Hiring in the US continues to grow. Why is California lagging behind?

Hiring in the US continues to grow. Why is California lagging behind?

Don Lee

March 8, 2024

U.S. employers have continued to hire new workers at a rapid pace over the past month, providing new evidence that the overall economy remains robust, but the new data shows that California still looks like an underperformer.

always a student


Job growth in California is lagging behind

national curve nations

all year round, and even if it is

did some groundwork better

in January, the Golden


the deed is still behind us

the national curve

when it comes to

obtaining add

new jobs.

The state’s unemployment rate also continued to exceed the national average by more than a full percentage point for months. California’s highest recent unemployment rate was 5.2% in January.

The national unemployment rate rose slightly in February and now stands at 3.9%.

. It was the 25th, mark 25

straight month


where the unemployment rate


remained below 4%.

Nationwide, the Labor Department’s Friday report said, employers added an unexpectedly strong 275,000 jobs last month, many in health care, but also in government, leisure and hospitality.

Still, the pace of hiring nationally has slowed from even stronger levels last year, and wage increases slowed in February. With inflation having eased in recent months, the Federal Reserve is expected to soon begin cutting interest rates, easing financial conditions for businesses and consumers, especially new home buyers.

For California, the Fed’s rate cuts can’t come soon enough.

California’s employment report for February will be released in two weeks. The January data released Friday offered a hopeful start to the new year: The Department of Employment Development Department said employers statewide added 58,100 unqualified workers.


bad jobs, a quarter of the nations win that month.

However, that has not been the general pattern. Even with the hiring burst in January,

California has gained about 11.5% of the nation’s labor force

only 7.7% of almost

three 3

million jobs created across the country in the last twelve months

have been in California, which represents about 11.5% of the country’s workforce.

Meanwhile, California’s share of the US unemployed was 16.6%. And in recent weeks, about a fifth of all unemployment claims filed nationally have come from workers in California.

Why the lagging performance? Economists and business analysts point to a number of factors: Some are

relics too

cyclical, such as the important role agriculture plays in the state’s economy. The harsh weather and rising costs have hit almond and other agricultural growers and spilled over into other parts of the economy, especially in the Central Valley.

Other causes are more systemic in nature, such as the tech industry’s belt-tightening after a few years of what is now seen as profligate hiring. That and some other factors could be long-term trends.

More so than in the country as a whole, job growth in California has been highly concentrated over the past year.

making the state’s workforce more vulnerable.

The biggest part

of the recruitment

has been in health

healthcare and social services, followed by the government and the catering industry.


Missing in action

have been

important, well-paid engines of the state economy. The entertainment industry, centered in Los Angeles, lost 38,000 film and sound recording jobs between January 2023 and January 2024.

The Writers Guild of America and SAG-AFTRA strikes had a profound effect on employment, the EDD said in its press release. Los Angeles County’s unemployment rate rose to 5.4% in January, up from a revised 5.2% in December.

Overall, the state’s information, business and professional services sector, which includes high-paying computer programmers and engineers, dropped more than 105,000 jobs in January from a year earlier.

Statewide, jobs in the transportation and trade sectors fell by about 10,000 from a year earlier, according to the EDD. Similar declines were observed in the financial services and manufacturing sectors.

Michael Bernick, an employment attorney at Duane Morris in San Francisco and former director of the Employment Development Department, said some of the states under

The achievements can be traced back to the pandemic and the response to it.

Economic lockdowns in California counties were more severe than in other states, and many small businesses never recovered, he said.

At the same time, Bernick said, employers in a number of industries have failed to fill entry-level jobs, leaving the state facing labor shortages even as overall unemployment grows. That, along with rising labor costs, appears to be hampering hiring at restaurants and retail stores.


Another big long-term problem, Bernick and other analysts said, is that California has become an increasingly difficult place to do business.

a lot of

labor rules that make hiring difficult and risky


. Add to that the higher costs


which has driven many businesses and people to leave California.

The reason Texas and Florida are doing well and California is not is the cost of housing and high taxes, said Sung Won Sohn, an economist at Loyola Marymount University in Los Angeles. We’ve lost a lot of small businesses.

However, he noted that there is still significant entrepreneurial momentum in the state, and that ethnic businesses, which dominate the small business landscape in the Southland, are very resilient.

Analysts expect national hiring to moderate in the coming months. The near-term hiring prospects for the state could be a little more mixed.

Although the number of y

if there are any openings in California

has had

has fallen,


There is still strong demand for entry-level jobs in restaurants, retail and healthcare. Whether more people will fill these jobs is another question. California’s labor force participation rate is lower than the nation, with many older workers and Latina women left on the sidelines of the labor market.

Layoffs in the technology sector continued this year,

attributed in small part to artificial intelligence,

but there are signs of that


Those cuts may have reached their nadir, says Andrew Challenger


from the outplacement company Challenger, Gray & Christmas.

In January, unemployment rates in California varied widely, with a high of 19.3% for Colusa County north of Sacramento


rose to a low of 3.7% for San Mateo in the

San Francisco

Bay area.

For Southern California, Orange County had the lowest rate at 4.2%. January



rate for Riverside

what 5.5%

in River Province


it was


in the front

San Bernardino




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