California’s political class has a great deal to say this election season about housing costs, crime, water policy and a dozen other hot-button issues. What almost none of them are talking about is jobs — even as the state’s labor market shows signs of real trouble beneath a deceptively calm surface.
With voters set to choose a new governor, several statewide officeholders, state legislators and members of Congress in just two months, candidates up and down the ballot are making plenty of promises. But the state’s slow bleed of employment, particularly in the industries that once defined its economy, has barely registered as a campaign issue.
The numbers tell a sobering story. California has never fully rebounded from the pandemic-era shutdown, and more than a million residents remain out of work. The state’s unemployment rate is among the highest in the nation, and long-standing economic engines such as technology and film production have been losing jobs for years rather than adding them.
A closer look at the data suggests the problem runs deeper than the headline figures indicate.
“California’s labor market is holding up, but its foundations remain troublingly narrow,” said Justin Niakamal, research manager at Beacon Economics, in a recent assessment of the state’s economic health. According to Niakamal, healthcare stands out as essentially the only sector posting solid job growth.
That might sound like good news, but healthcare employment in California leans heavily on government spending — both state and federal — and both sources of funding have been tightening. Unlike technology, agriculture or entertainment production, healthcare also doesn’t generate the kind of added economic value that builds broader prosperity; it’s a service sector, not a wealth-creating one.
The state’s official unemployment rate stood at 5.1% in July, trailing only Connecticut and Oregon, which each posted 5.2%. That figure reflects the share of the labor force without any job, including part-time work, during the month measured.
But the size of the labor force itself tells its own story. Over the past year, California’s labor force — those working or actively looking for work — shrank by 286,300 people, according to the state’s Employment Development Department. That decline tends to soften the official unemployment number, masking a more significant erosion in actual jobs. It’s also worth noting that anyone who works even a few paid hours in a month counts as “employed” under the standard measure.
Federal officials calculate more nuanced figures that paint a starker picture. One of these, known as the U-6 rate, accounts for underemployment — people working part-time who want full-time jobs, along with those only loosely attached to the labor force. California’s U-6 rate hit 10.3% in June, the highest of any state in the country.
For comparison, the U.S. Bureau of Labor Statistics also calculates U-6 figures for a few large counties and cities whose populations rival entire states. New York City came in at 10.2%, while Los Angeles County’s rate reached 12.1% — even worse than the statewide figure.
Yet even those numbers may not capture the full extent of the problem. The Ludwig Institute for Shared Economic Prosperity has developed what it calls a “true rate of unemployment,” which goes a step further than U-6 by excluding jobs — even full-time positions — that pay below what it considers a living wage, set at $26,000 annually. The institute frames this as a measure of “functional unemployment.”
Unsurprisingly, California’s numbers under this framework are alarming, particularly in rural areas dependent on agricultural work. Redding tops the list with a “true unemployment” rate of 67.4%, according to the institute’s regional breakdown. Several other rural and semi-rural areas fall between 50% and 65%. Even major urban centers aren’t spared — the Los Angeles-Long Beach-Anaheim metro area registers 53.8% under this measure. Only a handful of California regions dip below the 50% mark.
Given the scale of these figures, one might expect California’s candidates and elected officials to be laying out plans to address the state’s employment crisis. So far, that conversation has been notably absent from the campaign trail.
Original source: CalMatters
