Jobless Rate Drops, but so Do Payrolls

California’s unemployment rate fell last month to 6.4%, the lowest level in nearly two years, according to government data released Friday.

The good news was tempered by a decline in payrolls in November stemming from the supermarket strike that has idled thousands of union members in Southern and Central California.

Most of the net drop of 14,400 jobs came in the retail sector. The 2-month-old labor dispute affecting the grocery companies that operate the Vons, Ralphs and Albertsons chains has sharply reduced the number of employees actively working in the industry despite the hiring of some replacements.

Discounting that aberration, figures from the Employment Development Department revealed that the state’s labor market essentially was flat last month, with as many sectors showing employment gains as declines. The nation’s job tally was similarly lackluster in November, as employers added 57,000 workers to their payrolls, well short of expectations.

Despite a flurry of upbeat economic indicators of late, analysts have warned that employers have remained extremely cautious and that job creation is likely to ramp up slowly rather than bounce back quickly.

“The national and state economies have clearly picked up, but it just hasn’t translated yet into big employment gains,” said Michael Bernick, director of the EDD.

Still, economists say there are signs that the jobs scene may be a little brighter than what is reflected in the government’s payroll data. The monthly survey, which polls a large sample of employers about the size of their staffs, is considered a reliable gauge of hiring activity among established firms. But it tends to miss what’s happening among the self-employed and start-up companies, which typically are the first to add workers as the economy expands.

By the EDD’s survey, California’s nonfarm payroll employment last month declined by nearly 56,000 jobs, or 0.4%, from November 2002. By comparison, a separate EDD survey of households, which is used to determine the jobless rate, showed that 212,000 more Californians were employed in November than a year earlier. And economists said that was a signal that job activity might be stirring under the radar.

“My hunch is that the job market is better than the payroll data are showing,” said Lisa Grobar, director of the Cal State Long Beach Economic Forecast Project. “We’re pretty optimistic that the employment picture is starting to improve.”

November’s unemployment rate of 6.4%, the lowest since January 2002, was down from a revised 6.7% in October. But that drop was achieved in part because the labor force contracted, a sign that discouraged workers continue to leave the labor force and thus are no longer counted in official statistics. The U.S. jobless rate was 5.9% in November, down from 6% the month before.

In California, five of the 11 industry “super-sectors” tracked by government analysts gained jobs in November, led by construction, with a net 4,300 new positions. The information sector, which includes publishing, telecommunications, motion picture production and Internet services, added a net 3,100 jobs -- a welcome development for a high-paying cluster that has shed jobs in the last 10 quarters.

Educational and health services also gained jobs last month, as did the financial activities sector (mostly banks and real estate firms) and the “other services” category, which includes auto repair shops and dry cleaners.

California’s giant trade, transportation and utilities sector, which includes the retail industry, was the big loser in November, down a net 14,100 jobs. Analysts attributed the lower head count largely to striking supermarket workers, who weren’t tallied as being employed because they weren’t on the job and drawing paychecks.

Professional and business services lost a net 5,500 jobs in November, a disappointment to analysts who are closely watching for signs of hiring. This bellwether sector employs workers across a host of industries and pay scales, from high-paid scientists, lawyers and accountants -- whose fortunes rise along with the economy -- to entry-level temps who are among the first hired during a recovery.

Manufacturing continued its long losing streak, with payrolls falling by 1,500 jobs in November. Tourism, government and mining also shed jobs last month.

In contrast to the nation, which has gained jobs for four straight months, California employers have cut positions in three of the last four months.

“It tells you that businesses are still very concerned about the costs associated with putting people on the payroll,” said Jack Kyser, chief economist with the Los Angeles County Economic Development Corp., who cited high workers’ compensation and other costs in California as a drag on job creation.

Still, he and others have begun focusing on the government’s monthly household survey of employment for clues to where the job market is heading. The healthy gains in that survey in the last year indicate that a significant number of Californians may be working as independent contractors, toiling in the underground economy, starting their own businesses or working for tiny firms that don’t show up in official reports.

Some economists also expect an upward revision in the 2003 nonfarm payroll data when those figures are adjusted early next year. The Employment Development Department’s annual “benchmarking” uses unemployment tax data to update its monthly estimates of payroll figures, a process that typically uncovers job gains or losses by the newest and smallest firms.

“I wouldn’t be surprised to see some additional jobs turn up,” said Esmael Adibi, director of the A. Gary Anderson Center of Economic Research at Chapman University in Orange. “Some start-ups aren’t getting counted.”

Los Angeles County saw its November jobless rate drop to 6.8% from 7.1% on a seasonally adjusted basis. Other Southern California counties, whose unemployment rates are not adjusted for seasonal variations, likewise showed declines.

The rate in Orange County dropped to 3.5% in November from 3.8% the month before; Riverside’s jobless rate plunged to 6% from 6.6%; San Bernardino’s fell to 5.5% from 5.8%; San Diego’s rate was down to 4% from 4.3%; and Ventura’s jobless rate dipped to 5.6% from 5.8%.