The Bay Area will Outpace California in Job Growth Next Year

Still, the Bay Area is at least two years away from recapturing the jobs lost during the recession, stated a separate forecast by Beacon Economics.

"The job market has definitely hit the bottom," said Jeffrey Michael, director of the Stockton-based Business Forecasting Center at UOP. "Things are starting to improve and move toward growth."

Yet the upswing has been virtually invisible. The recession is technically over, according to experts, yet for many, the economy still feels like it's in a downturn.

"It has very much been a U-shaped recovery," Michael said. "We've been sitting on the bottom for at least a year, if not longer."

That could begin to change in 2012, the UOP forecast predicted. The three major urban centers in the Bay Area are expected to show employment expansion of greater than 1.5 percent next year, the Business Forecasting Center said.

The East Bay job market is due to expand by 1.6 percent, which would reverse what's expected to be a 0.1 percent decline in payroll jobs in 2011 and a 2 percent drop in 2010.

The South Bay is expected to expand 1.9 percent in 2012. That would be sturdy growth, but slower than the 2.4 percent job expansion that was projected for 2011.

The San Francisco-San Mateo-Marin metro region is expected to experience a 1.6 percent increase in jobs in 2012, faster than the 0.6 percent growth anticipated for this year.

If all of those growth rates hold true, the Bay Area's three main metro regions would be expanding more quickly than California.

Statewide job growth is expected to be 1.1 percent in 2012. That would be slightly slower than the 1.2 percent expansion anticipated in 2011 for California, the UOP researchers said.

In 2012, payroll jobs are expected to be added throughout the Bay Area, according to Beacon Economics. The East Bay should add 22,000 new payroll jobs, the South Bay should add 17,000 jobs and the San Francisco metro area should add 17,750, estimated Jordan Levine, an economist with Beacon.

While an upswing is welcome, the Bay Area nevertheless must confront a brutal reality: Since the region's last employment peak in July 2007, the nine-county region has lost almost 219,000 jobs.

"It's still going to be years before we get back to the old job levels," Michael said.

To underscore the canyon into which the Bay Area economy tumbled amid the depths of the recession, the region during the one-year period that ended in September added 41,000 jobs.

Some parts of the Bay Area will reclaim their vanished jobs more quickly than others.

"The South Bay shows the most promise to get back to its pre-recession levels, and it should be followed most closely by the San Francisco metro area," said Jon Haveman, chief economist of the Bay Area Council's Economic Institute.

The laggard in bouncing back is expected to be the Alameda County-Contra Costa County region.

"The East Bay has to dig out of a bigger hole than the South Bay or the San Francisco area," Haveman said.

The South Bay should regain its pre-recession peak by the end of 2013, Beacon Economics analysts said.

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"Because of the boom in tech, the South Bay has the highest median incomes in the Bay Area," Levine said. "The South Bay also has high levels of educational attainment. Those are the kinds of things you need to bolster job growth."

Next up in the recovery pipeline is the San Francisco-San Mateo-Marin region, which is expected to be back to its old job levels by 2015.

The East Bay is projected to reclaim the jobs it lost during the recession by sometime in 2016, according to Beacon Economics.

"The worst is over," Michael said.

The Growing 99 Percent

In recent weeks, the Bay Area has been roiled by anger and frustration with how the rich have grown richer while the rest of us endure underemployment, foreclosures, and deep cuts to public education and services, peaking with the Nov. 2 Oakland General Strike that drew more than 10,000 people into the streets to demand economic justice.

The Occupy Wall Street movement — and its many local manifestations, including OccupySF and Occupy Oakland — has been the main vehicle for those populist passions for the last two months, with the support of the labor movement. But now, student and faculty groups from California's three public university systems are about to get involved in the fight in a big way.

Student and labor groups allied with the ReFund California coalition are planning a week of action for Nov. 9-16, culminating that final day in demonstrations outside the California State University Board of Trustees meeting in Fullerton and University of California Board of Trustees meeting at the UCSF campus in San Francisco's Mission Bay.

Those protests aim to connect the problem of deep cuts and tuition hikes in the public university systems with the larger issue of wealthy individuals and corporations that haven't been paying their fair share. The coalition wants the boards to pledge support for a five-point action plan that includes taxes on the wealthy, removing commercial property from Prop. 13 caps on property taxes, restoration of cuts to higher education, a sales tax on Wall Street financial transactions, and pressuring banks to reduce mortgage debt on underwater homes.

Charlie Eaton, a ReFund California organizer from United Auto Workers Local 2865, which represents teaching assistants at UC, notes that many UC and CSU board members also sit on the boards of major banks and corporations that have contributed to the current financial crisis and which have been in the crosshairs of the Occupy Wall Street movement.

"It's really a club of California's corporate elites," Eaton said. "It's about saying to these folks: if you aren't willing to actively support paying your fair share, or at least get out of the way, we can't let it be business as usual at the Wall Street institutions that you help run."

Small Businesses Find Alternative Funding

When Caitlin McShane looks down San Francisco's Mission Street, she doesn't see taco joints and bodegas bulging with ripe fruit. She sees sharks.

"Look over there -- payday loans,'' says the spokeswoman for San Jose-based Opportunity Fund, a Bay Area-based microlending nonprofit that helps small businesses get off the ground or expand. "And there's a check-cashing place on the corner. There's a pawnbroker, a loan office, and another payday loan place. People are getting into debt to loan sharks and even pawning their things to keep their businesses from going under. It's a mess, and this is what we're competing against.''

Sixteen years after making its first loan of $17,000 to San Jose's Treasure Chest Aquarium, Opportunity Fund has become the country's third-largest microlender and a star player in the burgeoning realm of microfinance, much of it clustered right here in the Bay Area. And while microloans are more often associated with helping goat farmers in Uganda than food trucks in Oakland, they've become an increasingly popular method of alternative financing for small businesses, many of them struggling beneath the crushing weight of the Great Recession.

"The growth rate of microfinance around the world is astounding, growing faster than worldwide Internet usage,'' says Sean Foote, a venture capitalist who teaches a course on the subject at UC Berkeley's Haas School of Business. "Here in the U.S., it's a relatively new trend, but with 25 million 'unranked' people without access to credit, there's a huge market out there and the role of microlenders will continue to expand.''

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Manuel Godino, a 47-year-old chef from Buenos Aires who came to the United States after Argentina's currency crisis in 2001, is a beneficiary of the trend. After running his nascent empanada business out of rented kitchens, Godino got a $45,000 loan at 7.5 percent interest from Opportunity Fund, opened a small restaurant this summer on Valencia Street in San Francisco, and has already hired eight full- and part-time employees.

"I looked all over for someone to give me money, but I had no credit,'' he said, cranking out dozens of steaming empanadas for his lunchtime faithful. "I was able to show the lender that even though I had no credit, there was a big demand for my product. I could never have done this or hired these workers if I hadn't gotten that loan.''

He's got a lot of colorful company -- local microloans have helped a robot startup, a cupcake vendor, San Jose dry cleaners converting their operations to green businesses, and even a hair salon that becomes an art gallery by night.

Locally based groups with a hand in microlending include the Women's Initiative for Self Employment, which helps low-income women start small businesses with training and financing, and Urban Solutions, a San Francisco service working to facilitate loans for entrepreneurs who may have impaired credit or who lack collateral. Along with so-called peer-to-peer lending sites like Prosper, and other startups that connect individual lenders with borrowers online, microlenders are a compelling piece of a parallel banking system supporting the self-employed and others with little or no access to traditional banking services.

With funding from foundations, individual donors and banks themselves, microlenders have been able to help thousands of aspiring business owners who otherwise would be shut out from getting seed money or forced to take out high-interest loans. Rob Garcia, formerly head of peer-to-peer lending network Lending Club, says a main reason people have trouble going the traditional route is that banks see small loans as a hassle.

"Imagine a large bank having to spend all those resources managing thousands of these different small loans,'' he says. "These big banks are looking to give a million or two or three. So if you have a food truck or a small alteration shop working out of your garage, you have to try other options.''

Garcia says these alternative forms of financing often have a do-good element built in, so individual lenders can "do something right for people who need the money but are unranked or under-banked.'' That's industry lingo for an entire subculture of Americans with either no credit history, bad credit or a lack of financial literacy, a problem common among recent immigrants who easily fall prey to predatory lenders.

San Francisco-based nonprofit Kiva, perhaps the best-known microfinance outfit around, has mushroomed from a small lending project launched in a Ugandan village to become a powerhouse nonprofit, with 100 employees doing $100 million annually in loans to groups and individuals in 60 countries. In 2009, Kiva began domestic lending, partnering with Opportunity Fund in the Bay Area and other microlenders around the country.

CEO and co-founder Matt Flannery, 34, says that despite its growth, microlending in the United States faces different challenges than it does overseas. For starters, there are higher costs and more red tape getting a business up and running, he says. "These kinds of loans are really important,'' says Flannery, "and we need to make the system more efficient.''

Rich Schlarb was a trucker in trouble when opportunity knocked. After starting his one-rig RLR Transportation in San Jose in 2006, Schlarb soon found himself swimming in debt from credit cards and other high-interest loans, including a nearly 15 percent truck loan from a local dealer. After his wife lost her job, Schlarb realized "that if I didn't reorganize all this debt somehow, we were going to be in serious trouble.''

Securing a microloan for $45,000 took nearly half a year of vetting. But when he locked it in February, Schlarb was able to pay off the more onerous loans, then use his savings for deferred maintenance on the truck. "If it weren't for the microloan,'' he said, "I don't think our business could have kept going.''