California unemployment rate holds at 9.8%, highest in U.S.

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California’s jobless rate was unchanged at 9.8% in January for the second straight month, and that lack of improvement put the Golden State in a tie with Rhode Island for the worst unemployment in the U.S.

On the other end of the spectrum, North Dakota had the lowest jobless rate, 3.3%, the government said Monday in releasing updated and revised employment data for all 50 states.

California will release its county-by-county breakdown of jobs Friday, which economists expect will reflect the slow growth that is predicted in the state for 2013.


“We are expecting growth to pick up in the latter part of the year and in 2014, and the unemployment rate to come down at that point,” said Jerry Nickelsburg, a UCLA economist who writes a quarterly economic forecast on the Golden State.

These statistics, based on more complete payroll information that includes tax records, show that California and other states in the western half of the country did much better in job growth over the last 12 months than the rest of the U.S., powered by the energy sector, technology, trade with Asia and a rebounding housing market.

Texas led all states in payroll job growth from January 2012 to January 2013; it added 332,400 jobs, an increase of 3.1%, according to the Bureau of Labor Statistics.

California was second. Though little changed from December to January, California’s payroll count grew by 286,100 positions, or 2%, over the 12-month period. (Payroll jobs exclude work by the self-employed and jobs such as unpaid family work.)

The biggest gains came in leisure and hospitality, which added 7,800 jobs; construction saw a 7,300 jump. The largest drop in jobs — 5,500 — came in the combined trade, transportation and utilities sectors. The manufacturing sector shed 2,900 positions.

Nickelsburg said California was feeling the effect of a nationwide payroll tax increase as well as a state-implemented bump in sales tax and income tax on wealthy individuals. The automatic federal budget cuts that kicked in March 1, known as sequestration, will also affect growth.


“There are a lot of things going on,” he said. “It’s a little hard to ferret out what is the sequester and what are the other factors.”

The Northeast region lagged behind the West, hurt by its relatively greater commercial links to Europe and by consolidation in financial services. Although the Northeast had a good January — partly the result of rebuilding after Superstorm Sandy — its job tally in the month was up just 1.1% from a year earlier. New York added 90,800 jobs over the year, an increase of 1.1%.

The pace of job growth in the Midwest was higher than in the Northeast but lower than in the West. The region has benefited from sturdy gains in manufacturing, particularly in the car industry.

For the U.S. as a whole, hiring accelerated in February, with employers adding 236,000 net new jobs compared with 119,000 in January, the Bureau of Labor Statistics previously reported. The national unemployment rate fell to 7.7% last month.