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California’s Unemployment Rate Is the Nation’s Highest

In February, the state reached an unemployment rate of 5.3 percent, the highest in the country. Since 1976, California has created more jobs than any other state (9.7 million), accounting for 13 percent of all U.S. hires.

California's 5.3 percent unemployment in February was the highest rate in the nation.

My trusty spreadsheet, looking at labor stats dating to 1976, could find only 11 other months the state reached this dubious ranking. Look to the early 1990s economic malaise (August to December 1994) and the coronavirus chill (March to August 2021).

That's on top of our previous mention in this space that 2023 was the first year since 1994 that the state ranked dead last in the nation for job growth on a percentage-point basis.

To be fair, California historically has been the nation's leading job creator. At the same time, it's a reasonable bet that in any given month California will be high on the joblessness scorecard.

Consider that California unemployment has ranked second-highest amongst the states in 72 months over 48 years. It was third 52 times, fourth 35 times, and fifth 49 times.

So an average month since 1976 has seen California unemployment ranked No. 10 among the states. Only five places fared worse — Alaska, the District of Columbia, West Virginia, Mississippi, and Michigan.

And by the way, here's another example of California's persistent high joblessness: Its best month in the unemployment rankings since 1976 was 29th best in October 1987.

Yes, the best ranking was a paltry 29th place.

Why So High?

California has heavy concentrations of workers in businesses with big seasonal swings — hospitality, agriculture, and retail. Other economically volatile industries, major employers in California, include technology, real estate, and entertainment.

Additionally, California's celebrated entrepreneurial grit has a downside — that risk-taking creates a higher-than-average failure rate. That can also boost unemployment.

Consider a yardstick for chronic high unemployment from my spreadsheet: How often during the past 48 years has a state's monthly jobless rate ranked among the nation's 10 highest?

This is not a Top 10 list to be envied.

By this measure, California ranked in the Top 10 in 63 percent of the months since 1976. Just four others ranked more frequently: Alaska at 78 percent, DC at 69 percent, Michigan at 66 percent, and West Virginia at 63 percent.

Please note that California's economic rivals were in the middle of the pack: Texas was No. 21 at 17 percent and Florida was 24th at 15 percent.

It's worth noting that 12 states never made the Top 10 — Colorado, Iowa, Kansas, Maryland, Minnesota, Nebraska, New Hampshire, North Dakota, South Dakota, Utah, Vermont, and Virginia, a diverse mix economically and politically.

Bottom Line

It's hard to sugarcoat California's high unemployment in February.

Look, California's astronomically lofty cost of living nudges folks with solid finances to think about relocating — no less those who are missing a paycheck.

But let's mention that the state's chronically high joblessness during the past half-century came as California created more jobs than any other state since 1976.

That's 9.7 million new jobs — 13 percent of all US hires. Even California's job growth rate of 119 percent topped the 92 percent employment expansion in the rest of the nation.

Not to dismiss the pain of joblessness, but that top-of-the-nation 5.3 percent February rate is historically low. California has averaged 7.2 percent unemployment since 1976.

These stats suggest California employers have enjoyed the deep supply of job candidates that unemployment can create.

These same figures also indicate that California workers, if nothing else, have been very flexible.

PS: Ponder Nebraska, where the average monthly jobless ranking since 1976 is No. 48. That's the lowest among the states. But Nebraska employers added just 477,000 workers over the 48 years — 95 percent less than California's hirings.

Jonathan Lansner is the business columnist for the Southern California News Group. (c)2024 San Gabriel Valley Tribune, West Covina, Calif. Distributed by Tribune Content Agency, LLC.
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