For decades, California’s gigantic economy has been larger than that of most other nations and has played a prominent role in shaping global trends in technology, entertainment and agriculture.
While that reputation endures, the state has a less enviable distinction: one of the highest unemployment rates in the country.
Nationwide the rate is 3.7 percent and 353,000 jobs were created in the country in January. Job growth in California was slower than the national average last year, and the unemployment rate remains stubbornly high — 5.1 percent in the most recent data, one percentage point higher than a year earlier and bested only by Nevada’s 5.4 percent.
With layoffs in the tech-focused Bay Area, a slow recovery in Southern California following ongoing strikes in the entertainment industry and fluctuating demand for farm workers, California faces economic headwinds in the new year. And the residents feel it.
The state has historically had higher unemployment than the U.S. average because the workforce is younger and growing quickly, said Sarah Bohn, a senior fellow at the Public Policy Institute of California. Still, California’s workforce has declined over the past six months, a worrying trend.
“If you look at this decline, are there fewer opportunities and people have just stopped looking for work?” Ms. Bohn asked. “What does this mean for consumers and businesses?”
Early in the recovery from the pandemic, California’s unemployment rate was no outlier – 4 percent in May 2022 compared to 3.6 percent nationally, according to the Bureau of Labor Statistics. But the situation worsened.
About 36,000 Californians who work in the information industry, which includes the technology industry, lost their jobs last year. Several leading companies based in the state – Google, Meta and
In recent weeks, Snap, the Santa Monica-based parent company of messaging app Snapchat, announced it would cut about 500 employees, representing 10 percent of its global workforce. And Northrop Grumman, the aerospace giant, announced it plans to lay off 1,000 workers in the Los Angeles area.
Despite the difficult months, the unemployment rate in San Francisco and Silicon Valley remained relatively low – 3.5 percent in the city and 3.2 percent in San Mateo County – suggesting that many workers found new jobs relatively quickly.
The outlook is worse in Southern California, where the aftermath of last year’s entertainment industry strikes is still reverberating.
A report released in December by the Otis College of Art and Design in Los Angeles said nearly 25,000 workers have lost their jobs in Hollywood. While the Writers Guild of America and SAG-AFTRA’s extended work stoppages ended last fall, some industry-dependent jobs never returned and many people struggled to find full-time work.
The unemployment rate in Los Angeles County is around 5 percent, with jobs in the information industry, which includes film and sound recording, accounting for a large portion of the unemployment.
During the strikes, some restaurants and other small businesses that relied on Hollywood workers closed permanently, and others that had reduced their workforces were unable to return to previous levels, Kevin Klowden, executive director of the Milken Institute, told one Economic researcher Panzer in Santa Monica.
A stall in streaming growth has led to increased financial pressure on many studios, Klowden said, adding that “it is generally assumed that the peak of TV production was already reached before the strike.”
“There are many stories about actors and crew struggling to find consistent work due to the slow start of new productions,” he said.
After a strike in Hollywood in 2007-2008, it took a year for the industry to recover, and this time, with continued losses, it will take even longer, Mr. Klowden said.
The economic situation is even worse in parts of the state where agriculture is a key industry.
In Imperial County, a stretch along the Mexican border long known for agricultural production, the latest unemployment rate was about 18 percent, an increase of 3.1 percentage points from last year. And in Tulare County in the Central Valley, the unemployment rate is around 11 percent, an increase of 2.7 percentage points. Automation was a factor.
In a survey released this fall by the Public Policy Institute of California, about one in four Californians said the availability of good-paying jobs in the region was a major problem.
There are economic bright spots. The state saw employment growth in education, health care, and leisure and hospitality industries.
“California is the poster child of the American economy in terms of American recovery – in terms of job creation, innovation and entrepreneurship,” Gov. Gavin Newsom said in January when he unveiled his budget.
Mr. Newsom’s office released an analysis of the state’s economic outlook for the coming year, noting that “while unemployment in California is rising slightly faster than the nation as a whole, it is rising from extraordinarily low levels, reflecting a tight labor market.” “We are positioning ourselves for more sustainable growth after recovering so quickly from the pandemic-induced recession.”
Dee Dee Myers, director of the Governor’s Office of Business and Economic Development, said in a statement: “There is ample reason to believe that California’s economy will continue to grow faster than the nation’s.”
She pointed to a recent directive from Mr. Newsom to create a job training master plan that connects students with job opportunities. A priority is to reduce barriers for people seeking public service jobs – including college degree requirements that are not necessary for some jobs, a draft of the policy says.
But increased unemployment will continue to impact the state for a while, said Robert Fairlie, a professor of economics and public policy at the University of California, Los Angeles. Unemployment reduces overall income, which translates into lower consumer demand and investment, he said.
“The higher unemployment rates we are seeing are having a negative multiplier effect on the state’s economy,” Fairlie said.
Elyse Jackson is among those feeling the pinch.
Ms. Jackson, 27, has not had a permanent job since December 2022. As a feature art department coordinator in Los Angeles, she had hoped to find work soon after the strikes ended last fall.
“The hiring and new productions have just been so slow,” said Ms. Jackson, a member of the International Alliance of Theatrical Stage Employees union. She has taken on $15,000 in debt in recent months and is struggling to pay rent on the apartment she shares with her partner in the Echo Park neighborhood.
Unable to wait any longer for jobs in her industry, she recently filled out dozens of applications for administrative jobs across the city. She hasn’t received an answer yet.
“Skill-wise, I’m definitely qualified for these jobs,” Ms. Jackson said. “There just seems to be a lot of competition because of the market and unemployment.”
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2024-03-01 18:17:53
www.nytimes.com
