Business Update with Mark Lacter

California's unemployment numbers have different meanings

KPCC's business analyst Mark Lacter explains what the latest unemployment numbers mean for Californians.

Steve Julian: Mark, the unemployment numbers for California came out a few days ago. What do they say about the economy?

Mark Lacter: Well, mainly that the extent of the recovery really depends on where you happen to be located. Statewide, the jobless rate was 10.9 percent in April – that’s down a bit from the previous month, but still the third-highest rate in the country, after Nevada and Rhode Island. And the employment picture isn't expected to return to pre-recession levels for another two or three years, according to a new report by HIS Global.

Julian: Does the 10.9 percent rate really reflect what's happening in California?

Lacter: It's somewhat misleading, Steve, because California is really the tale of three different states. Areas in the best shape include Orange County, San Mateo, Santa Barbara, Santa Clara, and San Francisco. Those places have unemployment rates of seven or eight percent, which is fairly low (all things considered). Then you have the middle range, where the rate is nine to 12 percent. In that group: Los Angeles, Riverside, and Sacramento. And at the higher end - say anything over 14-percent - you have places like Kern County, Fresno, and way at top you have Imperial County, which is running about 27 percent (at least that's better than during the recession, when it was over 30 percent).

Julian: Regional deviations because the state isn't just one economy, I suppose.

Lacter: Exactly, it's really a dozen or more economies. Obviously, the home construction business continues to struggle, but then there's the information industry, which is doing quite well - and that includes both the entertainment business down south and the tech business in the Bay Area. The trade and transportation sector is doing well, and that makes sense given the increased export activity we're seeing at the ports and at the warehouses.

Julian: But the big question is how many new jobs are being created?

Lacter: Quite a few, actually. April was a weak month, but 219,000 private-sector jobs have been added to California payrolls over the past year, which is one of the better job growth rates of any state in the nation. But again, so much of the story really depends on what part of the state you're in – and that sort of detail doesn’t usually get reported. Everyone tends to look at just one or two numbers, and you can’t capture the overall economy in one or two numbers.

Julian: The Newhall Ranch project would probably generate lots of jobs.

Lacter: Well yes, considering that plans call for the construction of 20,000 homes. And there has been progress in getting the first phase of the development off the ground - the County Board of Supervisors signed off on the first phase of the project earlier this year (that covers about 1,400 homes). And they approved the second phase just last week. But guess what? A coalition of environmental groups filed a lawsuit.

Julian: Over the river...

Lacter: Right, they claim that the county's decision could harm the Santa Clara River, along with wildlife and American Indian burial sites. Now, this might sound familiar for anyone who has followed the Newhall Ranch saga. Basically, you have real estate interests on one side and environmental groups on the other, and they'll been battling for close to 20 years. The folks from Newhall Land still hope to break ground within the next year or two. Just think of all those construction jobs.

Julian: Great. What about demand?

Lacter: Well, that's the key. Remember, this project was first proposed in the 1990s, when housing developments in outlying areas were still going up and folks who couldn't afford to buy in L.A. or Orange County wouldn't think twice about driving a few hundred miles to their jobs each week. But that's not so true anymore. There just seems to be a greater interest in housing that's closer to work - and that could be a much bigger challenge for the developer than any of these lawsuits.

Mark Lacter is a contributing writer for Los Angeles Magazine and writes the business blog at LA Observed.com.


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