California employers drop 29,200 jobs in May

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California’s up-and-down economic recovery took another turn for the worse in May as employers shed a net 29,200 jobs from payrolls, a surprisingly large loss following the healthy gains seen earlier this year.

Some of the losses are probably tied to a slowdown in trade with Japan, which is still recovering from a devastating tsunami, and from rising gas prices and other costs that have led employers to put the brakes on hiring, economists said.

“I see Japan written all over this report,” said Esmael Adibi, an economist at Chapman University.


Cargo passing through the ports of Los Angeles and Long Beach rose just 1% in May, the same month in which employers eliminated 3,600 positions in trade, transportation and utilities.

Construction was another weak spot, shedding 5,000 jobs, as the sour real estate market continued to be a drag on the recovery. Home sales statewide fell 13.3% last month from a year earlier, and home values dropped by 10.4%.

The unemployment rate inched down to 11.7%, according to the state Employment Development Department report released Friday. But analysts saw little to cheer, saying that the decline in the rate probably reflects growing numbers of Californians who have given up the job hunt or who have left to seek work elsewhere. Only Nevada has higher unemployment than California.

The trend mirrors a gloomier outlook nationally, with both employment and economic growth slowing amid higher prices for gasoline and other consumer goods and services.

“This is one more indication of how slow the recovery is proceeding and is likely to proceed,” said Michael Bernick, an attorney who formerly headed the state Employment Development Department. “It also raises a counter-narrative, that there are structural changes and the economy, in certain sectors, needs fewer workers.”

That’s not what Donna Smith, 23, of Salton City wants to hear. She recently completed a certificate program in business management from Everest College, a multi-campus vocational school, but hasn’t had luck finding any work.


“I’m looking for any basic entry-level position, but it’s kind of hard,” she said. “There’s not really much.”

The job losses in May came after the state added an adjusted 14,900 jobs in April, when the unemployment rate was 11.8%, according to the latest EDD figures. The state experienced five straight months of job growth from October through February.

Adibi sounded an optimistic note, saying that the Japanese rebuilding effort will eventually translate into more work in California. He also predicts the state will gain jobs as consumers start spending discretionary income on vacations and on items they’d been holding off on purchasing.

Japan, he added, “is just a hiccup — job creation is going to gain momentum as we go through the year.”

Technology is one bright spot. Tech companies in the Bay Area are on a hiring binge, helping keep the unemployment rate in the San Francisco area to 8.1%.

The San Francisco area added a net 2,600 jobs in May, while the San Jose-Santa Clara statistical area added 2,100. Employment in the information sector has grown 7.1% in just a year.


“It is shocking to me — reading the paper, watching the news, hearing the unemployment reports, hearing house prices continuing to slump — you just don’t see that in the Bay Area,” said Kevin Hartz, chief executive of Eventbrite, an online ticketing company that has hired 32 people so far this quarter. The firm has been forced to recruit engineers from out of state to fill some open positions.

The Bay Area is one of the few regions to consistently gain jobs this year, thanks to the information sector, but most of the state’s unemployed lack the education to work in the newly created jobs.

Prospects aren’t so bright elsewhere. Many of the state’s unemployed workers are trained in industries — such as construction — that have virtually disappeared. Job prospects in retail and trade, meanwhile, have been dimmed by corporate efforts to make do with fewer people, often by having computer programs and machines do jobs that used to require workers.

“Becoming sophisticated, more advanced and computerized may not pay out in additional jobs,” said Johannes Moenius, an economist at the University of Redlands who studies the logistics industry. “It could even mean negative job growth.”

There remain 2.1 million unemployed workers in the state, and more than 1 million have been out of work for 27 weeks or more. The number of people who are not in the labor force in California grew to 10.3 million workers in May and is up 3.5% over the year.

The professional and business services sector, which had been performing well, dropped 16,300 jobs. Some of those losses can be attributed to employers shedding temporary workers to save money in a month during which gas prices rose. Others were linked to the end of the tax season.


Educational and health services, which grew steadily throughout the recession, lost jobs, as did the leisure and hospitality sector.

Los Angeles County led the field in job losses, shedding a net 11,400 jobs in May. Most of these were in professional and business services. The county’s unemployment rate dropped to 11.9% from a revised 12% the previous month. The information sector also lost jobs, with motion picture and sound recording jettisoning 2,700 positions.

Orange County lost a net 1,100 jobs, but its unemployment rate fell to 8.5%, from 8.6% the month before.

Riverside and San Bernardino counties shed a combined 1,900 jobs in May, although the region’s unemployment rate dropped to 13.2% from 13.4% the month before. Leisure and hospitality posted the biggest losses in that region.

Elsewhere in the state, Fresno County had an unemployment rate of 16% and Sutter County was at 20.3%. The worst job market in California is Imperial County, with an unemployment rate that stood at 27.7% in May.

Single mother Ashley Ochoa, 20, moved back to Imperial County six months ago after working for an amusement park in Texas. There, she said, jobs were easy to find. Now that she’s back, though, she hasn’t been able to find any work and has decided to go back to school.


“There’s really nothing here,” she said. “I’m probably going to end up moving back to Texas.”

The unemployment rate in Texas: 8%.