Job recovery in Southern California is outpacing U.S. gains
Southern California fell harder in the recession than the rest of the country and took longer to recover, but now the region’s job gains are outpacing the national employment upswing.
Each month since April 2012 except one, Los Angeles County has seen at least 2% year-over-year job growth, compared with a 1.7% average across the country.
On Friday, the Labor Department reported that all the jobs lost in the downturn are now back nationwide, with 217,000 net new jobs added in May. The unemployment rate stayed put at 6.3%, the lowest in more than five years. But a steadily growing population means that millions of people are still out of work.
In Los Angeles County, only 330,800 jobs have returned, compared with the 435,400 jobs lost from December 2007 to January 2010. Robert Kleinhenz, chief economist with the Los Angeles County Economic Development Corp., said he doesn’t see employers closing that gap until 2015.
“We passed an important milestone in recovering all of the jobs lost in the recession in the U.S., but that gives us only partial satisfaction because we continued adding to the labor force throughout that period,” he said. “And that’s every bit as true at the local level.”
Cheery economic reports showing rising home prices in Southern California, along with steadily recovering personal income, will help boost optimism, Kleinhenz said. But new opportunities will lure more job hunters into the labor force, requiring employers to add more jobs to keep unemployment rates low.
Job growth hasn’t kept pace with long-term labor force advances in Los Angeles County, where the population has boomed by 1 million people since 1990. Back then, there were 4,148,400 jobs. The number peaked at 4,227,400 just before the recession started in 2007 and is averaging 4,160,000 this year.
But an LAEDC report this week showed promising signs. In April, Los Angeles County employers added 90,800 nonfarm jobs — a 2.6% boost from a year earlier.
The area’s jobless rate improved to 9.8% last year from 10.9% a year earlier. LAEDC expects the gauge to fall to 8.7% this year and then continue sliding to 7.8% in 2015.
The county has maintained an average annual unemployment rate of 8% since 2000. In April, 8.3% of the county’s job seekers were unemployed.
The sense of recovery extends across the Southland. The unemployment rate in Orange County fell to 5% in April from 5.9% during the same month in 2013, below its long-term average.
In the Inland Empire, 8.3% of those in the labor force were looking for positions, down from 9.7% a year earlier. Unemployment in the region, which was hit hard by the recession, now matches its average annual level across 14 years. Ventura County, where the jobless rate sank to 6.1% from 7.2%, is approaching historical employment levels.
Private-sector industries such as healthcare, leisure and hospitality and scientific services will enjoy faster job gains in the region this year and next, according to the LAEDC report. Left out of the upswing is manufacturing, which has declined in Southern California for years, and financial services, where layoffs have followed a decline in activity surrounding distressed properties.
Amid federal budget cuts, government jobs will remain stagnant or rise slightly from a year ago.
International trade supports more than 150,000 jobs in Los Angeles County, a number set to rise. But the Los Angeles and Long Beach ports face intense competition from other port systems and the expected widening of the Panama Canal — a threat that has prompted the two ports to invest billions of dollars in infrastructure.
At the nonprofit Valley Economic Development Center in Van Nuys, President Roberto Barragan said local businesses are treating hiring with “a general stinginess.”
“Whether large, small or medium, they’re only hiring when they have to, not to grow their company but because they have a particular sale they need to meet or a singular piece of work they need to finish,” Barragan said. “Everyone is being that much more strategic — no one feels confident enough about the economy to make permanent, long-term hires.”
Instead, many businesses are investing in technologies that can replicate the work of an employee, eliminating the need to support health benefits and other payroll expenses, Barragan said.
Consequently, the ranks of so-called informal workers have swelled, said Yvonne Yen Liu, a researcher with the Economic Roundtable in Los Angeles.
In California, 16.7% of the total population are either unemployed, too discouraged to look for jobs, working less than they’d like or otherwise marginally employed, she said. That’s 6 million people. In Los Angeles County, 2 million people fit that bill.
The number of people doing work that is off the books or misclassified as contract work increased 50,000 in Los Angeles during the recession and 90,000 since then, Liu said. Usually, she said, such work comes without job security, benefits, workers’ compensation or the opportunity for career advancement.
“People are definitely trying to hustle in order to survive in this economy, but it’s not a good, long-term solution for our region,” she said. “It’s making contingent and precarious workers out of all of us.”