California economy hit by unemployment


For decades, California’s gigantic economy has outpaced that of most nations, playing an enormous role in shaping global trends in technology, entertainment and agriculture.

While that reputation remains, the state has a less enviable distinction: one of the highest unemployment rates in the country.

Nationally, the rate is 3.7 percent and in January the country added 353,000 jobs. Job growth in California has been slower than the national average over the past year, and the unemployment rate remains stubbornly high: 5.1 percent in the latest data, up one percentage point from a year ago and second only to by 5.4 percent of Nevada.

With layoffs in the tech-focused Bay Area, a slow rebound in Southern California due to prolonged strikes in the entertainment industry and shifting demand for farmworkers, 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 of a workforce that is younger and fast-growing, said Sarah Bohn, a senior researcher at the Public Policy Institute of California. Still, she noted, the workforce has shrunk in California in the past six months, a worrying trend.

“As you look at this reduction, are there fewer opportunities and have people simply stopped looking for work?” Ms. Bohn asked. “What will this mean for consumers and businesses?”

During the early part of the pandemic recovery, the unemployment rate in California was not an outlier: 4 percent in May 2022 versus 3.6 percent nationally, according to the Bureau of Labor Statistics. But the situation deteriorated.

About 36,000 Californians working in the information industry, which includes technology, lost their jobs last year. Several powerful companies based in the state — Google, Meta and X, formerly known as Twitter — cut tens of thousands of jobs to cut costs as the industry increasingly pivoted its focus toward artificial intelligence.

In recent weeks, Snap, the Santa Monica-based parent company of messaging app Snapchat, announced it would cut about 500 employees, 10 percent of its global workforce. And Northrop Grumman, the aerospace giant, said it planned to lay off 1,000 workers in the Los Angeles area.

Despite several painful 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), indicating that many workers They found new jobs relatively quickly.

The picture is worse in Southern California, where the effects of last year’s entertainment industry strikes are still having an impact.

Nearly 25,000 workers lost their jobs in Hollywood, according to a report published in December by the Otis College of Art and Design in Los Angeles. While the extended work stoppages by the Writers Guild of America and SAG-AFTRA ended last fall, some jobs that rely on the industry never returned and many people have had difficulty finding full-time work.

The unemployment rate in Los Angeles County is about 5 percent, and jobs in the information industry, which includes jobs in film and sound recording, account for a large part of the hole.

During the strikes, some restaurants and other small businesses that relied on Hollywood workers closed permanently, and others that reduced staff have not returned to previous levels, said Kevin Klowden, executive director of the Milken Institute, an economics expert. tank in Santa Monica.

A stagnation in streaming growth has put greater financial pressures on many studios, Klowden said, adding that “it is generally accepted that the peak of television production had already occurred even before the strike.”

“There are many stories about actors and crews having trouble finding consistent work due to the slow pace of new productions,” he said.

After a strike in Hollywood in 2007 and 2008, it took a year for the industry to recover, and this time — with lingering losses — it will take even longer, Klowden said.

In parts of the state where agriculture is a key industry, the economic situation is even more dire.

In Imperial County, a stretch along the Mexican border long known for agricultural production, the latest unemployment rate was about 18 percent, up 3.1 percentage points from a year earlier. And Tulare County, in the Central Valley, has an unemployment rate of about 11 percent, an increase of 2.7 percentage points. Automation has been a factor.

In a survey released in the fall by the Public Policy Institute of California, about one in four Californians said the availability of good-paying jobs was a big problem in the local area.

There are positive economic points. The state has seen job growth in education and healthcare, along with the leisure and hospitality industries.

“California is the pole of the American economy in terms of the American recovery — in terms of job creation, innovation and entrepreneurship,” Gov. Gavin Newsom said in January when presenting 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 may be rising somewhat faster than the country, it is rising from an extraordinarily low level, reflecting a tight labor market that is adapting to 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 every reason to believe that California’s economy will continue to grow faster than the nation’s.”

He pointed to a recent directive from Mr. Newsom to create a master plan for career education that connects students to job opportunities. A priority is reducing barriers for people seeking state jobs, including unnecessary college degree requirements for some jobs, according to a summary of the directive.

But high unemployment will have a ripple effect in 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, he said, resulting in lower consumer demand and lower investment.

“There is a negative multiplier effect on the state’s economy because of the higher unemployment rates we are seeing,” Mr Fairlie said.

Elyse Jackson is among those feeling the pressure.

Jackson, 27, hasn’t had a steady job since December 2022. As a feature film art department coordinator in Los Angeles, she hoped to find work soon after the strikes ended last fall.

“Rehiring and new productions have been very slow,” said Jackson, a member of the International Alliance of Theatrical Stage Employees union. She has incurred $15,000 in debt in recent months and is struggling to pay the rent on the apartment he shares with her partner in the Echo Park neighborhood.

Unable to keep waiting for jobs in his industry, he recently filled out dozens of applications for administrative jobs in the city. She still hasn’t received a response.

“In terms of skills, I’m certainly qualified for these jobs,” Ms. Jackson said. “There seems to be a lot of competition because of the market and unemployment.”

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