Why California’s jobs engine has remained resilient for 50 years

Michael Bernick
Counsel with the international law firm of Duane Morris LLP, a Milken Institute Fellow and former Director of the California Employment Development Department

Labor Day 2017 finds California in the midst of an employment boom that has lasted more than seven years. Since February 2010, the state has gained nearly 2.6 million jobs. How long will this boom last?

As we look over the ups and downs of employment in our state since World War II, we find a tremendous resilience in the face of ongoing job losses through automation, deindustrialization, defense and aerospace cuts, and dot.com busts. Though numerous factors are responsible for this resilience, on this Labor Day we might single out the state’s entrepreneurial culture and ability to bring more and more Californians as stakeholders into the free-market economy.

Let’s start with the numbers. Since World War II, California has had four lengthy periods of employment growth, including the current one now in its 89th month. The longest period occurred in the 1960s, totaling 113 months, and there were growth periods of 91 months in the 1980s and 92 months in the 1990s.

In each of these growth periods, the job losses, when they came, started slowly and were largely unanticipated — no dramatic event triggered them. In June, California saw a loss of 3,200 jobs, and California economists expected that we could be entering a period of job contraction. But in July, the economy rebounded with an addition of 82,600 jobs — a third of the jobs added nationwide. We’ll know better in the next two to three months as new job numbers come in but, based on the previous post-World War II expansions, this expansion could well continue for some time.

Will this hold true for a changing economy? A number of prominent entrepreneurs in 2017, including Elon Musk, Mark Zuckerberg, Richard Branson and Stewart Butterfield have raised the specter of technology eliminating jobs (and the accompanying role of a universal basic income to offset those job losses). That automation and technology will lead to high unemployment is by no means a new concern in California. Throughout all of the state’s growth periods, policymakers and commentators in the state have warned of large-scale job losses.

Originally published in the San Francisco Chronicle

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