Booming Demand for Workers in Service Industry Reflects Economy’s Evolution

When the posh Ritz-Carlton in Laguna Niguel interviewed more than 5,000 prospective employees last year, it made each applicant face the music.

Chamber music, to be precise. During a weeklong hiring binge before the hotel’s grand opening, a live, four-piece chamber orchestra soothed eager applicants while they filled out detailed forms.

Like it was at the Ritz, the employment outlook for the Southland service industry should be music to the ears of job-seekers over the next year--and beyond, economic analysts say.

The service industry ranks as the fastest-growing job sector in Southern California and will stay that way for the foreseeable future, analysts say. And it’s growing at about the same rate at which the manufacturing sector is weakening.

Nearly 60% of all non-farm workers in Southern California are employed in services, a widely varied sector ranging from hotel bellhops and amusement park workers to accountants and auto mechanics. More than 1.41 million Southern Californians were employed in the service industry as of June compared to 1.35 million in June, 1984.

Between 1982 and 1995, a whopping 75% of the nation’s job growth is expected to be within the service sector, according to projections from the U.S. Bureau of Labor Statistics. That will account for some 20 million new jobs coast to coast.

The number of jobs within that sector in Southern California should rise at a 4% or 5% clip in 1986 compared to this year, projects Phil Vincent, an economist at First Interstate Bank. Within Los Angeles County, last year’s growth of 5.6% is expected to be repeated through 1986, says Irene Bauske, labor market analyst with the Employment Development Department in Los Angeles County.

Central to this growth are Americans who--buoyed by a strong economy--continue to spend billions of dollars on services. “Simply stated, people use a lot more services when they’re working than when they’re not,” says Bauske. These services include everything from haircuts at local salons to the elaborate vacations that help fill up the nation’s hotel rooms.

Indeed, analysts say that jobs within the hotel sector in Southern California are among the fastest growing of all service jobs. The number of hotel workers here jumped 9.4% in the first half of this year compared to 1984, says Beth Burnham Mace, an economist at Crocker Bank. “There’s a ton of hotel construction in Southern California,” she notes.

The Los Angeles area should see plenty of that growth in 1986. For example, near Los Angeles International Airport on Century Boulevard--the city’s fastest-growing hotel corridor--Stouffer Corp. is building a 750-room hotel that is scheduled to open by next June. The $85-million hotel will begin hiring about 650 employees in January, says general manager Donald P. Bomer.

But because the hotel expects to have to weed through more than 5,000 applicants for the positions--ranging from dishwasher to front-desk clerk--it will probably look for workers with previous hotel experience, Bomer says.

In nearby Woodland Hills, Marriott Corp. is building a 477-room hotel due to open in January. The hotel plans to hire 350 workers, nearly 25% of whom will be placed there from other Marriott hotels, says Jon Q. Loeb, general manager.

Loeb says he expects more than 3,000 applicants. “People know there are a lot of positions involving gratuities, and some of the jobs, like cocktail waitress and bellman, can be very lucrative,” he says. “Besides, people see it as a chance to get out of the factory and work in a more upscale environment.”

Related to the hotel industry is the tourism-dependent amusement and recreation sector. It has grown 8.2% compared to 1984 and is expected to see continued growth, says Crocker Bank’s Mace. Tens of thousands of television viewers across the country who watched the Summer Olympics last year liked what they saw of Southern California and have traveled here this summer. The Southland’s amusement industry employed 69,000 people as of June compared to 64,000 a year earlier.

After hotel work, the next area with the fastest growth is in business services, Mace says. That division, which includes jobs ranging from computer and data processing service employees to employment agency workers, has so far grown at an 8.7% rate in 1985 compared to 1984, she says.

“There’s a lot of new office construction in Southern California,” Mace says, “and that always means more jobs in business services.”

Adds First Interstate’s Vincent, “As far as business services go, there will be no let-up.”

But some areas of the service sector are expected to see a slowdown.

Chief among them is health services. “Health costs have gone up so much that it’s begun to take a bite,” says Vincent. Employment that has grown at a 6% to 7% pace over the past few years is only expected to increase 2% next year, he says.

Some economists, however, say that jobs within the health sector are destined to rebound as the nation’s population continues to age.

Hiring in the so-called financial-service area also appears to be slowing, economists say. This sector includes financial institutions such as savings and loans, banks and stockbrokerages. “They’ve almost all been affected by deregulation, problem loans and competitive pressures,” Vincent says.

And Southern California’s biggest claim to fame, the film industry, is also hiring fewer workers. That sector, which employed 70,000 in 1984, has dropped slightly to about 69,500 this year, and the numbers will continue to decline in 1986, Mace says.

Many films are being shot on locations outside of the state, she points out. “With the competition in the industry, Los Angeles is starting to lose its lure.”

But Vincent thinks the problem is not that serious: “The importance of the film industry to the Southern California economy has long been highly exaggerated.”

JOBS BY MAJOR INDUSTRY GROUP Area includes Los Angeles, Orange, Riverside, San Bernardino, San Diego, Ventura and Imperial Counties. Annual average employment in thousands

1975 1984 1985* 1995** Agriculture 71.9 87.1 88.0 66.0 Mining 18.4 22.2 22.0 25.6 Construction 55.0 238.5 266.9 320.0 Manufacturing 1,052.6 1,331.6 1,368.2 1,588.0 Transportation/ Public Utilities 235.6 295.5 300.4 379.8 Wholesale/ Retail Trade 1,045.3 1,451.5 1,510.5 1,872.0 Finance/Insurance Real Estate 256.1 401.9 414.5 530.4 Services 932.4 1,496.0 1,582.7 2,068.9 Government 833.0 861.4 871.3 1,005.1

* EDD Forecast ** Projection by Center for Continuing Study of the California Economy, Palo Alto Source: California Employment Development Department