Business & Real Estate

Sacramento’s economy rebounds, but many workers struggle

Elisa Stephens, former Campbell Soup worker, has started a mobile hairstyling business and gives a haircut to client at his home in Orangevale.
Elisa Stephens, former Campbell Soup worker, has started a mobile hairstyling business and gives a haircut to client at his home in Orangevale. pkitagaki@sacbee.com

Elisa Stephens has embarked on her economic comeback, one haircut at a time.

Stephens worked in the office at Campbell Soup Co. before the south Sacramento factory closed in 2013, eliminating 700 jobs. Using financial aid from the government, she earned her cosmetology license and started her own hairstyling business earlier this year.

She loves it, but there’s a downside: Stephens makes about $900 a month, barely one-fifth what she earned at Campbell. A single mom with two daughters, she’s had to go on Medi-Cal for health insurance and move to a smaller apartment in a neighborhood near Madison Avenue and Interstate 80 that she considers unsafe.

“If Campbell were still open, I’d still be working there,” said Stephens, 41. “I’d be living like I was before. Now I’m starting from the ground up.”

Sacramento’s economic recovery, slow to emerge, is in full bloom. Unemployment is down, and job growth is catching up to the rest of California. Health care is booming, and state government, still the bedrock of the region’s economy, is hiring again. Construction cranes are once more part of the Sacramento skyline. New industries are sprouting, including solar energy. Even the 68-year-old Campbell site is being reborn as an industrial park.

Still, thousands of Sacramentans struggle. They can’t find work, or have made do with part-time jobs or work that doesn’t pay as well as their old jobs. For every job opening in electrical engineering, there are 10 times as many jobs available for cashiers.

To many, it feels like the recovery has barely arrived.

“The job growth isn’t a mirage,” said San Francisco labor lawyer Michael Bernick, a former director of the state Employment Development Department. “But most people don’t feel very secure, nor should they.”

Few regions in the country were hit as hard by the recession as Sacramento, where the bursting real estate bubble caused unemployment to peak at 13.1 percent in early 2010. As a new technology boom took hold in the Bay Area, job growth remained sluggish in Sacramento and much of the Central Valley until relatively recently.

Though unemployment has fallen to 6 percent, the Sacramento area still has an estimated 18,300 fewer jobs than at its pre-recession peak in June 2007. It will take several more months, at current growth rates, to make up the gap.

“It’s eight years and you still haven’t gotten back to that level. You still have problems,” said economist Jeff Michael, director of the University of the Pacific’s Center for Business and Policy Research. “It’s not the Bay Area economy by a long shot. It’s still a ways away from being repaired.”

A positive: Michael said the recovery seems more sustainable than what Sacramento experienced 10 years ago, when the region coasted on a housing market propped up by loose lending standards. “It doesn’t have that … single industry fueling the growth,” he said.

The new, old economy

In significant ways, the Sacramento economy hasn’t really changed from the pre-recession era. Government remains a mainstay. Health care, which passed state government in 2003 as the region’s leading employer, continues to prosper, with the Affordable Care Act creating additional demand for nurses, clinical lab employees, X-ray technicians and others.

Among the success stories is StemExpress, a 5-year-old Placerville company that provides human cells, bone marrow and other products to medical schools and drug companies. It ranked 363rd on Inc. magazine’s list of the fastest-growing private companies in America last year. Its 23-person staff is expected to surpass 40 by year’s end, Chief Executive Cate Dyer said.

StemExpress is considering expanding into an El Dorado Hills laboratory recently vacated by a pharmaceutical company that consolidated operations in San Diego. The drug company’s move eliminated 50 jobs; StemExpress likely will hire a quarter of the laid-off workers.

“We’ve been growing exponentially here for a while,” Dyer said.

Building new industries remains a hit-or-miss proposition in Sacramento. Many experts say Sacramento is a difficult place for startups, partly because of the relative scarcity of investment capital in the region. The “green tech” sector, touted during the recession as a possible savior for Sacramento, is only starting to emerge as an economic force.

SolarCity Corp., an 8-year-old solar energy company backed by technology impresario Elon Musk, soon will pass the 1,000-employee mark in Greater Sacramento. That’s more than twice as many workers as SolarCity employs at its Bay Area headquarters.

The company’s Sacramento workforce is a blend of sales representatives and field installers who put solar panels on rooftops. Most sales reps earn $70,000 to $80,000 a year, and installers average between $60,000 and $80,000, Chief Executive Lyndon Rive said.

“It’s a great place to get good talent,” Rive said.

SolarCity’s Sacramento payroll includes Blake Morris, 32, a former construction worker who was unemployed for nearly three years after the housing market crashed.

Now a crew chief, Morris said installing solar panels on residential rooftops is an improvement over building houses. The pay is better, and it feels like there’s less boom and bust.

“It doesn’t feel so much like it might be good for six months and then it’s going to stop,” he said while overseeing an installation in a West Sacramento subdivision. “This feels 100 percent steadier. It feels more secure.”

Campbell’s closure leaves mark

At the Sacramento Employment and Training Agency, where laid-off Sacramentans try to get back on track, workforce development director Terri Carpenter said 2015 is shaping up as “the best that we’ve seen in five years.”

But it’s hardly a worker’s paradise. Carpenter said most employers who hire through SETA are paying $12 to $18 an hour. The bulk of the openings are in occupations such as retail sales and food preparation. Many job-seekers make do with a workweek that clocks in at far less than 40 hours.

“There are many people who are piecing two part-times together to get to full time,” Carpenter said.

The scarcity of full-time work remains a problem. Of all the Californians holding jobs, roughly 7 percent have been relegated to part-time work involuntarily, according to state data.

Carpenter said it isn’t surprising that many still haven’t gotten back to where they were before the downturn. The recession was so severe and long-lasting, it forced tens of thousands of Sacramentans to essentially start over. Often that means starting at the bottom of the economic ladder.

“You’re not going to come in at the same (wage) rate you were making,” she said.

One of the most visible symbols of Sacramento’s economic slide was the closing of Campbell Soup, announced the morning of Sept. 27, 2012.

After more than 60 years, the company was leaving the Big Tomato and moving production of soup and juice to plants in other states. The announcement raised questions about California’s high-cost business climate. In the Franklin Boulevard neighborhood surrounding the plant, it was nothing short of a disaster, the loss of 700 solid blue-collar jobs paying around $20 an hour plus benefits.

Many workers took advantage of government retraining aid and went back to school. They graduated with a slew of new occupations: X-ray technicians, cosmetologists, truck drivers and pharmacy techs.

What many now have in common is this: They aren’t making as much money as they did at Campbell Soup.

“It was very tough; it’s still tough,” said Martha Carillo, who drove a forklift at Campbell Soup and now works in the receiving department at a window and door distributor. She’s making about $8 an hour less than before.

Likewise, Liborio Montoya went from making cream soup at Campbell to driving a produce truck for Golden State Express. He gets paid by the mile and figures he’s earning $15 to $20 an hour, a drop from the $22 he was making before.

“I feel we all took a step back,” Montoya said.

Elisa Stephens was earning $56,000 a year in the Campbell office and “felt lucky to be employed there,” she said. After her last day, April 26, 2013, she took her government retraining money and attended beauty school.

She found work at an East Sacramento hair salon, but the hours weren’t enough. So she struck out on her own. In mid-February, Stephens opened a mobile styling business called Passion Love Beauty.

Customers don’t come to her. She goes to them, lugging clippers, razors and the rest of her supplies in the back of her slightly dinged 2006 Volkswagen Passat. She’s built a clientele of about 20 customers, but the money isn’t exactly rolling in, and she gets regular reminders of Sacramentans’ lingering post-recession frugality.

“People are spending less,” she said. “They’re doing less. People want a lot more from us than they’re willing to pay.”

Jobs added here and there

It seems economic progress in Sacramento often takes a struggle. Take VSP Global, the Rancho Cordova vision-care insurer that was dropping hints in 2012 that it might relocate to another state. The reason was a very public fight with state regulators over implementation of the Affordable Care Act, also known as Obamacare.

The crisis was solved, and VSP now is expanding. Its eyeglass-making business has grown from 380 workers to nearly 500, and the company recently opened a new $37 million factory in Folsom. The plant’s employment is likely to surge past 650 over the next few years.

It’s not exactly the heyday of Campbell Soup. Most of the employees start at $10.10 an hour and will wind up making an average of $15, said lab director Karen Graser. But in a region where manufacturing has been struggling for years, VSP’s eyeglass operation is a definite bright spot.

“I don’t know many (manufacturers who) are adding that many ... employees,” said Joe Maris, senior vice president of lab operations. “We’re very proud of that.”

Much of the recovery in Sacramento’s job market has come VSP-style: a few hundred jobs here and there. A new mega-employer such as Intel Corp. hasn’t emerged to rescue the economy (Intel employment in Folsom has held constant at 6,000 jobs the past five years). It’s telling that the first big tenant in Capital Commerce Center, the business park taking shape at the old Campbell Soup site, will employ just 175 people. They will work in a warehouse, fulfilling e-commerce orders for Macy’s.

“It would be nice to see Tesla coming,” said housing-market consultant Greg Paquin, referring to the 6,500-employee battery plant that bypassed California for Reno. “We’re going to have to do it more incrementally.”

Paquin’s own industry has been among the slowest to recover. While the housing market has firmed up in recent years, construction of new homes has yet to begin in earnest. Construction employment has grown by 10,000 in the past four years but remains 32,000 below its 2005 peak.

That’s deprived the region of a source of good employment that does not require a college education. Carpenter said most residential construction workers make about $18 an hour.

“You didn’t need a college degree to pound a hammer,” she said.

The white-collar end of the construction industry is still getting back on its feet, too. A good example is MacKay & Somps, a Roseville civil engineering and planning firm. MacKay laid off nearly two-thirds of its 60 employees after the housing market collapsed. It’s now back to 55 jobs, hiring recent college graduates at $50,000 a year and up.

But don’t call it a hiring spree. MacKay president James Ray Jr. said his firm is proceeding slowly and carefully, just like its homebuilding clients. “It’s a tenuous kind of going forward,” he said. “There’s definitely more caution.”

Homebuilders in greater Sacramento likely will sell 3,500 units this year. That’s a 30 percent jump from last year, but a fraction of the 17,000 new homes sold in 2004.

Who’s going to buy those homes? One clue comes from the surge in office leasing activity reported by firms such as Cemo Commercial. In recent months, Cemo has made deals with a locomotive-parts supplier in El Dorado Hills, a medical-software business in Citrus Heights and a mortgage broker in Folsom, among others.

“People who have kind of been waiting for the world to change are making moves now,” said the firm’s chief, Sammy Cemo.

In the construction industry, that sort of activity gets noticed. Kevin Carson, a homebuilder who specializes in the eastern suburbs, uses a simple measure for gauging the recovery: the number of cars parked in a business park he passes every day on Latrobe Road in El Dorado Hills. The lot is a good deal fuller than a couple years ago.

“There is job growth, and it isn’t all Target and restaurant service,” said Carson, regional president of The New Home Co. “There are professional jobs coming.”

Call The Bee’s Dale Kasler, (916) 321-1066. Follow him on Twitter @dakasler.

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