Sam Zuckerman, Staff Writer San Francisco Chronicle
Saturday, June 21, 2008
San Francisco -- California's unemployment rate rocketed up by 0.6 percentage points in May - the largest one-month increase since the state began keeping records in 1976 - as the fallout from high energy prices and the depressed housing market rippled through the state's economy.
The state's jobless rate was a seasonally adjusted 6.8 percent, up from 6.2 percent in April, the California Employment Development Department reported Friday. That's the highest rate since November 2003, when California was recovering from recession.
Meanwhile, the total number of jobs in the state outside the farm sector declined by 10,900 in May, the third month in a row that payrolls shrank. Construction accounted for most of those losses, shedding 9,600 jobs during the month.
Economists cautioned that California's exploding unemployment rate may have been a statistical fluke that exaggerated the extent of the damage to the state's labor market.
The labor force showed unusual growth during the month, possibly because of large numbers of graduates leaving school and looking for work, they said. That could have skewed the jobless rate because the new workers would have been classified as unemployed until they got hired.
Still, there's little question that the job market has been contracting and that the state is on the edge of recession, if not actually in one, experts said.
"Some of (the jump in unemployment) was not real, but a fair amount of it was real," said Nancy Sidhu, senior economist with the Los Angeles County Economic Development Corp. "I am in the camp of people who say we are not in a recession yet, but we might be headed into one."
Payrolls in the state were down 49,600 in May from their level the year before, with the losses concentrated in construction, finance and manufacturing. That's a relatively small erosion of jobs compared with previous downturns.
"We haven't seen job growth fall off a cliff," said Ryan Ratcliff, an economist with the UCLA Anderson Forecast, which issued a report this week concluding that California's economy is weak, but not in recession.
In the Bay Area, which has been bolstered by technology and tourism, the job picture was brighter than in other areas of the state. But jobless rates rose throughout the region.
In the San Francisco metropolitan area, which includes Marin and San Mateo counties, unemployment was 4.6 percent in May, up from 4.2 percent the month before. In the San Jose area, the rate rose to 5.6 percent from 5.2 percent. And in the Oakland area, including Contra Costa and Alameda counties, unemployment was 5.7 percent, up from 5.3 percent.
"The Bay Area still is the best part of the California economy," said Howard Roth, principal economist for the California Finance Department. "But the bloom is off the rose."
Berkeley resident Phil Catalfo, 57, has been looking for work as an editor for almost a year, armed with a resume that shows experience as a top manager at such publications as Yoga Journal and Acoustic Guitar magazine. He has applied for several dozen jobs, but gotten few responses. One position that looked promising ended up getting filled internally.
"Companies I can tell are proceeding very cautiously," he said.
When Catalfo was looking for work three years ago, he was swamped with freelance jobs. This time, assignments are trickling in slowly.
"The air is definitely different," he said.
May's big jump in California unemployment was expected after the release of data two weeks ago that showed the national jobless rate leapt to 5.5 percent, up half a percentage point from April. Besides California, 17 other states had jobless-rate increases of 0.6 percent or more for the month, including five that had increases of a full percentage point or more.
Nationwide, only four states had jobless rates higher than California's, led by Michigan, where an ailing auto industry has pushed unemployment to 8.5 percent.
After release of the May employment report, Gov. Arnold Schwarzenegger issued a statement calling on the Legislature to move forward on bond measures to fund infrastructure projects, putting more construction workers in jobs.
"An economic slowdown caused in part by our housing crisis is clearly still affecting California," he said.
So far, most of the job market's distress has stemmed directly from the housing crash. Construction and finance, which includes mortgage, real estate and title companies, together lost 123,000 jobs over the past 12 months. Sectors such as government, education, health and professional services grew substantially during the year.
Now there are worries that the weakness is spreading as high food and gas prices put a crimp on consumer spending. Jobs in retail trade have been disappearing for four months and are more than 15,000 below their level of a year ago, according to Stephen Levy, director of the Center for Continuing Study of the California Economy in Palo Alto.
"The job outlook ranges from flat to lower job levels a year from now, depending on the consumer," Levy wrote in an analysis.
6.8%
California's unemployment rate in May.
6.2%
California's unemployment rate in April.
4.6%
San Francisco metro area's jobless rate in May.
4.2%
San Francisco metro area's jobless rate in April.
10,900
Number of lost jobs statewide in May (excluding farms).
9,600
Number of lost construction jobs statewide in May.
8.5%
Michigan's rate of unemployment. Only four states had rates higher than California's.
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