09/28/2022

Cut Me Some Slack: The Real Concern in Today’s Economy

As the tech sector continues its robust expansion, concern over whether the economy is in another bubble and speculation about when the next recession will hit, has deepened. However, today’s much more prescient question is how we cope with and maintain the growth the nation continues to experience. How do we meet our growing demand for labor? The recent release of the Job Openings and Labor Turnover survey (JOLTs) by the U.S. Bureau of Labor Statistics – along with headlines about the trials and tribulations of recruiters trying to fill positions – indicate that labor availability is a mounting problem for the U.S. economy.

This concern is particularly relevant in California for two reasons. First, California has been one of the fastest growing states in the nation from a jobs perspective since the ‘Great Recession’ ended in 2009. The state ranks 4th in terms of overall job growth since the recovery began and has added more jobs than any other state in the nation—including Texas (that state is growing at a faster rate but has added almost 500,000 fewer jobs than California).

California has partly been able to maintain such a rapid pace of expansion because there was a lot of slack in the state’s labor markets – available for firms to absorb. Unemployment went up more in California during the recession because the state was essentially ‘ground zero’ for the housing meltdown and also because consumer spending, which took a severe hit, is a large part of California’s economy. As production bounced back, firms were able to pull many of these formerly unemployed workers back into the labor force without displacing jobs or production from other sectors. In other words, there weren’t many tradeoffs in growing any one individual sector as there was ample available labor.

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