California’s Jobless Rate Hits 7% in January, Highest in 4 1/2 Years

The California unemployment rate increased to 7% in January from a revised 6.8% level in December, state officials reported Friday, providing new evidence that the recession is eliminating jobs in the Golden State.

A pattern of weakness continued to reduce jobs in manufacturing, construction and services, according to the report by the state Employment Development Department. California’s jobless rate has not been this high since July, 1986.

“I think the trend that we’re seeing is going to go through 1991,” warned Jack Kyser, chief economist at the Los Angeles Area Chamber of Commerce. “The weakness isn’t just in aerospace,” he added, referring to the federal budget cutbacks that have hammered Southern California’s defense sector.

Such fields as financial services, construction and real estate all are faring poorly and have bleak employment outlooks, he said.

But in a confusing development, a second government report Friday suggested that the California jobs picture improved in January. The report--a U.S. Labor Department survey of employers--found that the state gained 51,500 jobs last month, on a seasonally adjusted basis, including increases in manufacturing, construction and trade.

“That just does not fit my conception of what is happening,” said David Hensley, an economic forecaster at UCLA. While the employer survey is often viewed as a reliable barometer, the January finding may prove to be “an aberration,” in light of all the negative news about the national economy, Hensley added.

Unemployment in California was up 29,000 in January from the previous month, and--tellingly--up 285,000 from a year ago, according to the Employment Development Department report.

The number of Californians with jobs--more than 13.6 million--declined by 14,000 from December; that figure has fallen by 120,000 since January, 1990.

State officials, alarmed at a shortfall in revenue that has prompted Gov. Pete Wilson to propose a series of spending cuts and tax hikes in his new budget, sought to portray the January figures in the least negative light.

“This continual increase in California’s unemployment rate is troubling, but this month, at least, the accompanying numbers showed only a very small labor market change,” said Alice Gonzales, director of the Employment Development Department.

Of the more than 1 million unemployed, 593,800 have been laid off, 114,200 left their jobs voluntarily and the remainder were entering the labor market.

In another sign of distress, the number of Californians claiming unemployment insurance has risen steadily in recent months. There were 80,722 new claims in January by unemployed Californians, compared to 75,270 in December and 63,399 a year ago.

Officials previously had put the December unemployment rate at 7.1%, but on Friday announced a revision to 6.8%.

Unchanged, however, is a steady upward march in the jobless level since July.

California’s unemployment has been higher than that of the nation overall for months; the U.S. jobless rate was reported at 6.2% for January.

“I think the trend is going to continue and I think it’s very possible California’s unemployment rate will hit 8% this year,” said Paul Getman, an economist with Regional Financial Associates in West Chester, Pa.

Moreover, the weakening jobs picture undermines contentions that California’s economic diversity, booming population and Pacific ties somehow insulate its residents from hard times.

“There’s been a false picture painted about California, and that’s the picture you’re seeing unraveling right now,” Getman maintained.

DISCOUNT RATE CUT

The Fed cuts its key discount rate as the nationwide jobless rate rises. A1

UNEMPLOYMENT IN MAJOR STATES

Jan., Dec., State 1991 1990 Massachusetts 8.6% 7.3% Michigan 7.2% 7.3% California 7.0% 6.8% Illinois 6.8% 6.0% New York 6.5% 5.5% New Jersey 6.4% 5.7% Texas 6.4% 7.0% Pennsylvania 6.3% 5.7% Florida 6.1% 5.5% Ohio 5.9% 5.6% N. Carolina 4.9% 5.2%

Source: U.S. Bureau of Labor Statistics