Key Highlights for Policy Makers:
- Unemployment Rate Down for March 2014
- Middle Class Jobs Still Behind
- Two-Tiered Economic Recovery Persists
- Recovery Still Lags Population Growth
Unemployment Rate Down for March 2014
On April 16, the California Employment Development Department (EDD) reported the seasonally adjusted labor force statistics for March 2014 (California preliminary). While the numbers likely still reflect the effects of the revisions released over the past few months by EDD, overall the results show continued positive improvements in total employment in line with the national numbers. California’s unemployment remains about 20% higher than the national rate.
Change shown below is from February 2014 (seasonally adjusted):
The related not seasonally adjusted numbers (California preliminary), with the change from March 2013:
Middle Class Jobs Still Behind
Jobs growth (not seasonally adjusted) continued its positive trend over the past 12 months for most industries except Manufacturing, and Finance and Insurance. However, jobs growth continues to be concentrated in the higher wage (Professional,
Scientific and Technical Services) and lower wage (Accommodation and Food Service) industries. About ten percent of Total Nonfarm growth comes from Individual & Family Services, the industry containing the IHSS (In Home Supportive Services) employment numbers added by EDD in their March 2014 revision. Even with improvement in Construction, that middle job sector remains well below the 2007 average of 892,600. Other industries still significantly below their 2007 pre-recession level are Manufacturing, Retail Trade, Information, Finance and Insurance, Real Estate and Rental and Leasing, Administrative and Support and Waste Services, and Government. Overall, Total Nonfarm jobs remain 56,800 below the 2007 pre-recession average.
Two-Tier Economy Continues
Unemployment rates and employment continue to vary widely across the state. By region (all data is not seasonally adjusted), unemployment rates declined slightly in San Diego/Imperials, Sacramento, Los Angeles, Central Coast, and Upstate California regions, while unemployment in the Central Valley increased by 0.4 points. All other regions remained the same:
Rate (%) Mar 2014 Employment Change,
Mar 2014 – Mar 2013
By Legislative District:
Note: All data sources, methodologies, and historical data series available at CenterforJobs.org.
Recovery Still Lags Population Growth
The most recent Department of Finance Finance Bulletin noted that using seasonally adjusted data from February 2014, California has recovered 92.5% of the Total Nonfarm jobs lost during the recession, and that Total Private Nonfarm jobs have fully recovered and added more jobs than the prior July 2007 peak. These trends continued into March 2014.
These conclusions, however, ignore the significant population growth that has occurred in the last 7 years. Using Department of Finance numbers, California’s population grew an estimated 5.0% between July 2007 and March 2014. While Total Private Nonfarm jobs now exceed the July 2007 level, true recovery requires additional job growth to match this population increase.
To provide an equivalent level that would represent economic recovery rather than just regaining jobs lost, Total Private Nonfarm jobs would need to be 607,300 higher. Total Nonfarm Jobs would need to be 852,200 higher. Both numbers were derived by taking the 2007 ratio of jobs to population, applying the ratios to the 2014 population, and comparing to the actual job creation as shown in the EDD data.
Even at the job growth rate of the past 12 months, California would need nearly another 2 years to reach this level, during which the population would also continue to keep growing.
Another aspect that needs to be considered is that there has not been a like-job for like-job replacement. As indicated in the industry analysis above, job growth has been primarily at the higher and lower wage ends of the spectrum. At the higher wage end, 95,800 jobs lost in Finance and Insurance have more than matched by 113,700 jobs in Professional, Scientific and Technical Services. However, 466,300 middle-wage jobs lost in Manufacturing and Construction have been largely replaced by 302,000 lower-wage jobs in Accommodation & Food Services and Individual and Family Services.
The final dimension is that job growth has been limited primarily to some of the coastal regions. While EDD does not publish full seasonally adjusted county-level data, using the not seasonally adjusted data for the same periods illustrates the extent of this factor.
The data above also does not take into account population changes since 2007. Adjusting for this factor, only the Bay Area demonstrates job growth that has kept pace with population increases.