Pacific Coast as a boom-bust belt

Two years ago, America's Pacific Coast states sat on the prow of one of the greatest economic expansions in world history. Today, the collapse of the technology industry has turned them into a new "Bust Belt."

Like the Rust Belt states that girded the Great Lakes with steel and smokestacks during the last century, the northern Pacific Coast has become a heartland for the New Economy. From the Canadian border to Silicon Valley, the region has bred high-tech companies such as Microsoft, Cisco, and Hewlett Packard.

Yet labor statistics suggest that technology's growing imprint has made this western corridor particularly vulnerable to the tech sector's typical boom-and-bust cycle. Of the five states with unemployment rates of more than 6.5 percent, three are California, Oregon, and Washington.

Other factors have clearly played into the swollen jobless numbers of Pacific Coast states - from troubles at Boeing to a drop in tourism. But technology has played a significant, perhaps even primary role, and that might give some states pause as they try to lure dotcoms and develop silicon communities of their own.

"I can take all this down to one word: technology," says Jack Kyser of the Los Angeles Economic Development Corporation. "A lot of people were choosing technology, and for the longest time it was going to be the holy grail."

The allure was obvious. In December 2001, the heart of Silicon Valley, California's Santa Clara County, had an unemployment rate of 1.3 percent. Eleven months later, however, that figure had risen to 7.8 percent.

The same is true across the San Francisco Bay Area, home to the state's greatest concentration of technology firms. Among California's most populous counties, the top five jumps in unemployment from December 2001 to November 2002 all took place in Bay Area counties.

Py Bateman has seen the same forces at work in Seattle.

Her story is so familiar up and down the northern Pacific Coast that it is almost common: She left a job with an established company for a shot at stock options at an Internet startup. A year later, she was laid off. She tried again with a Web company; Within eight months she was cut loose.

Now she collects unemployment and waits for opportunity to knock. No one is knocking. "Nearly everyone I know thinks that sooner or later it's going to turn around," she says hopefully. "But they also always roll their eyes when they say that."

In Oregon, and especially in California, this rise in unemployed techies has spiked statewide jobless rates.

"That's the big difference," says Stephen Levy of the Center for the Continuing Study of the California Economy in Palo Alto. "Usually, the Bay Area's low rates pull us back toward the [national average]."

Actually, high unemployment rates are nothing unusual for Pacific Coast states. Large inland agricultural operations, as well as legions of seasonal workers such as loggers and fishermen, always place California, Oregon, and Washington near the top of the national unemployment chart.

Yet experts agree that this downturn has been particularly harsh to the Northwest.

"The West has a higher concentration in each of those sectors hit hardest after Sept. 11 and by the recession," says Jeff Thredgold of Thredgold Economic Associates in Salt Lake City.

Two of the industries most affected are tourism and dining - cornerstones of the San Francisco economy.

Greg hasn't had a job in four months because the restaurants that once offered $60,000 for a managerial position are now offering $30,000. And as he sits in a San Francisco job placement office, dressed in jeans and a pressed blue shirt, he sighs that $30,000 just isn't enough for life in The City.

He's already had to move from his $1,900-a-month one-bedroom apartment in Pacific Heights to a $1,200-a-month studio, and savings are getting slim.

"It's February, and I should be in Hawaii," says the dark-haired restaurateur, who declines to give his last name.

Instead, he comes here four times a week. Additionally, he's sent out 78 resumes and received six responses. "My lifestyle's going steadily downhill," he smiles nervously.

He's got a while yet until he can match Kelly Coty, though. She had worked for Boeing in Seattle for almost 13 years before she was let go more than a year ago. She hasn't had a job since.

The scope of Boeing's influence on the Seattle area is indeed massive. Some economists calculate that every job at Boeing generates 2.5 other jobs in the surrounding community, and it's not uncommon for the company to lay off 10,000 employees to bolster a particular quarter's profits.

In the past, however, it has usually rehired the workers over the next year or so. But with Airbus Industries already nibbling at Boeing's sales, the Sept. 11 attacks were devastating. Since then, sales of airliners have tumbled. Some 30,000 employees have lost their jobs.

For Mrs. Coty, it has meant a complete career change. She enrolled in a local community college and trained as a medical transcriptionist because she'd heard it was a promising field. "It was exciting to go to school," she says. "But right now it doesn't seem so positive. I haven't had a single interview yet."

Coupled with the trajectory of technology, some say, this points to a new economic concern for the Northwest.

"Look at where the job losses here have been: in the better-paying sectors - high-tech, aerospace," says John Burbank of the Economic Opportunity Institute in Seattle. "What we're going to see is that a lot of those jobs are never going to come back, because a lot of these jobs are being outsourced to other states and overseas."