State Jobless Rate Falls 0.4%; L.A. County Figure Up

California’s jobless rate fell to 9.7% in December, down from 10.1% a month earlier, a mildly upbeat conclusion to a year when the recession-battered state lost more than 200,000 jobs, the Labor Department reported Friday.

Nationally, unemployment remained stuck at 7.3% last month, finishing the worst year for job seekers since 1984.

Los Angeles County’s performance was especially disappointing, with the volatile jobless rate jumping to 9.8% during December, up from 9.4%, despite the normal boom in retail hiring at that time of year.

Even more ominously, the county labor force shrank last month by 64,000, an apparent sign that more workers are growing discouraged and giving up the job search entirely.

“The picture still is fairly bleak,” said Jay D. Horowitz, labor market analyst for the California Employment Development Department. “We’re continuing with what we have seen over the past year.”

The nation’s economic output is growing--more goods are being produced, distributed and sold, more services are being performed--but the creation of jobs is not keeping pace.

The current recovery is unique, the first one since World War II that failed to generate substantial job gains, William G. Barron, deputy commissioner of labor statistics, told Congress’ Joint Economic Committee on Friday.

“It is not really a recovery in the traditional sense of the term,” responded Sen. Paul S. Sarbanes (D-Md.), the committee chairman. “We have a jobs recession going on.”

Big businesses are slashing payrolls, extraordinary behavior in a recovery under way for 21 months.

“There has been a great emphasis on cutting costs and increasing productivity,” said Larry Wipf, director of regional economics for Norwest Corp., a bank holding company in Minneapolis. “Production has gone up, but with fewer workers.”

Because competition is tough, companies can’t pass through higher prices to raise profits. Instead, they cut payrolls to trim their costs and increase profits, Wipf noted.

“Companies are still restructuring, are still downsizing--even those that are making money,” said Joseph A. Wahed, chief economist of Wells Fargo Bank in San Francisco.

The national jobless rate has been stuck in the same numerical groove for November and December.

“If you take the two months together, it confirms what we already knew, that this has been a jobless recovery . . . which is unusual so late in the game,” Wahed said. “We still have some ways to go before we see a bona fide recovery.”

The November unemployment figure, originally reported as 7.2%, was changed to 7.3% under the government’s normal annual recalculation of the accuracy of its statistics.

California, with the highest unemployment rate among the top 11 industrial states, is dragging down the nation’s economic performance. The state’s jobless rate averaged 9.1% last year, up from 7.5% a year earlier. With defense spending down, aerospace business depressed and the real estate market in a slump, unemployment last year surged to its highest average level since 1983, when it was 9.7% statewide and in Los Angeles County.

The government’s survey of business payrolls in the state showed a loss of 208,300 non-farm jobs last year. By one state estimate, employment has fallen by more than 800,000 since May, 1990, and economists such as Wahed predict another 100,000 positions could disappear in 1993.

Los Angeles County, in turn, was pulling down the state’s performance. “The same thing that has happened to New York City over the past 20 years is starting to happen to Los Angeles,” said Wahed, citing business exodus from Southern California.

He estimated that perhaps 15,000 of the 22,900 payroll jobs lost in California last month came from the southern half of the state.

For all of 1992, joblessness in Los Angeles County was 9.6%, up from 8% in 1991 and the highest level in eight years.

Somewhat more optimistic about the state and regional economies was Frederick Cannon, senior economist for Bank of America, who said he is hopeful that employment will begin to pick up at mid-year.

He acknowledged that in Los Angeles County, “we’re still dealing with the bad ripple effects of the job losses we’ve already experienced” in aerospace and other manufacturing industries.

A separate government survey of households--generally considered far less reliable than the survey of business payrolls because of the relatively small number of families polled--showed employment rising in California last month by 155,000 to 13.9 million. For the year, though, the household survey found employment declining by 52,000.

The household survey also put unemployment at 1.5 million, a decline of 52,000 that brought the official jobless rate down from the eight-year high of 10.1% in November.

Cannon said the somewhat contradictory signals from the two surveys may indicate that some of the job losses reported in the payroll survey in California are being offset by increased self-employment and hiring at small firms. The household survey tracks such trends while the payroll survey focuses on larger employers.

However, with the unemployment rate still far higher than the national average, California’s problems are “pretty steady and pretty stubborn,” said Thomas Plewes, associate commissioner of labor statistics.

In Los Angeles County, there were 4 million people working last month, a decline of 75,000. The number of unemployed rose to 437,000, an increase of 11,000.

The overall national outlook remains gloomy “because many firms have not completed resizing and restructuring,” said National Assn. of Manufacturers economist Gordon Richards, using two of the popular euphemisms to describe layoffs and firings. “Periodic layoffs will be visible in early 1993, even as overall payrolls increase,” he predicted.

In past economic rebounds, after 21 months, the country had typically recouped more than triple the jobs lost during the recession.

Jobless Rates

Here are U.S. and California unemployment rates, in percentages:

U.S. Calif. Dec. ’92 7.3 9.7 Nov. 7.3 10.1 Oct. 7.4 9.8 Sept. 7.5 9.4 Aug. 7.6 9.8 July 7.7 8.9 June 7.8 9.5 May 7.5 8.7 April 7.1 8.0 March 7.2 8.5 Feb. 7.2 8.7 Jan. 7.0 8.1 Dec., ’91 7.0 7.7