WASHINGTON — The housing boom that helped fuel U.S. economic growth and employment from 2000 to 2007 was an unsustainable bubble, and when it burst it not only sent the economy into a tailspin, but also left the U.S. economy struggling to create jobs.
A McClatchy Newspapers analysis of employment data collected by the Labor Department's Bureau of Labor Statistics has found that the jobs that are being created as the economy recovers often don't replace the ones that were lost when the housing boom collapsed.
The analysis suggests, in fact, that the recovery is slow in part because many unemployed workers don't have the skills to fill the jobs that are now available.
"That's an astute observation, and I think it's accurate. How to retool to meet those new skills?" said Martin Regalia, the chief economist of the U.S. Chamber of Commerce. "I think it's a longer-term issue. You are not going to retool someone who was a construction worker to handle motherboards. The skill matchup with the skill need is shifting as the economy recovers."
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A deep dive into the government's monthly employment reports indicates that the sectors that benefited most from the housing boom, especially
construction and housing-related manufacturing, are unlikely to return to bubble levels or even close to them.
It also suggests that the road ahead will remain rocky for low-skilled laborers and skilled tradesmen.
There are plenty of those workers in the Northern San Joaquin Valley, where the unemployment rate has hovered around 20 percent this year.
Many of those job losses came in construction and related fields after the housing market in the valley took a nosedive more than 4½ years ago. As home values declined and easy credit terms dried up, new home construction slowed to a trickle.
Construction-related firms in the valley that had more work than they knew what to do with suddenly began cutting back and trimming payrolls. As layoffs mounted, the economy continued to weaken and more firms were forced to shed jobs. Unemployment in the region spread from construction to other sectors, including retail and food service.
"There has to be a reverse flow of those workers back into the other parts of the economy," said Joel Prakken, the chairman of Macroeconomic Advisers, a consulting firm in St. Louis that co-issues the monthly ADP National Employment Report on private-sector hiring.
The ADP reports show a continued bleed, month after month, in residential construction jobs that are unlikely to bounce back.
"In my judgment, some of that is gone forever. ... We're not going to need as many people as we had (in that sector) in 2006 and 2007," Prakken said.
Housing and residential investment make up 2.5 percent of the nation's gross domestic product, the total value of domestically produced goods and services. Their impact is larger, however, because many manufacturing jobs are tied to housing.
These include jobs in companies that produce, install or repair kitchen cabinets, hardwood floors, carpets, heating and cooling equipment, appliances and other products.
There also are jobs in hardware stores and home improvement centers, the truckers who deliver stock to Home Depot and Lowe's, and the longshoremen who handle containers of Asian-made tools in West Coast ports.
A strong housing sector, one in which home prices rise, creates personal wealth. That, in turn, feeds consumer spending, which drives 70 percent of U.S. economic activity.
In the valley, the housing market appears to have bottomed out. Median home prices have bounced around $140,000 for several months this year, but haven't been able to post any consistent gains.
At the same time, new home construction remains stalled because of a lack of demand from consumers still struggling with job losses, debt and the region's sluggish economy. Plus, there's a glut of cheap foreclosed homes on the market for interested buyers.
That means few job opportunities for valley residents who work in construction.
During the housing boom, employment in construction and manufacturing tied to the sector soared. Residential building accounted for about 800,000 direct jobs in January 2000, and peaked at 1.037 million jobs in August 2006. It fell to a decadelong low this February at 549,000 jobs. Hiring in this segment of the construction sector has picked up only slightly since, adding about 55,000 jobs through June.
Some of the strongest data this year come from the professional and business services sector, usually associated with white-collar employment. Employers in this broad category have added jobs for eight consecutive months, 572,000 from January through June. The sector accounted for more than 16.7 million U.S. jobs in June.
Health care also continues to add jobs as the first wave of baby boomers, born from 1946 to 1964, hits the official retirement age at the end of this year. There were 13,760,000 health care jobs in June, up from 13,134,000 in December 2007.
Despite those job gains nationwide, Northern San Joaquin Valley economists think the region could be burdened with double-digit unemployment for five years.
In the wake of such dramatic job losses, most employment experts say it's hard to see what industry is going to lead the valley out of this because every sector in the region is struggling.
Many observers also believe a lot of jobs that disappeared during the downturn won't be coming back, so people must improve their skills and educations if they want to keep working and remain in the area.
The problem in the valley and the rest of California is that the unemployment picture is being clouded by additional job losses in the public sector. School districts, law enforcement agencies and local governments are eliminating jobs in an effort to balance budgets amid declining revenues brought on by the recession.
Bee city editor David W. Hill contributed to this report.