January 2014

Key Highlights for Policy Makers:

• EDD Revision of the Labor Force and Employment Data
• Jobs Increase but Continued Lagging of Middle Class Job Growth
• Legislative District Data: Two-Tiered Economic Recovery Persists

Unemployment Rate Down for January 2014

The March 7th Employment Development Department (EDD) report included the seasonally adjusted labor force statistics for January 2014 (California preliminary).

Change shown below is from December 2013:

The related not seasonally adjusted numbers (California preliminary), with the change from January 2013:

Jobs Increase but Continued Lagging of Middle Class Job Growth

The absence of recovery in middle class jobs – in particular, blue collar middle class jobs – is shown by comparing the latest industry data with the pre-recession January 2007 industry jobs structure for the state. Even with the positive growth in the last 12 months, two key middle-class jobs sectors (Construction and Manufacturing) have produced a net loss of 490,600 jobs.

The net loss of 109,400 jobs in Finance and Insurance reflects both reductions from the financial crisis along with continued shifting of middle class back office jobs to lower cost states.

Instead, job growth is occurring in either lower wage or high income job sectors. There has been a net growth of 120,500 high wage jobs in Professional, Scientific and Technical Services. Health Care and Social Assistance and Accommodation and Food Service – two sectors with lower income pay and many part-time workers – have grown by a net 519,600 jobs. In sum, many middle class Californians are not skilled enough for the technical jobs that are being generated, and are forced to turn to lower income work or part-time pay in other sectors.

Increase from IHSS Jobs. The largest increase from the revisions stems from the addition of IHSS jobs to Individual and Family Services under Health Care and Social Services. EDD indicates that these jobs previously were not covered within the scope of the CES survey (Current Employment Survey). Supported through government funding, the IHSS Jobs produced an increase in both this industry and total Private Jobs.

While seasonally adjusted data is unavailable from EDD, the not seasonally adjusted data shows the effect of this change. Comparing BLS and EDD data, adding IHSS jobs increases total California Private Jobs by about 400,000 in December 2013, with corresponding increases in prior years as a result of the revisions.

Of the 392,000 Health Care and Social Assistance jobs created between January 2007 and January 2014, about 170,000 are the result of adding IHSS jobs to the data. Using annual numbers as of December from BLS (the latest available), most or all of the annual growth (Jan 2013 to Jan 2014) shown for Health Care and Social Assistance appears to be due to the addition of the IHSS data.

Population Growth. The revised EDD data shows that California is near to regaining the prerecession job level for Total Wage and Salary. However, Department of Finance estimates indicate the California population has increased 5.3% within this time period. Even adjusting for the currently lower Labor Force Participation Rate, sustained job growth at or beyond the last 12 months’ rate will be needed to produce lower unemployment rates.

Two-Tiered Economic Recovery Persists

Unemployment rates and employment continue to vary widely across the state. By region (all data is not seasonally adjusted):