Some say unemployment rate is a whopping 20 percent
August 01, 2003
Jim Mesler gets up every morning, walks to his computer and for the next two hours scours dozens of online job lists. The Oakland resident makes phone calls if he has some new leads, holding onto any shred of hope before he heads out to meet with other unemployed professionals in the afternoon. He then returns home to check e-mail.
"By that time, the day is pretty much shot; I'm feeling really depressed, and it's time to go home," Mesler says.
Mesler, a systems manager with San Francisco-based Charles Schwab & Co. Inc. before being laid off in 2001, is one of a growing number of unemployed Bay Area residents who are not counted in the official unemployment figures posted by the U.S. Department of Labor Statistics or the California Employment Development Department (EDD).
"I went through my original [severance], my original savings, my meager unemployment and two draws of equity out of my house via a refinance," says Mesler, 58. "I don't live a high lifestyle, just paying bills and eating."
Unemployment in Santa Clara County declined from 8.6 percent in June to 8.4 percent in July, according to the EDD. But those estimates are based only on claims for unemployment benefits, which exclude people like Mesler.
Other people left out of the equation include those who were forced to take an early retirement, unsuccessful job seekers-turned-consultants and people who have just given up, not to mention the gray area of underemployed workers making 50 percent of their earning potential or less.
"That's a totally bogus number," say Mesler about the EDD's jobless figures. "I think it has got to be at least 20 percent for the technology sector here and maybe even as high as 25 or 30 percent."
Janice Shriver, analyst for Santa Clara County with the EDD, insists the employment situation is getting better, but acknowledges near-term visibility is low. When asked about those who are unemployed but not counted, Shriver says that although job opportunities are next to nil, there is no reason to stop looking for work and thus no reason not to collect benefits and be counted.
"The way they're counted is if they're officially looking for work," says Shriver, referring to jobless claims being tied to the weekly paperwork. "Certainly they're discouraged; but if they see an ad in the newspaper, surely they can at least respond to it."
Shriver stops short of saying the EDD's numbers fail to factor in a large number of unemployed workers, but she acknowledges the widespread underemployment.
Congresswoman Zoe Lofgren, D-San Jose, says the unemployment situation is one of the top concerns of her constituents and believes that significantly more people are unemployed than the government figures indicate.
"The unemployment rate just measures who's checking in with the unemployment office. It doesn't factor in people who have moved back to wherever they originally were from, people who went back to school or people who have just given up," says Lofgren, who partly blames a lack of leadership in the White House for failing to curb the bloodshed in the job market.
For example, Lofgren believes Bush's dividend tax cuts do nothing to bolster economic growth, much less job creation. Tax incentives for small to midsize businesses, she says, would do much more to spur job growth.
According to the EDD, the metropolitan San Jose area -- San Jose and the surrounding cities -- reported roughly 9.9 percent unemployment in July. John Lang, an analyst with the San Jose Office of Economic Development, believes the true rate is perhaps 50 percent higher when the "hidden" unemployment rate is added.
"There is no good way to calculate this," Lang says. "But pushing 15 percent would be the higher limit, I would think."
The bottom line is that no one knows for sure, but nearly everyone has a hunch the jobless rate is much higher than reported. And some job-market watchers are unable to give encouraging news for the near term.
An Aug. 11 report based on a survey conducted by Chicago-based outplacement company Challenger, Gray & Christmas Inc. indicates the public is in the dark regarding job creation. For example, numbers indicate the productivity of manufacturers has risen recently and is cited as an indicator of an improving economy. But this may not translate into job creation, the report concludes.
"Increased productivity can actually lead to slower job creation as employers conclude that extra workers are unnecessary since they are able to achieve gains with existing staff," reads one passage in the report, entitled "Numbers Send Mixed Signals on Job Market."
Another recent Challenger survey concludes that 43 percent more job cuts were planned for July than for June. CEO John Challenger, as quoted in a press release, believes a turnaround in the job market "may be visible at the end of the year -- if there is significant capital spending to compel employers to start hiring again."
But that's a big if.
Niels Nielsen, president of Princeton Management Consultants Inc. in Princeton, N.J., attributes the slack demand for workers in the valley to overcapacity, mirroring Challenger's arguments. Bay Area companies, Nielsen argues, are just making do with the equipment they already have, as well as extracting greater productivity from their workers.
"Because of this huge overcapacity, businesses simply are holding off hiring people, as well as holding off buying new [technology products]," says Nielsen, who believes the unemployment rate in the Bay Area may be as high as 20 percent.
Nielsen's outlook for the near future doesn't provide much of a silver lining, either.
"There are a lot of people, even [Federal Reserve Bank chairman Alan] Greenspan, trying to hype the economy and to say there is a turnaround under way," Nielsen says. "But it could take three to five years before the excess capacity is used up."
Job growth, he says, likely will not pick up until that capacity is used up. And the tech industry, he adds, will be at the tail-end of any recovery.
Meanwhile, Mesler will continue his daily routine, unwilling to move to a less-expensive part of the country for fear of being separated from his support network.
"To go anywhere else at age 58 is an extremely difficult thing to do," says a weary Mesler. "Losing family and friends would be another loss."
Mesler -- not even a statistic in the figures compiled by the EDD or the U.S. Department of Labor Statistics -- most definitely counts, but remains in the shadows just beyond the officially unemployed.
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