Explaining Southern California's economy

California's unemployment rate falls to 10.8 percent in May

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A job seeker looks over event materials as she waits to enter the San Francisco Hirevent job fair at the Hotel Whitcomb on March 27, 2012 in San Francisco. California unemployment rate fell slightly in May 2012.

The Labor Department released data for May regional and state unemployment this morning. California's unemployment fell slightly, to 10.8 percent from 10.9.

Regionally, the West continues to have the highest unemployment rate in the nation, at 9.4 percent, while for what the Bureau of Labor Statistics calls "geographic regions," the Pacific has the highest rate, at 10.1 percent. Nevada has the highest unemployment rate for a single state, at 11.6 percent (which sounds terrible, until you note that last May, the number was a frightening 13.7 percent).

If you look at the current situation in California, we're definitely in a rut. These monthly tenth-of-a-percentage-point moves show a job market that's not recovering at a robust pace. 

But if you contrast the current situation with a year ago, the picture brightens. This is from the BLS release:

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Reportings: California unemployment; LA car mechanics; drive the speed limit

Not a rounding error. California was at 12 percent unemployment. Now we're at 12.1: "California's dependence on the real estate industry is going to continue to cause pain until home-building starts again. But with uncertainty throughout the economy, few businesses in any field seem willing to hire." (LAT)

 

Lose your job in a recession, see your future income reduced by almost 20 percent: "For high-tenure workers who experience job displacement in a recession, the losses amount to about three years of earnings at pre-displacement levels and 19% of the present value earnings of otherwise similar workers who retain jobs." (Brookings Institution)

 

It's springtime for car mechanics in LA: "And as the U.S. vehicle fleet ages and consumers continue to save, repair shops, analysts said, are in a good position to continue their growth." (LAT)

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Does a new econ guy in the White House mean a new hope for jobless California?

We can always hope so. Princeton economist Alan Kreuger was just nominated by President Obama to head the Council of Economic Advisers, the three-person team that provides know-how on the economy to the chief executive. 

This move has been taken as a sign that Obama intends to get serious about unemployment. As the LA Times' Opinion L.A. blog points out, Kreuger is known for his work on labor issues:

Perhaps the research most relevant to his new post…is the recent work he did with Andreas Mueller of Stockholm University examining the efforts by unemployed people to find new jobs. Among their findings: People spend less time looking for work each day the longer they are unemployed, but they don't lower their wage demands significantly over time. This is especially true for younger workers, for whom the long-term cost of a big cut in pay is more severe than for an older worker closer to retirement, the study found.

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