Jobless Rate Dips as State Shrugs Off Negative Trends

By STUART SILVERSTEIN

March 17, 2001 12 AM PT

TIMES STAFF WRITER

California’s economy last month defied widespread expectations of a downturn, adding 38,000 jobs and bringing unemployment statewide and in Los Angeles County to the lowest levels in decades.

The strong economic performance reported by state officials Friday cut the jobless rate sharply to 4.6% in Los Angeles County, from a revised figure of 5.3% for January. California’s unemployment rate in February inched down to 4.5%, from a revised 4.6% for the previous month.

Los Angeles County’s unemployment rate was its best in the 18 years the state has kept records in their current form. By some measures, officials said, the county enjoyed its lowest joblessness since 1969. For California, joblessness is officially at its lowest level since December 1969, the height of the Vietnam War era, when the rate was 4.4%.

Business analysts said the report showed that the state’s energy crunch and the national downturn in technology spending, though certain to hurt the California economy, have yet to take a significant toll. The improvement was powered by job gains over a broad spectrum of the economy, led by service businesses, as well as the categories of wholesale and retail trade, and finance, insurance and real estate.

“It’s hard not to be fairly optimistic, given these numbers. We still will slow down, but maybe not as much as some people anticipated,” said Ross DeVol, head of regional and economic studies for the Milken Institute in Santa Monica.

The employment report demonstrated that business has kept chugging along in California, as it has in many other parts of the country, despite the emergence of a national slowdown that has hammered states dependent on heavy manufacturing.

To some extent, the latest figures also reflected a split between the fortunes of Wall Street, where stocks recently have plummeted, and the workings of the so-called Main Street economy in areas that have kept thriving.

The key question for California “is how much longer can this strength hold up?” said Jack Kyser, chief economist for Los Angeles County Economic Development Corp.

During February, it was hard to find much weakness. All five counties in the Los Angeles region posted unemployment levels last month that either were better than, or equal to, their rates of January and February 2000. Ventura County tied its record low, at 3.9%.

Among African Americans, statewide unemployment fell to a record low of 7.3% in December. In January, the figure was 7.6%. For Latinos, unemployment edged up to 6.6% from 6.5% in January, just above its record low of 6.4%.

The relatively mild toll taken so far by the energy crunch was reflected in a variety of economic indicators. New claims for unemployment insurance in February totaled 53,517, up from 51,119 in January but below the February 2000 level of 56,952.

The story was similar in high-tech, despite the failures of a rash of dot-com businesses and layoff announcements from big technology companies. Employment in high-tech generally was up. Where there were losses, such as in computer and office equipment manufacturing, the setbacks were small.

“The laid-off workers seem to be getting picked up by more traditional firms that do technology work. They get laid off by a dot-com and then get hired by the Bank of America to do Web design,” said Michael S. Bernick, director of the California Employment Development Department, which compiles the state employment statistics.

Analysts were particularly impressed by California’s gain of 38,000 jobs. It amounted to 28% of the national total for February and slightly exceeded the state’s strong average of 37,117 over the past 12 months. California accounts for 12% of the nation’s population.

As previously reported, the U.S. jobless rate held steady at 4.2% in February.

In California, the February job gains also marked a recovery from the reported loss of 45,100 jobs for January, a setback that analysts alternately deemed a possible signal of a slowdown or a statistical quirk.

Broad-Based Job Gains

Job gains were spread over seven of the state’s nine major industry categories. Services, a broad category including everything from business consulting to landscaping, led the way with a gain of 18,800.

The only industry with a substantial job loss was manufacturing, where employment shrank by 4,100 jobs. Even so, that loss was minor compared with the 94,000-job decline in manufacturing nationally. In addition, while manufacturing employment has tumbled nationally over the past year, in California it still is up 11,600 from February 2000.

“Manufacturing here, compared to the rest of the U.S., is a real bright spot,” said Ted Gibson, chief economist for the California Department of Finance.

The overall job growth in California, however, overshadows some long-running problems. For instance, even as California’s urban areas keep adding jobs, the state’s rural areas are enduring some of the worst unemployment in the country. In Colusa County, northwest of Sacramento, unemployment hit 27.9% in February. The next-worst was Imperial County, east of San Diego, at 18%.

The state also suffers more than other parts of the nation from an urban income gap between its wealthy elite and its lowest wage-earners, many of them immigrants. Despite gains among the state’s poor in recent years, analysts say the state’s education and job-training systems will need to be improved for California to move its poor into middle-class jobs.

In Los Angeles, ground zero for the California collapse of the early 1990s and home to growing numbers of the working poor, there have been scattered signals that the recovery is about to slow.

For instance, the H.J. Heinz Co. said Thursday it will close a pet food factory on Terminal Island and lay off 325 workers, reducing the plant’s employment to 200. New figures from the Port of Long Beach show a downturn in shipments. That is a particularly worrisome indicator because foreign trade is one of the major engines of the California economy.

The figures for Los Angeles may have benefited, too, from the entertainment industry’s speed-up of television and motion picture production in anticipation of strikes that could begin as soon as May 1. In effect, the recent job gains in the entertainment industry “have been borrowing from the future,” DeVol said.

Overall, though, California is faring better than many thought possible this far into the energy crunch and technology spending slowdown. DeVol said he may revise upward his forecast for job growth in California this year. He previously predicted that the state, whose employment grew by 3.8% in 2000, would slow down to a 1.9% pace in 2001. Now, DeVol said, he is considering switching his forecast to 2.4% or 2.5%.

In other Southern California counties, the jobless rates were as follows:

* Orange County, 2.3% last month, down from 2.4% in January and 2.5% in February 2000.

* Riverside County, 4.8% last month, unchanged from January but down from 5.1% a year earlier.

* San Bernardino County, 4.4% last month, down from 4.6% for January and for February 2000.

* San Diego, 2.6%, down from 2.8% in January and 2.9% a year earlier.

* Ventura County, 3.9% in February, tying a record low. The rate was down from 4.5% in January and from 4.2% a year earlier.

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California Jobs

Change in number of jobs statewide from January to February:

Total Nonfarm Jobs: +38,000

Services: +18,800

Wholesale and retail trade: +15,700