State’s December Jobless Rate Dips 0.4%; Analyst Says Picture Is ‘Bleak’

California’s jobless rate eased to 9.7% during December, down from 10.1% a month earlier, but the recession-battered state has suffered a loss of more than 200,000 jobs during the past year, the Labor Department reported Friday.

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

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

In Orange County, the most recent statistics show a 7% jobless rate for November-the highest since August, 1983. The December and 1992 annual unemployment rates for the county won’t be released until later this month.

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 isn’t 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 Sarbanes (D-Md.), the committee chairman, “We have a jobs recession going on.”

Big businesses are slashing payrolls, extraordinary behavior in a recovery underway 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 both 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 unmployment 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 level averaged 9.1% last year, up from 7.5% a year earlier. With defense spending down, aerospace business depressed, and the housing market in a slump, unemployment last year surged to its highest average level since 1983, when it was 9.7%.

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 volatile jobless rate there jumped to 9.8% during December, up from 9.4%, a disturbing rise during a time of year so normally associated with a boom in retail hiring.

“The same thing that has happened to New York City over the past 20 years is starting to happen to Los Angeles,” said Wells Fargo’s 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.

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

California had 13.9 million persons at work in December, a rise of 135,000. Unemployment totaled 1.5 million, a decline of 52,000. The economy improved from the 10.1% jobless rate in November, an eight-year high. However, with the rate still far higher than the national average, California’s unemployment problems are “pretty steady and pretty stubborn,” said Thomas Plewes, associate commissioner of labor statistics.

The overall national outlook remains gloomy “because many firms have not completed re-sizing and restructuring,” said National Association 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 231% of the jobs lost during the recession. However, the current situation is starkly different--1.7 million jobs were wiped out during the slump that lasted from July, 1990 until March, 1991, but only 357,000 jobs have since been recovered.

Sen. Sarbanes, who is urging the Federal Reserve Board to ease monetary policy to stimulate economic activity, said the country must “achieve a rate of growth fast enough to make real and substantial progress on the job front.”

He said the true jobless impact was significantly higher than the official jobless total of 9.2 million last month, because there were another 6.3 million Americans working part-time since they were unable to get full-time jobs, and 1.1 million discouraged workers who are no longer counted in the labor force. The federal government’s monthly survey of unemployment includes only those who are actively seeking jobs.