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Jobless rate falls below 10% in California

Retailers ramp up hiring, but November payrolls shrink overall, the state says. One expert says more Californians are becoming self-employed. Another expects the payroll report to be revised.

December 21, 2012|By Ricardo Lopez, Los Angeles Times
  • At a job fair in San Jose, people line up to speak with staffing supervisor Sabrina Grech, left.
At a job fair in San Jose, people line up to speak with staffing supervisor… (David Paul Morris, Bloomberg )

California's unemployment fell below 10% in November for the first time in almost four years, thanks in part to a holiday hiring surge by retailers.

The jobless rate fell to 9.8% from 10.1% in October, according to data in an overall jobs report released Friday by the state Employment Development Department.

The drop in the unemployment rate, based on a survey of households, came even as a separate payroll survey found that employers shed a net 3,800 jobs in California, according to the report.

"The state showed a very significant and encouraging drop in the unemployment rate. A fall below 10% is welcome news," said Lynn Reaser, chief economist at the Fermanian Business & Economic Institute at Point Loma Nazarene University.

For months, economic forecasts have said the unemployment rate would stay above 10% well into next year.

The state's labor force — those who are employed or looking for jobs — grew by 34,100 people in November. That typically indicates that job seekers feel encouraged to resume looking for work.

A growing number of people working as independent contractors and in sole proprietorships, a figure not caught in the payroll survey, helped to explain the seeming incongruity of a growing labor force, falling employment rate and net loss of jobs.

"The good news in California was that we saw more people looking for work and more people getting jobs," Reaser said. "But the bad news was that the nonfarm payroll survey, which is usually the more reliable source, showed a small drop in employment ... and comes as quite a disappointment."

The biggest drop in jobs — 11,000 — came in the educational and health services sector. The manufacturing sector lost 8,900 positions. The biggest gains came in retail, which added 15,900 jobs.

Some economists were skeptical of November's report, particularly losses reported in the healthcare and professional and business services sectors.

"Over the last year, [these sectors] have been very strong," said Christopher Thornberg, founding principal at Beacon Economics, a Los Angeles consulting firm. "Why should it turn on a dime?"

Thornberg pointed out that healthcare has been resilient, expanding even through the economic recession.

He said he expects that November's job report will be revised early next year and that the loss in payroll jobs probably will be reversed.

The report "is not as good as what the household survey says, but it's not as bad as the payroll survey," Thornberg said. "None of this should be a surprise to us. California's economy has clearly been gaining strength."

In recent months, retailers beefed up payrolls on expectations of an unusually strong holiday shopping season. The National Retail Federation predicted holiday retail sales of $586.1 billion this year, up 4.1% from last year — and the highest level in decades, according to retail experts.

The trade, transportation and utilities sector, which includes retail, notched the largest increase from October, adding 12,900 jobs. Leisure and hospitality added 3,300 jobs. Construction, aided by a housing recovery, gained 1,700 jobs last month.

Esmael Adibi, director of the A. Gary Anderson Center for Economic Research at Chapman University, called the report a "mixed bag."

"Overall, yes, unemployment went down," Adibi said. "Some people will see that as good news, but the question will be: Is this downtick going to be sustainable?"

Adibi said an increase of 78,000 in the civilian employment figures shows more Californians becoming self-employed, a sign that companies have been reluctant to hire. Household surveys take those people into account; payroll surveys don't.

"Firms are laying people off," Adibi said. "So in October and November, we've seen a surge of self-employment."

He said that other groups of employers, in professional and business services, for instance, also may be hesitant to hire until the White House and Congress resolve the "fiscal cliff" issues — the automatic tax hikes and government spending cuts set to kick in Jan. 1.

"If firms are worried about a significant slowdown, they're not going to commit themselves to hiring people," Adibi said.

Francisco Vasquez, a 34-year-old father of two, knows how difficult it can be to find steady work.

He said the poor economy forced him to close his Hollywood restaurant last year. He now has been unemployed for 10 of the last 12 months, and he and his wife recently lost their home in a foreclosure and moved into an apartment.

"I'm applying everywhere," Vasquez said. "It's tough, but I'm pretty positive I'll find something."

Over the year, California has added 268,600 nonfarm jobs, an annualized growth rate of 1.9%. That's a faster pace than the nation as a whole, which has grown at an annual rate of about 1.4%.

The Golden State's unemployment rate, still the third-highest in the nation, has fallen 1.5 percentage points since November 2011.

Many Southern California counties notched lower jobless rates in November as well.

Los Angeles County added 17,400 net jobs and had a 10.2% unemployment rate. Orange County had a net gain of 3,000 jobs and recorded a 7% unemployment rate, one of the lowest in the state

Combined, Riverside and San Bernardino counties gained 13,400 nonfarm jobs — about half in retail trade. Their jobless rate fell to 11.3%.

The unemployment rates for California and L.A. County are seasonally adjusted; those for Orange, Riverside and San Bernardino counties are not.

The state also said October's job gains were revised down, to 38,800 instead of the originally reported 45,800.

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