California has added 826,500 non-farm jobs since the low of February 2010, but is still short 541,400 non-farm jobs from California’s July 2007 high. However, there are also 692,511 more workers than in July 2007, meaning there is a gap of 1.2 million jobs (8.2%). This also doesn’t include those individuals who have left the workforce because they believed looking for a job was futile.
Construction currently accounts for 616,500 jobs, 35% off the high of 945,100 set in February 2006, up only 13% from the low 544,700 in September 2010.
The bright spot is in business and professional services, which at 2,310,500 jobs in August 2013, is at an all-time high, now accounts for 16% of California’s non-farm jobs, and is the second largest non-government supersector just behind Trade, Transportation, and Utilities. Compare the ten-year table on that sector to that of Manufacturing, which has been on a decline for two decades.
California’s unemployment rate was 8.9% in August, a significant reduction from the 12.4% that haunted most of 2010, although some reduction in the rate (as pointed out above) is due to to disaffected workers leaving the workforce. Even at 8.9%, that is significantly higher than the roughly “full employment” rate of 5% the state saw through most of 2006 into early 2007.
Despite many of these gloomy numbers, there’s a fascinating thing: California’s personal income was at an all-time high of $1.768 trillion in 2012, and will likely set another record this year. That’s 15.1% higher than the recession’s low in 2009 and 10.7% above the pre-recession high of $1.596 trillion in 2008. Even on an inflation-adjusted basis, personal income is higher than the all-time high before the recession.
However, the swelling personal income does not appear to be buoying retail. While the Business and Professional Services sector has seen a jobs increase of 2.5%, Trade, Transportation and Utilities–which includes retail–has only increased 1.3%. One bright spot is new car sales, which at 146,498 in June are double the 2009 lows and at levels not seen since 2007, as financing has eased and consumers return to a more regular car replacement schedule (yes, I am still driving a 2005 Prius).
But, from the data we have, much of the “new wealth” reflected in the state’s personal income is not being spent. This is likely because it’s “extra” income being reinvested by already financially secure individuals, or it’s being held on the sidelines by would-be investors (including a small business owner holding off on an additional hire or equipment replacement) because of continued economic uncertainty.
And, that’s where the tension lies. That personal income is concentrated among high-income workers in limited sectors, as well among wealthier Californians who have had the ability to participate in the stock market’s recovery. After all, the Dow Jones set another all-time high Wednesday, although the close of 15,746.88 was actually a couple hundred points below the inflation-adjusted all-time high set in October 1997 and about four hundred points below the high of December 1999.
I don’t want to go all socialist on you, as like many readers of The Nooner, I’m blessed to have a great job. But, from a public policy standpoint, we have to take note when the economic recovery is concentrated at one end of the socioeconomic spectrum, as that’s what leads to political upheaval and will create more strain in Sacramento.
We’re seeing signs of the strain yesterday as protestors were in front of Twitter’s headquarters to protest gentrification of San Francisco, which has gone out of its way to keep Twitter in the city. And, the proxy for that may be the fight against $4 toast.
Let’s applaud the innovators and investors who are leading California’s recovery, but also note that the top line number of personal income or state tax revenues doesn’t tell the whole story.
I am not an economist, know that there are dozens of metrics one can use to make an argument, and I look forward to hearing from the real experts over the next 24 hours and to put a little more thought into the impact of California’s economy on state politics and policy.
Cross-posted at The Nooner.