Explaining Southern California's economy

Los Angeles continues to add construction jobs, but well below peak levels

Justin Sullivan/Getty Images

A home under construction at a new housing development in Petaluma, California. Construction hiring has been steadily rising in both the state and in Los Angeles.

The Labor Department released February jobs data for California on Friday and for the fourth consecutive month, the state added a significant number of construction jobs: 7,600, on a non-seasonally adjusted basis, and more than 5,000 when adjusted for seasonal factors. In California's case, that means primarily discounting the fact that we have pretty nice weather  year-round.

California still has one of the highest unemployment rates in the U.S., but in February it came down a bit to 9.6 from 9.8 percent.

Construction hiring is critically important to the state's economy because California was disproportionately affected by the housing crisis. As the housing market improves — it's currently staging a comeback that many economists think could have staying power — construction jobs, for both residential and commercial building, will become more abundant.

In Los Angeles, we've been adding construction jobs at a steady clip. February did witness a dip of about 1,000 jobs versus January for the larger of the two metropolitan areas that the Labor Department defines as making up the the L.A. area, but that's consistent with a similar modest drop in previous years. (And the February loss of jobs was a preliminary result; come next month, it could easily be revised up.)

Gary Steinberg, a press officer and economist for the Bureau of Labor Statistics, helped me to drill down into L.A.'s numbers. At the metro level, the bureau doesn't do seasonal adjustments as it does for the state data, mainly because it lacks the staff to assess the actual employment situation in local areas.

Steinberg said that on an annual basis, the trend of construction jobs being added is definitely up. And that's what the numbers show. There were 113,800 construction jobs in the Los Angeles-Long Beach-Glendale area in February, the highest number since 2009, when there were 123,600. 

The peak February total in the past ten years, however, was in 2007, when there were 155,700.

But that was at the height of the bubble. It's nevertheless a reminder that Los Angeles has a ways to go before construction employment is at a healthy level. February 2013 is 27 percent lower than February 2007 — and also 12 percent below 2003.

Ironically, demand for homes in Southern California is rising above the available supply, but because the downturn was so long and took such a profound toll on the building trades, homebuilders are struggling to find enough skilled workers to meet their needs. Construction hiring could actually be even better at this time, but it's being held back by the lingering negative effects of the Great Recession.

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