HomeMy WebLinkAboutMINUTES - 05132008 - C.78 (2)r
FtHS #44
` Contra
TO: BOARD OF SUPERVISORS -
o' �•7iiiaiiilh Costa
FROM: Family and Human Services Committee x -
DATE: May 6, 2008 S'A couK County
SUBJECT: EHSD Challenges — Impact of the Economic Downturn
Aft
SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION
RECOMMENDATION:
ACCEPT the attached report from the Director of the Employment and Human Services Department
regarding the impact of the recent economic downturn on the workforce programs of the Department, as
recommended by the Family and Human Services Department.
BACKGROUND/REASON(S) FOR RECOMMENDATION(S):
On April 28, 2008 the Family and Human Services Committee received a report from the Employment
and Human Services Department regarding the impact the recent downturn in the economy is having on
the workforce programs administered by the Employment and Human Services Department, including
recent economic and labor force trends, operations impact on the departments programs, capacity and
resource implications, and strategies for the future.
CONTINUED ON ATTACHMENT: YES /IGNATURE:
RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATI OF BOARD COMMITTEE
APPROVE OTHER
SIGNATURE(S):
Sus n A.Bonilla,Chaff— Mary N.Piepho, Member
ACTION OF BOARD ON APPROVE AS RECOMMENDED_ O R
VOTE OF SUPERVISORS
I HEREBY CERTIFY THAT THIS IS A TRUE
UNANIMOUS (ABSENT P/1i � ) AND CORRECT COPY OF AN ACTION TAKEN
AND ENTERED ON THE MINUTES OF THE BOARD
AYES: NOES: OF SUPERVISORS ON TH D TE SHOWN.
ABSENT: ABSTAIN:
ATTESTED
JO/NCLLEN RK OFT BOARD OFSUSO ND COUNTY ADMINISTRATOR
Contact Person: Dorothy Sansoe 5-1009
CC: CAO
Bob Lanter, EHSD
BY: DEPUTY
J
Employment and Human Services Department
Workforce Development & Workforce Services Bureau
Joint Presentation to the Family and Human Services
Committee
DATE April 28, 2008
TO: Family and Human Services Committee
FROM: Joe Valentine
Bob Lanter
Stephen Baiter
SUBJECT: Economic Downturn & Impact on Labor Market
RECOMMENDATION: Accept report from EHSD on the impact of the economic
downturn.
This report provides an overview of some new and emerging challenges facing the
workforce programs of the Employment and Human Services Department(EHSD) that
are resulting from the recent economic downturn. The accompanying presentation of this
information to the Family&Human Services Committee will specifically highlight
developments in the mortgage and finance industry and how the meltdown in the region's
housing market is beginning to have ripple effects across the county's economy and labor
market, and how EHSD is working to adjust to these conditions.
I. A Changing Landscape
Two years ago, El Sobrante resident Carol Sanchez used to wake up each morning
without giving much thought to her seventy-five mile, two hour one-way drive to
Fidelity's office in Saratoga, where she worked in her$114,000/year job as an Escrow
Officer. That was before the day she learned that her husband, retired from Pitney-
Bowes,was diagnosed with prostate cancer, a day when she couldn't get home fast
enough to be with him. As this tragic development forced Carol to reprioritize her life,
she confidently found her way into a similar job much closer to home in the spring of
2007, taking a slight pay cut (down to $102,000 annually) as she began working for a
smaller title company. In October 2007, as the housing bust began accelerating, Carol
was laid off from her job. With her husband's medical bills mounting, they soon had to
move out of their(rented)home and live with a friend, giving up a pet in the process.
On January 11, 2008, Carol walked into the EASTBAY Works One Stop Career Center in
San Pablo in search of assistance with finding a new job. She enrolled in the Workforce
Investment Act (WIA)program so that she could get individual assistance and guidance
around how to best package her eight years of experience in the mortgage industry and
one year of community college work in a way that would make her most appealing to an
employer. She is now applying mostly for administrative/office support positions—many
of which pay less than half as much as she was earning just six months ago—as she
works in an agency temp assignment as a greeter at the San Pablo One Stop. Thanks to
the generosity of a friend, Carol and her husband are currently renting a condominium
from one of their friends at a below-market rate,but with their credit rating crumbling,
Carol and her husband are beginning to wonder how long they can hold on. "I've always
believed that I would find a job—when it(my layoff) happened, I really freaked out,"
Carol said.
Sadly, Carol's story is not unlike that of thousands of other Contra Costa County and Bay
Area residents, who are suddenly finding themselves in a position that they could have
scarcely imagined just a short time ago. As the current economic downturn ensues,
creating more uncertainty and insecurity for people at all income levels across a wide
range of industries, the EHSD is beginning to grapple with how to not only continue
helping individuals and families who are already accessing its programs and services,but
how to adjust, adapt, and (where possible) expand its programs and services to meet the
needs of the Carol Sanchez' of the world just as the state and local budget crises hit
everyone full bore.
II. Recent Economic and Labor Force Trends
Unfortunately, statistical information about what is happening in the local labor market is
not much more encouraging than Carol's story. On Friday, April 18, 2008, the California
Employment Development Department(EDD)released unemployment rate information
for Contra Costa County for the month of March 2008: the 5.5%preliminary reported
unemployment rate is the county's highest since 2004. The chart below shows the two
year trend in the county's unemployment rate, a trend that unfortunately is not going in a
direction that one would like.
Figure 1: Benchmark Unemployment Rate for Contra Costa County
Unemployment Rate Historical Trend
5.5%
5.0°k
4.5%
4.0%
3.5%
06 06 pb o6 d° S3° A6 A� ol 01AA o� AA A� 01 A� Al A� 00 §1 0,Y"o �J�PJB 5eQ 06
In addition to the rising unemployment rate, Contra Costa County has seen a substantial
increase in mass layoffs as reported through Worker Adjustment and Retraining
Notification(WARN)notices that have been received during the first three months of
2008. Indeed,job losses this year from mass layoff events are on pace to be at 357% of
last year's rate, and these figures do not include additional layoff notices that have just
been filed by Lawrence Livermore National Laboratory(LLNL). Although based in
Alameda County, the hundreds of job losses at LLNL will undoubtedly impact many
Contra Costa County residents. Our Rapid Response services, which serve as the first
line of support that laid off workers receive when they are about to lose their jobs, stand
at the ready to assist neighboring Alameda County with responding to this mass layoff
event.
Table 1: Job Losses by Industry Sector from WARN Notices
2007 2008 throu h March 2008
Sector # of Layoffs Sector # of Layoffs
Health Care 68 Health Care 16
Manufacturing 7 Manufacturing 1
Mortgage and Home 654 Mortgage and Home 126
Finance Finance
Professional and 3 Professional and 429
Business Services Business Services
Transportation 83
TOTAL 732 TOTAL 655
Above and beyond the troubling trend of increased job losses through WARN notices in
2008, is how these job losses are being experienced in different industry sectors and
appear to be tracking what has been happening with the downturn in the housing market.
In 2007, a full 89% of WARN layoffs occurred in the Mortgage and Finance Industry,
and the downturn now appears to be spreading into the Professional and Business
Services sector, which accounts for the majority(65%) of layoffs in 2008. We will
continue to closely monitor industry sector layoff trends in the coming months,
particularly as its predictive attributes make it an important indicator to watch.
Table 2: Industries with bigzestlob zains and job losses 2006-2007
Industry Sector Dec 2006 Dec 2007 Gain (Loss)
Financial Activities 64,900 59,900 (5,000)
Credit Intermediation & Related Activities 24,600 21,700 (2,900)
Securities, Commodity Contracts & Investments 5,200 5,400 200
Insurance Carriers & Related 17,500 16,400 (1,100)
Real Estate 12,000 11,300 (700)
Residual-Rental & Leasing Services 5,600 5,100 (500)
Manufacturing 94,700 93,200 (1,500
Computer& Electronic Products 20,600 19,800 (800)
Transportation Equipment 7,600 7,500 (100)
Residual-Misc. 31,800 31,800 0
Petroleum & Coal Products 7,100 7,100 0
Chemical 7,300 7,300 0
Residual-Food 20,300 19,700 (600)
Information 30,000 28,900 (1,100)
Newspaper Industries (except Internet) 3,700 3,500 (200)
Software Publishers 3,000 3,000 0
Telecommunications 14,500 13,200 (1,300)
Residual-Motion Picture & Sound Recording 8,800 9,200 400
Industry Sector Dec 2006 Dec 2007 Gain`((Loss)
Government 184,000 190,400 6,400
Department of Defense 300 300 0
Other Federal Government 17,200 16,800 (400)
State Government Education 25,600 26,500 900
Other State Government 20,100 19,900 (200)
Local Government Education 63,700 68,600 4,900
County 22,200 22,800 600
City 19,100 19,500 400
Other Local Government 15,800 16,000 200
Educational & Health Services 124,400 126,100 1,700
Educational 19,800 19,900 100
Ambulatory Health Care 37,600 37,800 200
Hospitals 32,100 32,600 500
Nursing &Residential Care Facilities 17,900 17,500 (400)
Social Assistance 17,000 18,300 1,300
Leisure & Hospitality 86,800 87,500 700
Arts, Entertainment, &Recreation 14,200 14,300 100
Accommodation 7,100 7,600 500
Food Services &Drinking Places 65,500 65,600 100
With a net loss of 5,000 jobs between December 2006 and December 2007, financial
services has been the industry sector to experience the greatest contraction in our county.
The events over the past several months in the housing market makes this news
somewhat unsurprising, but it is worth noting that(so far) the construction industry-
which for the past five years has been the biggest job gainer for Contra Costa County-
has not taken a correspondingly similar hit, with a net annual loss of only 400 jobs. One
important caveat about construction industry employment data: there were actually 1,400
construction jobs lost during the 4th quarter of 2007, losses that were offset by job gains
in the previous three quarters. At the same time, the seasonal nature of construction work
is such that job losses in the sector are a regular event as we enter the winter months.
Moving into the first two quarters of this year, the employment trend in the construction
industry may start to become a little clearer.
In many respects, an equally troubling aspect of the county's overall employment picture
is that much of its recent job growth has occurred in the public sector(education and
government), which, as everyone is acutely aware, is entering a period of incredibly
difficult times at the state and county level. Given the implications this has for various
parts of the public sector that may soon be forced to shed jobs, the county's overall
employment picture is unlikely to improve in the near term unless other sectors begin to
experience a faster growth rate. Two sectors that may be more likely to show some
resiliency over the next 12-18 months include health care and energy(especially the
emerging"green collar"industry), although the latter currently comprises only a tiny
portion of the overall labor market in the county.
The clear driver of the currently deteriorating labor market is the housing slump.
Foreclosure activity has been extraordinary at both the east and west ends of the county,
and there is little sign of this being likely to change anytime soon. As the effects of the
slump spill over into the broader economy and consumers are pressed to be more
conservative with their expenditures, many other parts of the economy that are driven by
consumer spending are likely to be negatively impacted, which then has a further
downward spiraling effect on economic growth (and by extension, the labor market).
III. Operational Impact on EHSD Programs
With the region's economy and labor market now beginning to tangibly shift, the
EHSD's workforce programs and services have been seeing an increased volume of
people come into their offices over the past several months. These impacts are being felt
in both the department's Workforce Investment Act (WIA) funded programs and services
(especially at the EASTBAY Works One-Stop Career Centers), and they have also spilled
over to it's social services offices as a larger number of people apply for Ca1WORKs,
Food Stamps, and other safety net services.
Figure 2 New Customers at Contra Costa County One-Stop Career Centers
First-Time Customers Visiting One Stop Career Centers
Contra Costa County*
4500 f -
u _` z
4000 ";
3500 -
3000
500 3000 F
s r
2500
s
2000 ,
1500
v�
1000 tia
500
San Pablo Concord Pittsburg Brentwood
One Stop Career Center Location
2005-2006 0 2006-2007 0 2007-2008 (through March 2008)
What is perhaps most noteworthy about the data contained in the chart above is that
through the first nine (9) months of the current fiscal year, the One-Stop Career Centers
in eastern Contra Costa County have already surpassed the number of new customers
seen during all of the 2005-2006 and 2006-2007 fiscal years. At the same time, given the
dynamics of the county's housing market, it is not necessarily all that surprising that the
largest increase in new customers (who are typically unemployed or underemployed
individuals)would be seen at the Pittsburg and Brentwood offices. A 2006 survey
conducted in partnership with East County Economic Developers, the Contra Costa
Redevelopment Department and the Contra Costa Economic Partnership looked at
employment in East Contra Costa. As cited by survey respondents, 13.6% of East
County residents were employed in the Finance, Insurance, and Real Estate or Leasing
industry. In addition, East County workers in this industry fell second behind 13.9% of
the workforce employed in the Construction industry. Assuming the overall trend
continues to stay constant over the next few months, the One-Stop Career Centers could
wind up seeing a record number of new customers this year.
In terms of public assistance programs (CaIWORKs, GA, Food Stamps, etc.), it has been
difficult to precisely quantify the number of Ca1WORKS applicants and clients that
EHSD has seen who were either directly or indirectly impacted by the housing and
mortgage/finance industry collapse. Based upon what staff have been readily able to
report and quantify, over the last six month period approximately 120 Ca1WORKS
applicants had been known to be directly impacted by this industry downturn.
Approximately 67 of these were in East County and according to at least one report, 52 of
the 67 were actually found eligible and granted cash aid. The number of applications for
General Assistance by recently laid off individuals is negligible. Additionally, at least a
third of the most recent Eligibility Worker Training Unit (EWTU) class (of the
approximately 28 total) is comprised of individuals who have been affected by the
mortgage/finance industry downturn. Several of them had previously been with banking,
mortgage, and other lending institutions in loan processor positions. A few others had
been associated with the construction industry.
IV. Capacity and Resource Implications
To state the obvious, it is clear that EHSD's offices are substantially busier now than they
have been in comparison to the previous two years, and all signs point to this being a
direct effect of the economic downturn. Indeed, change in our local economy is
happening much faster than the information presented here even suggests, and there are
many additional and unknown variables (such as the worsening state budget crisis) that
are likely to put additional strains on the local economy and labor market. Indeed, the
State's planned cuts to all programs puts further pressure on our system. Decreases in
Ca1WORKS, Community College, Education, Employment Development, Department of
Rehabilitation, and other programs have considerable impact on our ability to serve.
The Federal Government has continuously reduced Workforce Investment Act (WIA)
funding since the law was enacted, with California losing a staggering 40% of its
allocation in the last seven years. However, due to changes in the within-state formula,
Contra Costa has been spared deep budget cuts that have significantly altered many other
local workforce board's programs over that time. In fact, the budget cuts have only
recently began to hit us locally: over the last two years, the Workforce Development
Board of Contra Costa has lost roughly 7%of its formula funds.
Increased demand for services, coupled with the real possibility that the economic
downturn could drive even more customers to our programs, makes it imperative to look
at the capacity of the workforce development system and larger social service safety net
and how it can fulfill its role to successfully meet the needs of our county. For example,
at the April 2008 meeting of the WDB's Youth Council, one contractor commented at
several of the youth enrolled in our programs in the Pittsburg area are, as a result of the
housing market, "homeless", and experiencing a range of formidable challenges that
often brings them and/or their families to EHSD district offices and other community
resources.
On a more positive note, it is important to point out that our local workforce system is
highly leveraged. As outlined in the WIA legislation, this leveraging occurs through a
network of mandated One-Stop partner organizations. The following organizations are
members of the Contra Costa One Stop Operator Consortium that has operational
oversight of the One-Stops in Contra Costa County:
• California Human Development Corporation (CHDC)
• California State Department of Rehabilitation (DOR)
• California State Employment Development Department(EDD)
• Contra Costa Community College District
• Contra Costa County Adult and Continuing Education Council
• Contra Costa County Community Development Department
• Contra Costa County Employment and Human Services Department, Workforce
Services Bureau
• Contra Costa County Employment and Human Services Department, Community
Services Department
The aforementioned One Stop Consortium partners have not only successfully met or
exceeded all WIA performance measures since the law was enacted, but over the past two
years they have managed to serve an even greater number of job seekers and businesses
with even fewer staff and resources, and the upcoming year may prove to be one of the
most challenging yet in terms of meeting the service demand. Furthermore, if the overall
trend in funding cuts to WIA continues, it may become necessary to set levels of service
in priority order at some point in the future.
V. Potential Strategies for Success
The Workforce Development Board and its staff will continue to seek outside sources of
funding to support its important work. This objective continues to be a major focus of
the Board's Strategic Plan. Increasing and diversifying funds allows us to spread our
current dollars to many more customers. Grants such as the National Emergency Grant,
the State Energy Training Grant, and the Incumbent Nursing Upgrade Grant allow us to
specialize and increase our own capacity in service to both our business and job seeker
customers. In addition, as we struggle through these challenging times,we will continue
to support the extraordinary staff that works at the Board, in the One-Stops and for our
youth providers. These men and women do work that at times is life-saving.
In 2005, the Workforce Development Board adopted an industry sector approach to
workforce development. While this approach is currently being altered, it has enabled us
to look holistically at the effects an industry and its clusters of employment have on our
local economy. Sector initiatives allow workforce boards to leverage resources, target
specific industries, link economic development and training activities, improve
opportunities for workers, and build stronger regional economies.
A notable example of this work is the Workforce Development Board's recent
undertaking of a sector-based strategy to assist people impacted by layoffs in the
mortgage and finance industry. The following activities are either being implemented or
planned to be delivered in the next several months to address the current service need:
• The Workforce Development Board has been awarded $100,000 in National
Emergency Grant(NEG) funds designed to assist roughly twenty individuals who
have been displaced from the mortgage and finance industry. The grant is
designed to provide: marketing and outreach to the community, services to
include: Rapid Response, assessment services,job announcements, workshops,
training, case management, and job development all targeted to affected workers.
In the coming months, the State may increase our grant award to as much as
$400,000 to serve even more individuals who have been laid off from jobs in this
industry.
• Relative to the aforementioned grant, the WDB and its workforce system partners
are in the process of developing targeted workshops and information sessions for
displaced mortgage and finance industry professionals. Likely areas of focus
include assessment of career interest and aptitude, identification of transferable
skills, resume writing, interview techniques, customer service skills training, and
business development support. Supportive services include financial counseling,
family counseling support, and training materials, e.g., textbooks, software and
calculators.
• The EASTBAY Works One Stop Career Centers and Workforce Development
Board held an event at JFK University in February 2008 that was attended by
more than ninety(90) individuals who have been affected by the downturn in the
mortgage and finance industry. This event included featured presentations on
career transition options,resources for managing financial issues and new
perspective on lifestyle and attitude change. Feedback from attendees was
extremely positive, and we were able to survey them to garner information on
both their recent employment history(many did work in escrow, mortgage and
lending, and title insurance) and also learn more about the additional services they
need to navigate this time of transition.
• Analogous to the aforementioned event, we expect to hold one or more
community forums with industry designed to gather demand-driven information
and opportunities from viable companies in order to identify education and
training needs and move laid-off workers into these jobs. From these events
career maps or ladders (see Attachment A)will be developed and marketed.
• Our Rapid Response program continues to mobilize to provide outplacement
service orientations to each company filing a WARN notice and is proactively
engaging smaller businesses that may be downsizing but are not subject to the
WARN Act.
As evidenced from the above, one of the primary benefits of a local workforce
development system that takes a sector based approach to services is that it forces us to
be demand-driven and flexible, changing our service delivery as best we can to meet the
current needs of industry,job seekers and the community at large.
VI. The Road Ahead
One can surmise from the information included in this memo, that the current labor
market is becoming increasingly tougher to navigate. The EHSD and its workforce
bureau's expect this trend to continue throughout this year. The trends we are witnessing
coupled with the County's demographics make for a challenging time.
R R
The Workforce Development Board of Contra Costa County has been advocating that the
California Workforce Investment Board declare a"workforce crisis"in California. The
WDB has adopted the position that such a declaration is rooted in the following issues:
• There are not enough new entrants into the workforce to match the number of jobs
that will become available within the next five years due to the "Baby Boomer
Retirement Wave."
• Many of the jobs that are going to open up due to attrition are skilled positions. A
substantial portion of the current labor force does not have the skills or training to
qualify for these jobs.
• High school dropout rates continue to increase in California, further exasperating the
unskilled workforce situation. Dropout rates are estimated to be as high as 40%
among some populations.
• Among the high school population that does successfully graduate, many are leaving
high school with insufficient STEM (Science, Technology, Engineering, and Math)
skills necessary to obtain employment.
• We have a fast growing immigrant population in California. While that can be
advantageous for entry-level positions, this will be a further challenge to technical
positions.
Despite this admittedly troubling picture,we do believe we are positioning our local
workforce development system to meet these challenges. The WDB's work with
enhancing its sector approach will ensure that our services are positioned to capture
industries that are growing in our local economy(e.g. healthcare, biotech, and green jobs)
while enabling us to quickly respond and provide services to people in industries that
may be showing some decline. By partnering with economic development organizations
like the East Bay Economic Development Agency, the Contra Costa Economic
Partnership, the K-14 educational system, labor agencies, and private industry we expect
to be able to continue to leverage resources to develop successful programs and help
support economic vitality and the growth of good-paying jobs in Contra Costa County.
The Carol Sanchez's of our community are counting on us to make this happen.
x c
Attachment A
CAREER LADDERS/LATTICES
Mortgage & Lending Industry
Loan Processor
$22.53 Hourly
Skills
Mathematics
Alternative Careers Related to Loan Processors
Payroll & Timekeeping Bill 8, Account Collectors
Clerks Mean Hourly Wage: $ 19.00
Mean Hourly Wage: $21 .13 Skills: Speaking
Skills: Mathematics Projections 2004-2014:
Projections 2004-2014: 230-+- jobs
190+ jobs
IF- Preferred New Career Field
Medical Assistant Diagnostic Ultrasonographer
Mean Hourly Wage: $ 17.10 Mean Hourly Wage: $45.19
Skills: Active Listening, Skills: Active Listening, Critical
Service Orientation Thinking, Operation & Control
Education: Certificate, two Education: Certificate, 18
years months
Projections 2004-2014: Projections 2004-2014:
430+ jobs 800-x- jobs