Business analyst Mark Lacter joins KPCC once a week for an in-depth look at economic issues in Southern California.
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KPCC's business analyst Mark Lacter talks about jobs.

Steve Julian: On Tuesdays we talk about the latest business stories with Mark Lacter. Mark, we have lots of news this week about jobs. How are things shaking out in California?

Mark Lacter: The jobs problem is the worst kind of economic problem Steve because it is simply stuck - not getting appreciably worse, but not getting appreciably better, either. There's the basic unemployment rate, which is high enough at 12 percent in the state and 12.4 percent in L.A. County, well higher than the national rate of 9.1 percent. But once you drill down further - and the California Budget Project did just that in a new report - things look worse.

Julian: I know things can always 'get' worse, but how bad is it?

Lacter: Well, first off, those unemployment rates seriously understate the number of working-age people who don't have a job because so many of them have essentially dropped out of the labor force. Actually, the percentage of people with a job in California is lower than it's ever been. Right before the recession started, the state had a little over 15 million jobs. It’s lost almost one-and-a-half million of those jobs - and only gained back about 17 percent. And that explains another stunning number: Nearly half of the people who are unemployed in California have been out of work for more than six months; one-third have been out for a year or more.

Julian: You know, of all the statistics that are tossed around about the economy, what really stands out to you?

Lacter: It's the number of long-term unemployed. That's because the longer that people are out of work, the less likely they are to find any new work - whether it's because their skills start to erode, or potential employers are reluctant to hire someone who has been out for so long, or the person out of work just gets frustrated and gives up. So even when we start to see the recovery pick up a little steam - and we are seeing that in a few industries - this group is likely to be lost in the shuffle. "Effectively unemployable," is how economists at the Federal Reserve have put it in their research. And this long-term unemployment problem hasn’t gotten much attention because elected officials are fixated on quick fixes, when in fact there's nothing quick about trying to get these folks back to work.

Julian: So in what industries is the recovery picking up steam?

Lacter: If you look at the number of jobs gained and lost in L.A. County over the past year or so, the best showing is the movie and TV business - more than 12,000 jobs for the 12-month period ended in July. Then came health services, leisure and hospitality (that category includes mostly hotels and restaurants), and after that manufacturing, which has actually held up fairly well and is responsible for an increase in the amount of export activity. If you're looking at all of California, employment in technology and entertainment has led the way. These two areas account for a disproportionate amount of the new jobs in California, which is fine as far as it goes, but relying so heavily on just two industries is not a great sign.

Julian: And as for industries that have lost jobs over the last year?

Lacter: Government. Almost 25,000 state and local government jobs were lost in California. This is the result of monster pension obligations and also because the weak economy has been keeping down the amount of tax revenue coming in. State officials were hoping for more money this year, but it's now looking as if the projections were overly optimistic - and that's even with tech and entertainment thrown in. The reality is that job growth has been stalling in California over the last few months, just as it has nationally.

Julian: Sounds bleak.

Lacter: Well, in a nutshell, you have an economy that has very little forward momentum, and for all the big proposals you'll be hearing from elected officials, about the best prospect is a slow and choppy recovery that could easily drag out for several years. Not a great prognosis, but that's where it's at, I'm afraid.

Julian: Mark Lacter is a contributing writer for Los Angeles Magazine and writes the business blog at LA