State Added 8,700 Jobs in November

Times Staff Writer

California's employers added only 8,700 net jobs last month, the state reported today, another sign that companies are reluctant to hire aggressively even as the recovery gains endurance.

The gain was sharply lower than the revised jump of 42,400 jobs in October, the Employment Development Department reported. The increase also was lower than what the Golden State should have gotten, based on its share of the national job market, economists said.

The state's unemployment rate declined to 5.7%, down from 5.8% in October, and the lowest rate since September 2001.

Analysts said the state's economy and job picture — while not going gangbusters — is stronger than the report indicated.

"Today's number wasn't a barnburner, but as a whole, it's a lot better than a year ago," said Howard Roth, chief economist for the California Department of Finance. The average for the last two months was a much better looking 25,550 jobs, he noted. Meanwhile, personal incomes and taxable sales are growing about twice as fast as this time last year.

"That bodes well for the state's economy," said Roth, whose job makes him Gov. Arnold Schwarzenegger's chief economist.

Nonetheless, California employers remain cautious about hiring for a number of reasons, analysts said.

Employee benefits costs remain stiff, and employers still aren't seeing expected savings in their workers' compensation insurance premiums.

Costs for energy, steel, paper and other commodities have risen. But many employers — facing intense competition — simply can't pass along those higher costs to customers.

"Many companies are suffering from lack of pricing power," said Keitaro Matsuda, senior economist at Union Bank of California in San Francisco. As costs rise, profits get squeezed, so employers "might play it safe or rely on temp workers," he said.

Employers also are concerned about slowing consumer spending, particularly if gasoline prices rise again or if rising interest rates kill off the strong real estate market.

But Matsuda and other analysts said the job picture in California is not as bad as the latest numbers suggest.

California, they say, is a hotbed for start-up companies and for people choosing self employment or independent contracting over working for big corporations. The state also sports a huge informal economy of housekeepers, gardeners, illegal workers and others getting paid in cash and not on anyone's official payroll.

But none of these workers are counted in the EDD's job survey of company payrolls, which produces the official job count.

EDD's alternative "household" survey shows a much better job picture. But that poll has too small of a sample size to be reliable, economists say.

The result: No one really knows for sure how good the job market is here.

Nonetheless, that isn't stopping experts from producing forecasts of job growth. And their consensus: Expect California to outperform the nation in job creation next year.

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