California's next boom: high tech, services
Like a surfer waiting for the next big wave, California anticipates another 10-year spate of economic growth, even while in a trough of 9.4 percent unemployment.
Two reports just published by the state Department of Economic and Business Development predict that California's high-technology boom will continue -- and widen -- in the 1980-90 decade.
Between 1970 and 1980, California jobs in basic industries grew by 38.9 percent; the nationwide figure was 24.4 percent. The Golden State's share of total US job growth in the 1970s was 15.4 percent -- largest of all the states. The number of jobs in high-technology industries grew by 71.6 percent, from 261, 600 to 448,900.
Stephen Levy, senior economist at the Center for Continuing Study of the California Economy (CCS) in Palo Alto, wrote one of two reports just published under the general title, ''California's Technological Future: Emerging Economic Opportunities in the 1980s.''
In ''The California Economy: 1970-1990,'' Mr. Levy says: ''Total jobs are projected to grow faster in California than in the nation during the 1980s. The California economy will expand by 2,770,500 jobs . . . to reach a total of nearly 14 million jobs in 1990.''
That 24.9 percent growth is well in excess of the 15.9 percent increase projected for the US as a whole, he points out. ''California will capture 16.9 percent of new jobs in the nation during the 1980s,'' he writes -- slightly more than one out of every six new jobs.
How can he predict this kind of prosperty with the nation in deep recession and California's 9.4 percent jobless rate higher than the US average? Levy says that although the current recession may slow job growth for a while, it is unlikely to affect the gains projected for 1990 if it ends within the year.
If California is the trend-setter, economically and otherwise, that it is so often said to be, then recent assessments of the national move toward a service economy are being borne out.
The Levy report states that more than 75 percent of the new jobs in California were in the service sectors, including trade, finance, insurance, real estate, government, and self-employed/household workers.
''Services was the fastest growing sector during the decade, increasing by 67 .9 percent, or 860,000 jobs,'' he writes.
''In service sectors, California grew 43.6 percent in 10 years, while the US grew 38.9 percent.''
In high technology, also, service is the big job-growth area. The CCS report defines high tech as computers, communication equipment, electronic components and instruments, and computers services (including computer programming services). The aerospace industry is separated from high tech in the report.
''New high tech jobs will account for nearly 50 percent of the growth in basic industry jobs in California in the 1980s,'' writes Levy. ''Computer services is projected to have the highest rate of growth among individual high technology industries. Jobs will nearly triple to 128,300 in 1990 from 43,300 in 1980.''
The Levy report warns that though California has been attractive to new industry in the past, two factors could change that: ''One is the future of support for governmental functions ranging from the university system to local parks to highway maintenance and construction. The other is the impact of housing prices and supply on the possiblities for job growth. . . . There is a growing consensus that failure on either issue would negatively affect both the prospects for growth and the quality of life for exisiting resisdents.''
The other report, prepared by SRI International of Menlo Park and titled ''High Technology and the California Workforce in the 1980s,'' deals more specifically with the possiblities for developing new technologies. It, too, hoists a few warnings:
''Perhaps the most serious problem of the new 'information era' is the conflict between the demands of an increasingly technically oriented industry and the current pattern of reductions in state support for education. These cutbacks are taking place in the face of growing educational challenges. Well over 25 percent of the elementary enrollment is ethnic in character, with both language and other education problems. This large and growing group of students must be brought up to the new standards of technical literacy, otherwise there will be drastic social and economic consequences and a potentially alienated ethnic group that will present continuing high unemployment problems.''
Levy's CCS report shows that the Los Angeles Basin had 50 percent of California jobs in 1980, the San Francisco Bay Area 24 percent. Together they had 90 percent of the high-tech jobs.
The SRI report points out that ''California, like the nation, is developing a pattern of great differences in economic health among its several regions. . . . Much of the Central Valley and North Coast have severe unemployment problems. At the same time . . . California high-tech firms are spinning off new plants to other states and nations. Potential new California locations for high-tech industrial growth are being skipped over. . . .
''California state government should focus increased attention to identifying and planning to support humane transitions and the social infrastructure necessary so that all Californians can share in the benefits of our technical success.''
California vs. United States Percent of jobs by major industrial sector California United States 1970 1980 1970 1980 Agriculture 3.5% 3.4% 4.4% 3.0% Mining 0.4 0.4 0.7 1.0 Construction 3.8 3.9 4.3 4.3 Manufacturing 19.4 18.0 23.4 19.8 Transportation, 5.7 4.9 5.5 5.0 public utilites Trade 19.1 20.3 18.2 20.0 Finance, insurance and, real estate Services 15.8 19.1 14.0 17.2 Government 17.8 15.9 15.2 15.7 Self-employed, 10.0 8.7 9.9 8.8 household workers Total 100.0 100.0 100.0 100.0 Sources: Center for Continuing Study of the California Economy; US Bureau of Labor Statistics.