California’s political hopefuls remain silent on state’s job losses, unemployment

In two months California voters will elect a governor, fill several other statewide offices and choose a new class of state legislators and members of Congress.

The aspirants for those positions are making all sorts of promises to win voters’ approval. But few, if any, have mentioned a slow-motion menace affecting a fundamental facet of life: jobs.

The state has never fully recovered from the virtual shutdown of the economy during the COVID-19 pandemic. It still has more than a million unemployed workers. Its unemployment rate continues to be the highest, or nearly so, of any state. And its signature economic sectors, such as high tech and film production, have been shedding jobs for several years.

As ominous as those data points sound, a deeper dive into employment data reveals an even darker reality.

“California’s labor market is holding up, but its foundations remain troublingly narrow,” Justin Niakamal, research manager at Beacon Economics, said in a recent overview of the state’s economy. Healthcare is the only sector with strong employment gains, he noted.

While healthcare jobs are welcome, they are highly dependent on spending by federal and state governments, and both have been cutting back. Moreover, while healthcare is a service industry, it does not create added-value wealth the way technology, film production and agriculture do.

Back to the data.

California’s stubbornly high unemployment rate — 5.1% in July — was second-highest among the states, behind Connecticut and Oregon, both at 5.2%. The rate is the percentage of the labor force that is not employed, even in part-time work, during the month.

The size of the labor force, as well as the unemployment figure, are important to note. Over the previous year, California’s labor force — people who are working or seeking work — declined by 286,300, according to the monthly Employment Development Department report.

To some extent, the labor force decline masks the actual decline in employment. Moreover, the widely quoted unemployment figure is simplistic: Even if someone is paid for working just a few hours in a month, he or she is counted as employed.

The federal Bureau of Labor Statistics makes several other computations of employment that are more sophisticated. One, called U-6, measures underemployment. It takes into account workers who want to work full time but can only find part-time work, as well as those who are “marginally attached” to the labor force.

California’s U-6 rate is a much more realistic measure of the job picture. It was calculated at 10.3% in June, easily the highest of any state.

The bureau also calculated U-6 for New York City and Los Angeles County because their populations are larger than many states. New York’s rate was 10.2% while Los Angeles’ was 12.1%.

Those are high numbers but may still understate what’s happening — or not — in California’s job market.

The Ludwig Institute for Shared Economic Prosperity takes the U-6 underemployment calculation even further. It discounts jobs, even full-time work, that pay less than a living wage, which it pegs at $26,000 a year. It calls its number the “true rate of unemployment,” saying it measures “functional unemployment.”

As one might suspect, Ludwig’s calculations for California — reported by major metropolitan area — are very high, especially in rural communities where agriculture is a primary source of jobs.

California’s highest “true unemployment” rate, according to Ludwig, is in Redding (67.4%). Other rural or semi-rural communities fall into the 50%-65% range. But some urban regions see high rates as well, such as 53.8% in the Los Angeles-Long Beach-Anaheim metropolitan area.

Only a few regions are under 50%.

Given these numbers, one might expect that California’s officeholders and office seekers would be telling us how they will respond. They are not.