A look behind June's employment report

Pasadena Star News

By: Cynthia Kurtz

Posted: 7/30/2014 

It was good to read the headlines announcing that California has created more new jobs than it lost in the recession. But the California Center for Jobs and the Economy - a non-profit public benefit corporation dedicated to providing objective information on California's economy - was quick to add a few caveats in its California Employment Report. There are hidden numbers and some pain lurking behind that announcement.

In June 2014 the California unemployment rate dropped by 0.2 percent to 7.4 percent. Some 15,472,000 people are now employed (seasonally adjusted) compared to 15,449,000 who were employed in July 2007. Before we declare victory, however, let's look at some other numbers.

First, those new jobs aren't distributed equally across the state. Los Angeles County and the San Gabriel Valley have not added back "all" the jobs lost in the recession. In 2003 the SGV had approximately 644,000 jobs. Over the next five years that number steadily grew to reach 674,000 jobs in 2008.

Then the SGV lost 55,000 jobs in less than two years bottoming out at 619,000 jobs in 2010. Jobs are coming back - over 3,000 new ones in 2011, 11,000 more in 2012 and an additional 12,000 in 2013. But we still need to add an 29,000 more jobs before we are back to 2007 levels and that will take at least two years.

The SGV isn't alone. What California is seeing is a two-tiered recovery. Unemployment numbers vary widely across the state. Imperial County has the highest unemployment rate at 22 percent followed by Colusa County at 14.9 percent and Sutter County at 13.3 percent. Los Angeles County has an unemployment rate of 7.9 percent - 0.5 percent higher than the state average.

Compare those figures with Marin County's unemployment rate of 4 percent, San Mateo County at 4.2 percent, and San Francisco County at 4.5 percent.

Second, while the state unemployment rate dropped by -1.9 percent, the participation rate also dropped by -1.0 percent. The participation rate is the number of people who are employed or actively looking for work. In June 2014 the California rate was 62.1 percent compared to 62.8 percent for the country.

When more jobs are created the participation rate should stay the same or increase to reflect that more people are entering the work force with population growth. When it drops, it is an indication the workers are discouraged and have stopped looking for jobs.

Between June 2013 and June 2014, California added 137,200 jobs but the population increased by 1.73 million people. The California Center for Jobs and the Economy estimates that there were 73,500 fewer people looking for work in June 2014 than in June 2013.

Finally, the Center for Jobs found that middle class job creation is lagging and remains 222,700 jobs behind the 2007 number.

What does this mean? It means we are not done. Both the public and private sectors are creating jobs. Things appear headed in the right direction. But public policy makers, regulators, and employers must stay focused on the issues that impact the economy and California's ability to create jobs.