California’s Jobless Rate Dips to 6.9%, Lowest in Six Years

Reflecting the steady momentum of an economic recovery that is outpacing all of its neighbors’, Orange County’s unemployment rate fell to 3.8% in October, its first journey below 4% since the summer of 1990.

The drop from 4.2% in September, was accompanied by an unusually large jump in employment as school districts scrambling to meet the state’s new demand for smaller primary classes added hundreds of new teachers.

Total wage and salary employment at Orange County businesses, schools and government agencies hit an all-time record of nearly 1.19 million for the month and kept the county on track to record a net gain of more than 25,000 new jobs this year. For the month, Orange County employers added 4,700 new jobs, mostly in services and education.

California’s unemployment rate edged down to a seasonally adjusted 6.9% last month, the first time joblessness has been below 7% in nearly six years.

The decline in the unemployment rate, from a revised 7.1% in October, came in a month when the state showed a solid, if unspectacular, job increase totaling 25,700.

While state figures are adjusted to account for seasonal fluctuations, county figures are not.

All told, the figures show California is enjoying faster employment growth than the rest of the nation, even as its jobless rate remains far higher than the U.S. level. Two weeks ago, the government reported that the U.S. jobless rate held steady at 5.2% in October, while employers added 210,000 jobs nationally to their payrolls.

“We’re in the process of closing the gap with the U.S., and we could see some continued improvement in California even if the national economy slows,” said Tom Lieser, associate director of the UCLA Business Forecasting Project.

But in Los Angeles County, the news was far less encouraging. The county’s jobless rate was 7.6%, the same as the revised figure for September, although down from 8% in October 1995.

What’s more, the employment expansion in the county since January 1995 now appears to be far smaller than previously estimated, said Vincent Canales, labor market analyst for the California Employment Development Department.

The discovery of what may turn out to be a significant overcounting of jobs in Los Angeles County came amid the re-analysis of employment data undertaken by state officials every year.

To fine-tune the job estimates they produce every month, state officials once a year take a comprehensive look at payroll tax records. The evaluation takes several months, and normally is completed in February.

Canales said the preliminary indication, however, is that Los Angeles County’s employment growth during 1995 and 1996 has been well under 1%, versus previous estimates of over 2%. As a result, more than half of the nearly 93,000 jobs that were believed to have been added over the past 12 months may be illusory.

“I don’t want to sound like it’s all doom and gloom, but it seems to be flat,” Canales said. “There isn’t much strength.”

In Orange County, however, the anticipated 2% annual job hike is in line with the state’s pace as well as economists’ predictions.

“This is a good report, it shows what we’ve been saying all along--that we’re going to gain back all the jobs we lost from 1991 through 1994,” said Esmael Adibi, director of the Chapman University Center of Economic Research.

Orange County job growth has come in almost every segment of the economy in the past year, said Eleanor Jordan, county employment analyst for the Employment Development Department. There were 29,000 more jobs on Orange County payrolls last month than in October 1995, she said. Of the nine major employment categories tracked by the state agency, only mining and the finance, insurance and real estate segment failed to increase.

The biggest hike was in services--a broad category that includes personal, business and health care services, hotels and the amusement industry. Led by a gain of 7,400 jobs in business services such as accounting, blueprint making and consulting, employment in the category grew by 14,800 from the October 1995 level.

Economists say the heavy service industry growth completes the shift in the county away from its dependence on aerospace and manufacturing employment.

“A lot of these new gains are being driven by the growing importance of exporting,” said Adibi. “These aren’t the same kinds of jobs we used to have. They are mostly in services and retailing and wholesaling instead of construction and manufacturing.

“But that’s not bad, either,” he added. “Many jobs in the services are high value jobs in accounting, law and health care. It just means that the structure of the economy is changing.”

Adibi cautioned against making too much of the big drop in the county’s October jobless rate, though. Employment typically climbs in the last three months of the year because of school and seasonal holiday hiring, he said. And good news about employment usually brings out a new crop of job hunters who add to subsequent jobless tallies.

The unadjusted jobless rates fell in all of the other Southern California counties too, as follows: San Diego, 4.8%, down from 5.4% in September; Riverside, 8.3%, down from 9.1%; San Bernardino, 6.6%, down from 7.2%; Ventura, 6.9%, down from 8.2%.

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Unemployment Rate Drops

Last month, Orange County’s unemployment rate fell below 4% for the first time since the summer of 1990. The county’s October rate of 3.8% was far below Los Angeles County’s rate of 7.6% and the state’s 6.9%. Orange County October unemployment rates, 1990-96, and 13-month trend:

October trend:

1990: 3.6

1996: 3.8

Monthly trend

1995

Oct.: 5.1%

1996

Oct.: 3.8&

* Source: State Employment Development Department