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California's job picture gets brighter

In a sign of real progress, employers are creating jobs faster than the labor market is growing.

June 22, 2013|By Ricardo Lopez and Shan Li, Los Angeles Times
  • Job seeker Yerusalem Gizaw Ashenafi, center, asks questions about how to polish her resume during the 2013 Anaheim OC Job Fair and Expo this week. About 5,000 people attended the event.
Job seeker Yerusalem Gizaw Ashenafi, center, asks questions about how… (Bob Chamberlin, Los Angeles…)

Just a few years ago, California was hemorrhaging tens of thousands of jobs and had one of the highest unemployment rates in the nation.

But on Friday the Golden State reached a turning point: Helped by a recovering housing market, its jobless rate plunged to 8.6% in May, down from 9% in April and the lowest level in nearly five years. The improved economy has cut the number of unemployed Californians to 1.5 million from a peak of 2.3 million in 2010.

Economists said the latest batch of government data showed the state is creating jobs faster than the labor force is growing, a sign of true strengthening in the labor market. Some previous dips in the unemployment rate were the result of discouraged job seekers dropping out of the workforce.

"California is making a big comeback," said Esmael Adibi, a Chapman University economist. "That's why you see such a sharp drop in the unemployment rate."

The state's employers added 10,800 employees to their payrolls in May, according to figures released Friday by the state Employment Development Department. Nearly all industries added workers, led by the leisure and hospitality sector, which added 9,000 jobs, mainly at hotels and restaurants.

Over the last year, California has added 252,100 jobs. That has helped California lower its unemployment faster than any other state since May 2012, when the jobless rate stood at 10.7%. The unemployment rate is also well below the 12.4% peak reached in February 2010.

The gains mean that California is no longer competing with Mississippi and Nevada for the dubious distinction of having the highest unemployment rate in the nation. Five other states now have higher unemployment rates than California, according to federal data.

Although the state's economy is improving, it is far from healed. California's unemployment rate is higher than the 7.6% national rate, and the state is still 601,000 jobs short of its peak employment level reached in July 2007.

"We are not at Champagne and caviar yet," said Brandi Britton, district president of professional staffing firm Robert Half International. "Although it certainly feels like each month gets better."

Driving the job expansion this year is the construction industry, which is heating up along with the real estate market. Nearly 39,000 jobs have been added since May 2012, although last month showed a decline of 8,500 jobs that economists believe was an anomaly.

But it's not just laborers swinging hammers and hanging up drywall. The housing recovery has had a ripple effect that's leading to hiring in related industries such as banking, insurance and retail.

That is good news to Aaron Lobliner, a 28-year-old urban planner who graduated from college in 2009 near the depths of the recession.

Unable to find full-time work, Lobliner hustled for two years flipping burgers at an In-N-Out restaurant and working part-time internships in his field. He recently nabbed a full-time job in Orange County working on a housing development in Rancho Mission Viejo.

My job "is tied to the real estate industry," Lobliner said. And "there's been a significant uptick in hiring. People are hiring architects again. People are hiring engineers. And you need planners. We're all in the same boat."

These kinds of white-collar jobs have driven the recovery over the last year. The professional business services sector, which includes many higher-paying jobs, added 73,000 new positions in the last 12 months.

Still, many of the jobs being created in California are low-wage jobs. The leisure and hospitality sector posted the second-highest employment gain during the same time period, swelling by 64,000 jobs.

A separate government survey of households offered more clues about the state's economic well-being. Total employment grew by nearly 84,000 in May. That's an indication that Californians have turned to self-employment or consulting work not captured in the payroll data.

This might be part of an overall shift in the state's job market, economists and employment experts said. They worry that many companies might rely on temporary or contract workers even after the economy fully recovers.

"We may be hitting an employment tipping point," said Michael Bernick, former director of California's Employment Development Department. "The cost of unemployment insurance, worker's comp and most of all healthcare is becoming so large that companies are looking at other options such as independent contracting, technology or overtime for existing employees."

That means job seekers such as Jerry Levinson, 51, may continue to struggle by piecing together part-time work or settling for a salary far below their expectations.

The Sherman Oaks resident once made $100,000 a year as an accountant for a nonprofit, enough to eat out regularly and hire a maid. But for the last three years, he's only found temporary work earning as little as $20 an hour.

His previous job, which ended in April, had him time-stamping documents.

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