December 25, 2012 > California jobless rate dips below 10 percent
California jobless rate dips below 10 percent
By Don Thompson, Associated Press
After a long twilight, business is booming again at Matt Construction as high end orders come in for hotels and office complexes.
The Los Angeles area company increased hiring by about 20 percent this year, adding 30 employees as more construction jobs, and bigger ones, piled up.
Such stories are a major reason California's jobless rate dipped below 10 percent last month for the first time since the recession began. The 9.8 percent unemployment rate reported Friday by the Employment Development Department is down from 10.1 percent in October.
The last time the unemployment rate was in single digits was in January 2009, when the number was 9.7 percent.
The improvement, led by a surge in technology jobs that have spurred a wave of new construction, comes as something of a surprise. Leading economists had predicted that California's unemployment rate would remain in double digits through 2013.
Al Matt, executive vice president of Matt Construction, said his Santa Fe Springs based company has seen a strong recovery from the height of the recession in 2009, when revenues dropped by half.
"Overall, our revenues are up in 2012 by a substantial amount, as much as 30 percent," he said. "It looks like next year will be a similar sort of increase."
There are other positive signs. The number of unemployed Californians dropped to 1.8 million, also the lowest number in nearly four years. The state has added more than 564,000 nonfarm payroll jobs since the economic recovery began in 2010.
"The job gains have been fairly widespread," said economist Jerry Nickelsburg, a professor at the University of California, Los Angeles. "We're finally seeing an increase in construction, particularly single-family housing."
He added that such signs are "continued evidence that California's economy is growing and is recovering."
Experts say growth in single family housing and construction are good indicators of recovery because they signal increased wealth, relatively high paying blue collar jobs, and general optimism.
The danger of a downturn still lurks, however, most immediately in the form of the impending "fiscal cliff." Business and government officials have warned that fallout from ongoing budget negotiations at the nation's capital could halt California's recovery.
Without a deal, automatic spending cuts will slash local government budgets and raise tax rates for workers as the nation struggles to get over the effects of the Great Recession. Also, unemployment benefits for 400,000 Californians would expire next month without an agreement from Congress and the president.
Also, despite the gains indicating one of the nation's fastest growing economies, California still lagged behind the national unemployment rate of 7.7 percent.
About 14.4 million Californians were working last month, and the recovery varied significantly across the state. Imperial County had a whopping 26.6 percent unemployment rate, while rates in many inland counties remained in the double digits.
Expansion in high paying technology jobs helped the San Francisco Bay Area remain the state's growth leader, said Stephen Levy, a senior economist at the Center for Continuing Study of the California Economy.
The unemployment rate was 5.8 percent in Marin County, while San Francisco and San Mateo counties hovered above 6 percent.
The information sector, meanwhile, showed the biggest percentage gain in jobs over the last year, up nearly 6 percent.
Growth in San Diego County also has been strong, Levy said. Los Angeles County and others nearby also have joined the recovery, while the Central Valley is slowly regrouping.
The capitol region, where government is a large employer, still is lagging, Levy said in an email.
Government employment showed the biggest losses in Friday's report, down 34,500 jobs in the last year, indicating an overall decline in spending.
The contraction has meant less money for public projects like road construction, said Skip Brown, owner of road contractor Delta Construction Co. in Sacramento.
Brown said he hasn't taken a paycheck from his own company in five years, and his salaried employees have eaten pay cuts up to 40 percent.
Meanwhile, stricter air pollution standards mean most of his heavy diesel equipment will be illegal to use in California in coming years. Brown said if he can't sell the 69 year old firm started by his father, he'll close the doors once he can no longer operate his paving and grading equipment.
For Brown, "There's no rebound at all."