Explaining Southern California's economy

Self-employment won't save California from jobs crisis

Job Fair At Marlin Stadium Draws Many Seeking Employment

Joe Raedle/Getty Images

First, the good news: unemployment continues to fall in California, to 11.1 percent in December from 11.3 in November. Basically, California is beginning to add jobs at a decent clip — the pace is faster than the nation as a whole. However, the state was clobbered far worse the rest of the country during the downturn, so our unemployment rate remains above the national level of 8.5 percent.

Now the bad news: for a lot of people to get a job these days, they have to create it — themselves! This is from the LA Times:

Self-employment is often the only option for workers with limited education and skills, suggested Christopher Thornberg, principal at Beacon Economics, a Los Angeles consultancy.

"They're struggling, trying to get ahead," he said. "For every guy we see selling fruit on the corner somewhere, there's another guy working as a DJ doing sweet 16 parties and probably making a good dime."

That entrepreneurial spirit is very Californian. "It's healthy," said economist Jerry Nickelsburg with the UCLA Forecast. "People stop looking for others to provide jobs and start using their own creativity."

But this surge of self-employment also underscores fraying job security and declining wages and benefits in many industries. Some hard-pressed employers are shedding full-time workers and hiring independent contractors to do the same jobs for lower pay.

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Visual Aid: Why self-employment isn't just for the young

This chart is from a Bureau of Labor Statistics working paper that was released in 2008, titled "Self-Employment Transitions among Older American Workers with Career Jobs." I know that's from a few years back — and the data itself is drawn from the 1997-2004 period — but you can see a clear trend: As workers age, they increasingly consider moving into self-employment. Particularly men. Some of this probably has to do with ongoing financial needs in retirement. But the data comes from a study of people aged 51-61, so the "transition" from full-time work to self-employed work is taking place well before the typical retirement age. 

Now connect this trend with what Sara Horowitz, founder of the Freelancers Union, has recently been saying about the changing nature of work in the Atlantic. You can then see that the "Gig Economy" isn't just about younger workers who are stuggling to find full-time jobs. It's also about older workers who are seeking new ways to work, either out of desire or necessity.

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