.2%

Semiconductor Mfg. 51.6 -19.5K -27.4%

Trade, Transport & Utils 134.2 -5.0K -3.6%

Information 35.8 +9.5K +36.1%

Financial Activities 36.8 +4.9K +15.4%

Prof & Bus Services 162.1 +2.4K +1.5%

Real Estate 27.0 +3.3K +13.9%

Education & Health Svcs 95.7 +19.4K +25.4%

Leisure & Hospitality 75.9 +10.8K +16.6%

Government 94.1 +6.4K +7.3%

Once more people understand we are +51.2K CHARGE jobs d-o-d, fewer of us will pay any attention to the monthly headlines claiming Silicon Valley is "back." Yes, there are a few more jobs out there. No, there is not a widespread resumption of the mid-to-late-90's prosperity, let alone the bubble years.

Extracting out the jobs not involved in enterprises required to earn a profit, building houses or paying minimum wage, the actual growth over the last 10 years is negative.

Conclusion:

Check the actual numbers before jumping on any bandwagons.

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The above is not intended as advice to buy, sell or hold any stock, bond, real estate nor any other financial product or service. Invest at your own risk.