Sacramento Job Growth Turns Negative...Worst in 15 years

Sacramento’s Negative Job Growth

According to the analytical employment work done by Sacramento Regional Research Institute, SRRI, for the first time in more than 15 years Sacramento’s job growth for a consecutive 12 month period has turned negative! See the steep decline in the green line below. That is the Sacramento Valley Line. Our region’s employment has declined more steeply than the Bay Area’s, more than the US Average, and worse than the California Average. There are 6,500 fewer jobs than there were 12 months ago.

This chart shows it in declining and vivid detail:

Six sectors in the Sacramento Region posted year-over-year losses resulting in a combined decline of 14,200 jobs. The Construction sector showed the largest decrease followed by Trade, Transportation, & Utilities (concentrated in the Retail Trade component).

Six Sectors showed positive job growth , they included; Government; Educational & Health Services; Professional & Business Services; and Other Services all added jobs between May 2007 and 2008, but only created a 7,700 job gain, which helped cushion, but did not completely make up for, the other relatively heavy losses.

These job losses are a clear indication of the economic woes and strain that are confronting the Capitol Region. We are all aware of the sharp declines in construction- primarily residential and new home construction- but financial services, manufacturing, utilities, and retail trade are additional sectors that are now shrinking. If you use a multiplier of 4 jobs per thousand square feet of office demand --- the 14,200 job decline in those six sectors means that more than 3,000,000 feet of office space that would have been the home for these workers now will be surplus and vacant. If you look at the offsets for those sectors that did add jobs this past year we still have a demand for nearly 1.5 million fewer feet than a year ago.

As they say in every economic cycle there are winners and losers. In the Sacramento region we now have 2 losers for every winner. Also it is worth noting that the largest growth has been in the government sector—we lost 3.1 private sector jobs for every government job that was added. Clearly, this situation is neither innovative nor sustainable. Also one must wonder as the reality of a $16+ Billion state budget deficit sets in will government employment continue to mitigate the private sector job losses. The other shoe may fall!

For a complete review of the report see; SRRI Economy Watch, EMPLOYMENT GROWTH IN THE SACRAMENTO REGION, THE BAY AREA, CALIFORNIA, AND THE UNITED STATES, June 2008.
If you have questions about this Post or if you would like to discuss a real estate question or need please contact Jim Gray or Nahz Anvary , of NAIBT Commercial Real Estate. We can be reached at (916) 375-1500.