Reporting from Sacramento —
California's labor market stagnated in June as temporary federal census workers lost their jobs and about 400,000 out-of-work people exhausted their unemployment benefits.
Although the monthly, seasonably adjusted unemployment rate crept down a tenth of a percentage point to 12.3%, the economy lost 27,600 jobs, according to the California Employment Development Department. The state's unemployment rate was 11.6% in June 2009. Nationally, it hit 9.5% last month.
Analysts were not encouraged by the decline in the unemployment rate. That's because California's labor force shrank by 24,000 jobs, a signal that discouraged job seekers have dropped out of the labor force and are no longer counted as unemployed.
"One of the worrisome features of this report is that the civilian labor force actually declined. That's true on the national level and certainly true of California," said economist Sung Won Sohn of Cal State Channel Islands. He said he had heard many anecdotal reports of people of Korean, Mexican and other nationalities residing in California who had decided to return to their countries of origin.
Los Angeles' seasonably adjusted unemployment rate was unchanged from May at 12.2%.
Employers in June still appeared to be hesitant to hire while consumers remained nervous about buying. Some economists fear that the Golden State and the country could be teetering on the brink of a double-dip recession, especially if Congress does not quickly pass an unemployment insurance extension to keep $33 billion in benefits flowing to more than 2.5 million long-term job seekers.
Republicans in the Senate have stalled the extension, saying it should not be financed with more deficit spending. Democrats counter that continuing the benefits would boost consumer spending and provide a lifeline to jobless workers at a time when the nation's employers aren't hiring. There are nearly five job seekers for every employment opening, according to the Economic Policy Institute in Washington.
A vote in the Senate could come as early as Tuesday.
With the economy creating so little employment, "this is not the time to cut off unemployment benefits," said Howard Roth, chief economist for the California Department of Finance. Fighting deficits by slashing government spending is no way to climb out of a recession, he said.
"That's something we learned in spades during the Great Depression," Roth said.
Not everyone agrees that extending unemployment insurance is crucial to restarting the economy.
"The unemployment checks were being spent" on basic items such as food and gas, "but the magnitude of that is something that economists have debated," said Jerry Nickelsburg, a senior economist at the UCLA Anderson Forecast, who tracks California and the Los Angeles region.
Normally, Californians can receive up to 26 weeks of state unemployment insurance help. But since the recession began, Congress has approved four extensions for a total of 53 additional weeks. States with very high jobless numbers, such as California, became eligible for 20 weeks on top of that, for a total of 99 weeks.
The recent loss of $270 a week in unemployment benefits means that Annette Tornberg must choose between paying her monthly rent or credit card and utility bills. It also means she can't buy gas to go out on job interviews.
"When I was getting unemployment, we could survive and it helped me to keep looking for a job," said Tornberg, 50, of Sacramento. Last summer, she lost a job in a bindery where her husband still works.
"I have been looking like crazy. Every day, I'm on the computer doing 10 to 30 applications," she said. "Some people say that if you stay on unemployment, you won't look for a job. That's not true."
California already has been hit hard by the halt in unemployment insurance benefit extensions. As of Wednesday, 368,000 people were no longer getting checks that average $304 a week, according to the Employment Development Department. The total is projected to rise to 555,700 by the end of the month if Congress doesn't reauthorize the benefit extensions, the U.S. Department of Labor said.
Those swelling numbers don't include the so-called 99ers, who have been out of work for so long that they've run through all five previous benefit extensions. People out of work for 27 weeks or more now make up 42% of all unemployed Californians in May, compared with 26% of the total a year earlier, the Employment Development Department reported in May.
Keeping millions of dollars' worth of weekly checks coming provides both an overall economic stimulus and help to individuals suffering from a prolonged recession, said Stephen Levy, chief economist and director of the Center for the Continuing Study of the California Economy in Palo Alto.
It's "a bridge until private-sector spending picks up, and that could take another six to 12 months," he said.
Unemployment benefits were keeping food on the table for her family of four in South Central Los Angeles, Maria Gomez said. Her husband, Marcelo, lost his job at a credit card manufacturing facility 16 months ago after working 34 years with the same company, she said.
"Every two weeks he got $628," Gomez said. "Now he is getting nothing."