The unemployment rate in California is far higher than the national level — 12 percent versus 9.1 percent — and that's depressing for residents of the state. But there's one other state that's doing worse: Nevada, at 12.9 percent. The temptation is to put the two states in the same boat, because there are some similarities. Both California and Nevada have been hit hard by the housing crisis, which has created a kind of vast corridor of jobless construction workers between Los Angeles and Las Vegas. But California has the eighth largest economy in the world (if states could be compared with countries, which they can't), at $1.9 trillion. Nevada, by contrast, is around $130 billion.
So the idea that California and Nevada can be subjected to an apples-to-apples comparison just because they sit atop the high-unemployment tally is sort of ridiculous. Nevada may have Vegas and gold mining, but California has Hollywood and Silicon Valley. Besides have a much larger economy, California has a much more diverse and innovative economy. The housing collapse is something that Nevada may never recover from. In California's case, it could just take a while.
Just look at the difference in venture capital (thank you, Wall Street Journal). How much VC has been raised in Nevada? $7 million. In California? $7 billion.
But before anyone in California gets too cocky, they should ask themselves how they've allowed a nearly $2-trillion economy to become so dependent on housing and government jobs that the more highly productive sectors, technology and entertainment, can't create enough work to at least bring the unemployment level down to something that's within striking distance of the fairly appalling national number. The implications are serious. The country can handle a protracted economic slump in Nevada. But it's counting on California to be an engine of growth and to lead it into a brave new economic future.