California jobless rate ticks up to 12.5%
California’s unemployment rate climbed in December as fallout from real estate downturn and the state’s budget woes continued to weigh on the labor market.
The jobless rate rose to 12.5% from 12.4% in November. That stood in contrast to the nation’s unemployment rate, which fell to 9.4% in December, from 9.8% the previous month.
California employers added just 4,900 jobs to payrolls in December, the Employment Development Department said Friday, after adding 30,500 the month before. The beleagured construction sector lost 3,200 jobs. But the month’s biggest loser was the government sector, which shed 15,400 jobs. (The jobless rate rose despite the net increase in jobs because an even greater number of people joined the labor market; the reverse can also be true.)
Economists expect public sector employment to keep shrinking as Gov. Jerry Brown tries to close a budget deficit projected to be $28 billion over the next 18 months. Many of these job losses will be felt in local government payrolls, which account for the lion’s share of government employment.
“We’re going to see loss in government jobs for the foreseeable future,” said David M. Smith, associate professor of economics at the Graziadio School of Business at Pepperdine University. “Frankly, they need to be on the decline for us to get our budget situation under control.”
California managed to add a total of 87,500 jobs in 2010, mostly in professional and business services, education and health, and leisure and hospitality. While that’s well below the pace needed to bring down the unemployment rate, it’s a big improvement over 2009 when the state lost 836,000 jobs.
But the government sector has had to contract to compensate for lower revenue collections. The sector lost 21,700 jobs in 2010, with most of those positions coming from local government.
Marvin V. Davis is just one of the thousands of unemployed government workers now struggling to find work in the state. The 45-year old Sacramento resident lost his job as a financial analyst with the city of Folsom in July. Though he has an MBA and is a certified professional accountant, his only offers have been minimum-wage jobs that he’s overqualified for.
He’s interviewed for a few government jobs, he says, but worries that agencies are reluctant to hire because of the uncertainty with the budget. For now he and his wife are surviving on her salary, although that’s also been cut. She works for the state.
“There’s a lot of fear in our economy right now,” he said. “Fear of there not being any jobs, fear of receipts getting cut in the government arena.”
Earlier this month, Brown released a budget plan that plans to ask voters to renew higher sales, income and vehicle taxes that could bring in $9 billion a year. If those taxes are renewed, state and local government employment in the state could rise to 2.2 million by the end of the year, from a low of 2.1 million in the second quarter, according to projections from Esmael Adibi, an economist at Chapman University. If the taxes are not renewed the state could lose about 10,000 more government jobs, he said.
The pace of job creation still is really disappointing,” Adibi said. “The sectors that are the big drags on the economy are construction and government.”
Construction may still have some pain to come. Median home prices barely rose in Southern California in December, and the number of deals fell from a year earlier, according to a report this week from research firm MDA DataQuick. New home construction also fell unexpectedly from November to December.
The state’s construction sector has lost 319,000 jobs since the recession began in December 2007.
There were some hopeful signs in the December jobs report: Manufacturing added 4,400 jobs over the month, bringing the total number of people employed in the sector to 1.2 million. Average weekly hours in manufacturing rose to a four-year high of 41 hours, and average hourly earnings reached a recent peak of $19.22.
Professional and business services, a high-paying sector that includes legal, architectural and bookkeeping positions, added 7,000 jobs. Financial activities added 6,200, and leisure and hospitality gained 9,300.
Los Angeles County added 4,400 jobs off strength from the trade, transportation and utilities sectors, although the unemployment rate rose to 13% in December, from 12.8% the month before. The Port of Los Angeles reported record-breaking exports in 2010, and the Port of Long Beach experienced its biggest ever year-over-year increase in overall cargo traffic.
The information sector was also strong in Los Angeles, with the motion picture and sound recording sectors adding 4,200 jobs.
The unemployment rate in Orange County dropped to 8.9% in December from 9.3% the month before. Still, the county lost 2,200 jobs, led by a decline in construction jobs. Most of the construction losses were tied to a slowdown in specialty trade contracting.
In the Riverside-San Bernardino metropolitan area unemployment fell to 13.9%, from 14.3% the month before. The area added 1,000 jobs, led by trade, transportation and utilities. The unemployment rate in that area a year earlier was 14.1%.
Unemployment in Ventura County slipped to 10.6% in December, down from 10.8% the month before. The area added 600 jobs. San Diego added 2,600 jobs and its unemployment rate slipped to 10.1% from 10.4% the previous month.
Many counties throughout the state were still plagued with high unemployment in December, including Imperial (28.3%), County (25.2%), Merced (20.1%) and Plumas (21%). Those rates are not seasonally adjusted.
But even those who live in counties with low unemployment, like Orange County, say jobs are hard to come by. Each applicant must compete with the 2.3 million other people in the state who are unemployed. Job fairs are mobbed. This month, a hiring event in Anaheim to recruit workers for a new stage show, “Battle of the Dance,” had to turn away applicants when lines got too long.
Suzanne Fitzwater, a 29-year-old San Clemente resident, waited in line at the job fair for three hours to land a three-minute interview for a job she didn’t get. Although the waitress sometimes works part time for a staffing agency, she says she needs a full-time job to pay the bills.
She plans to keep checking websites for jobs, hoping that her 10 years of experience will set her above other applicants.
“I’m on Craigslist every five minutes,” she said, “because $150 a month is not enough to get by on.”