Bleak employment numbers obscure good news in California economy

January 21, 2011

By Steve Levy

The headline numbers in today’s California employment report (12.5% unemployment and a 4,900 job gain) give a misleading reading of the improvements in the California economy during the pat two months.

Job growth in November, originally reported 1,600, was revised upward to 30,500 based on gains in manufacturing, retail trade and services.

And the job growth for December includes losses of 15,400 government jobs and additional losses of another 3,200 construction jobs.

The losses in construction and government are, indeed, restraining the state’s near term jobs growth and that is likely to continue into 2011.

On the other hand job growth in the other sectors is picking up in response to higher levels of economic activity. Job growth in December would have been 23,500 without the losses on government and construction.

This week the ports in Southern California reported a record year for exports and strong gains in overall trade volumes. Activity is picking up across the board (tourism, entertainment, venture capital, retail trade) except in the housing sector.

The three metro areas with the largest concentration of technology firms showed the largest job gains in 2010 led by Orange County (+20,700 jobs) followed by San Jose (Silicon Valley with 8,500 jobs and San Diego with a gain of 6,500 jobs.

The slowest job growth is in the areas most hard hit by the housing downturn—the Inland Empire (Riverside and San Bernardino) and the Central valley—where most metro areas had continuing job losses in 2010.

Though the economic outlook looks better than it did two months growth in 2011 will still be modest, not enough to reduce unemployment substantially or reduce the budget shortfall that faces the state. However, the prospect for income growth for those who have jobs has brightened.

In sum, the California economy is really three different economies these days. Growth in sectors outside of construction and government is picking up in contrast to continuing job losses in these two sectors. Growth in the coastal and especially the coastal tech centers is picking up while job losses continue in areas hard hit by the housing downturn. And income growth prospects for those with jobs is improving while job prospects for unemployed residents remain scarce.

To see the full report from the Employment Development Department, click here.

Steve Levy is director of the Center for the Continuing Study of the California Economy.

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One Response to Bleak employment numbers obscure good news in California economy

  1. Moravecglobal

    January 21, 2011 at 5:40 pm

    Employee-employer loyalty creates employability in a wrecked economy. Businesses, universities, states, counties, cities worldwide are into a phase of creative disassembly. Hundreds of thousands of jobs are being shed. Even solid world class University of California Berkeley led by Chancellor Birgeneau is dismissing employees, faculty via “Operational Excellence (OE)”: 2,000 fired by end of 2011. Yet many continue to cling to an old assumption: implied, unwritten management-employee contract.

    Management promised work, upward progress for employees fitting in, employees accepted lower wages, performing in prescribed ways, sticking around. Longevity was a sign of good employer-employee relations; turnover was a dysfunction. None of these assumptions apply in the 21 century economy. Businesses, universities, public institutions can no longer guarantee careers, even if they want to. Managements paralyzed themselves with a strategy of “success brings successes” rather than “successes bring failure’ and are now forced to break implied contract with employees – a contract nurtured by management that future can be controlled.

    Jettisoned employees are however finding that hard won knowledge, skills, earned while loyal are no longer desired in 21st century employment markets.
    What contract can employers, employees make with each other?

    The central idea is simple, powerful: job is a shared partnership.
    • Employers, employees face financial conditions together; longevity of partnership depends on how well customers, constituencies needs are met.
    • Neither management nor employee has future obligation to the other.
    • Organizations train people.
    • Employees create security they really need – skills, knowledge that creates employability in 21st century economies
    • The management-employee loyalty partnership can be dissolved without either party considering the other a traitor.

    Let there be light for (union) employees and employers

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