California unemployment rate hits 12.1% as employers slash jobs

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Unsettled by signs that the recovery is stumbling, California employers in August cut jobs for the second month in a row, helping push the unemployment rate to 12.1% from 12% in July.

Payrolls fell by 8,400 positions last month, according to figures released Friday by the state Employment Development Department.

It’s a worrisome sign for California’s labor market, which has all but ground to halt. California has gained 98,500 jobs in 2011, but almost all of that hiring came early in the year. The state’s employers have added just 11,000 jobs since March.


The European debt crisis, the recent stock market slide and sluggish economic growth numbers have spooked employers, who are holding off hiring until they feel more confident about the future, analysts said.

“It looks like the job market is just stalled,” said Esmael Adibi, an economist at Chapman University. “The big question is: Is this a pause in hiring or are we going through a fundamental change in direction?”

Deep disagreement in Washington over whether and how to stimulate the economy has only added to the uncertainty, Adibi said. The government sector is also dragging down the job market as local and state agencies trim costs by cutting positions. Government lost 3,600 positions in California in August.

Construction, information and financial activities also shed jobs last month, according to the Employment Development Department.

California has the second-highest unemployment rate in the nation, after Nevada, which saw its jobless rate rise to 13.4% from 12.9% in July. There are 2.2 million unemployed people in California, many of whom exhausted their 99 weeks of unemployment benefits months ago.

They include Rayan Simmons, 25, who was browsing job postings recently at the Verdugo Jobs Center in Glendale. She was accompanied by her 4-year old daughter, who clutched a toy beauty case containing pink ribbons and a comb. Simmons, who said she worked in customer service before getting laid off in January, recently moved with the child into a homeless shelter.


“To be honest, it seems like there’s a lot of jobs, but not a lot of hiring,” Simmons said.

Chronic joblessness in California is taking a toll on the state’s families. The Census Bureau said this week that 16.3% of Californians had incomes below the federal poverty line in 2010, up from 15.3% the year before.

About 2.2 million children in the state lived in families with incomes below the federal poverty level, a number that concerns analysts. Children raised in poverty are much less likely to go to college than their wealthier peers. They also tend to have poorer health and are at higher risk for becoming involved in criminal activity and for becoming crime victims.

“All the research … points to adverse life effects for children that have been raised in poverty,” said Jean Ross, executive director of the California Budget Project. “These kids are the workforce of the state’s future.”

Some areas of the state did create jobs in August, but that’s not likely to help most of the state’s unemployed and impoverished, economists said. While Los Angeles and Orange counties and the Inland Empire shed jobs in August, the Bay Area, including San Francisco, Marin and San Mateo counties, gained 8,300 positions.

Companies including Twitter Inc. and Inc. are advertising dozens of positions in the Bay Area. But those positions require skills that most workers lack, said Michael Bernick, former head of the Employment Development Department.


“You have a very mixed economy in that you have this one sector that’s doing very well, but it’s also a sector that’s hiring nationally and internationally and not impacting the great majority of California workers,” he said.

In contrast, aerospace giant Boeing Co., networking equipment maker Cisco Systems Inc. and packaging company Ball Corp. laid off workers in California last month. Ball closed a 45-year-old aluminum manufacturing plant in Torrance, which employed 120 people, as it shifted operations elsewhere.

Statewide, the manufacturing industry gained 1,600 jobs in August, and there are some signs that activity is picking up. Average weekly hours in manufacturing grew to 41.2 last month from 40.9 in July.

In Los Angeles County, though, manufacturing shed 1,400 jobs, part of the 10,300 positions lost in the county last month. The county’s unemployment rate rose to 12.5% from 12.3% in July, with government leading the decline. Leisure and hospitality, financial activities and construction also lost positions.

The information sector added jobs in L.A. County, including the motion picture and sound recording category, which grew 2.4% in August and 9.5% from a year earlier. Educational and health services also added positions.

Orange County lost 4,600 positions in August, although the unemployment rate fell to 9% from 9.3% in July. The unemployment rate can fall even if a region loses jobs as frustrated job seekers drop out of the labor force.


The percentage of Californians participating in the labor force has dropped to 62.9% from 64% in August 2010, according to the Employment Development Department.

The Inland Empire, which includes Riverside and San Bernardino counties, lost 1,400 jobs in August, and its unemployment rate fell to 14.1% from 14.7% the month before. The declines were concentrated in government and leisure and hospitality.

San Diego County added 200 jobs, and that county’s unemployment rate slipped to 10.2% from 10.6% in July. Ventura County added 1,000 positions and its unemployment rate declined slightly to 10.5% from 10.6% the month before. Kern County, boosted by its oil fields, added 1,400 jobs. Unemployment fell to 14.4% from 15.5% in July.

Continuing weakness in the construction and government sectors are likely to remain a drag on the state’s labor market for some time to come, said Dan Seiver, an economist at San Diego State University.

“It’s not obvious that they can turn around any time soon,” he said.

That’s creating competition for job seekers such as Roger Medina, 23. The unemployed warehouse worker is looking for work in retail. But so are thousands of laid-off workers from construction and other fields.

Medina lives with his three sisters in Duarte, trying to get work repairing computers — a skill he learned from a friend — as he looks for a full-time job. He said most retailers he contacts tell him that they’re fully staffed.


Medina said money was so tight that, on some days, his family didn’t have enough to eat.

“I have my good days and my bad days,” he said.