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  Dr. Sohn's Commentary

California Payroll for March

April 20, 2018

California has shed 7,200 jobs in March creating 2,856,200 positions since the recovery began in February 2010 and 288,300 from a year ago. The February number was revised down to 1,200 from 14,000. The unemployment rate remained at 4.3 percent the lowest since 1976. The comparable U.S. unemployment rate was 4.1 percent. The CA unemployment rate a year ago was 5.0 percent. The employment decline was broadly based except health & education, manufacturing and mining.

The California’s job market may have gone through an inflection point. The economy is at full employment and having difficulty finding workers from Silicon Valley to Southern California. The civilian labor force, which had been rising in previous months responding to the news that there are good jobs to be had at higher wages, fell by 7,200 in March. Over the past five years, employment has grown 10 percent along with the labor force growth of 4.2 percent. The gap between the U.S. and California unemployment rate has been steadily fallen from 1.7 percentage points five years ago to 0.2 percentage point today, indicating how far California’s job market has come. Skilled jobs are going begging. Construction is being hurt by the shortage of carpenters, plumbers, plasters, etc. Nurses are hard to find and so on.

The fall in employment is broadly based. Healthcare continues to hire people reflecting the aging population. Manufacturing added 1,900 jobs related to IT and automobiles. Unfortunately, the rest of the industries shrank.

For many years, tech and information have represented the bulwark of employment in the Golden state. The strong rate of job gains in the sectors has given its way to a slower rate of growth in part due to skilled labor shortages. The Bay area with the unemployment rate hovering below 3 percent has been experiencing the slowdown. The slowdown in information services is attributable to the lack of skilled people in technology and the high cost of living, especially housing in the Bay area and Southern California. In recent months, software, data processing and other tech have added jobs while motion picture and sound recordings have shed employment. The tech growth has spawned new jobs in professional and business service fields.

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