Dan Walters: Labor Day economy a mixed bag in California

09/02/2013 12:00 AM

09/02/2013 12:34 AM

As California marks the Labor Day holiday, there's a slow-motion debate over the strength of its recovery from the worst recession since the Great Depression and thus its prospects for improving employment.

There's no question that the state has rebounded somewhat, having seen several percentage points knocked off an unemployment rate that peaked over 12 percent and was among the nation's highest.

Gov. Jerry Brown has been touting the recovery, telling The New York Times recently, "Some people were ridiculing California, and some were calling it a failed state. The unemployment came down from 12.2 (percent) to 8.5 (percent). Real estate is rebounding. There's a lot of confidence out there. That's what happened."

Last week, Brown's Employment Development Department issued an upbeat "Labor Day briefing," saying "labor markets in California continue to get stronger" and "unemployment is falling faster in California than it is in the nation "

If one looks beyond the hype, however, the economic picture is muddier.

Certain regions and economic sectors are doing very well – especially the San Francisco Bay Area and its high-tech industry.

But as a new report from the left-leaning California Budget Project points out, it may be two more years before California recovers the 1.4 million jobs it lost when recession hit. Meanwhile, the state's population and potential labor force have continued to grow, which will mean a continued high unemployment number even when that milestone is reached.

Moreover, as the report points out, labor force participation remains extremely low, perhaps 2 million Californians are involuntarily working at part-time jobs, meaning they are not counted in the jobless ranks, and long-term unemployment remains high.

Double-digit unemployment remains the rule in most of California's inland counties as prosperity returns, albeit slowly, to coastal communities. Finally, a high percentage of the new jobs are in relatively low-paying service fields, such as those in "leisure and hospitality."

The negative analysis from the left is matched by that from the political right, which sees a state that is overtly hostile to business because of its high taxes and dense regulatory systems.

Those critics cite anecdotal evidence of a reluctance to make job-creating investments in the state, such as the letter that Barrie Laing, president of Gilroy-based Radiation Detection Co. sent to his customers recently, announcing a move to Texas after more than 60 years in California. He cited "the attractive business-friendly environment in the state of Texas as opposed to California."

So California is recovering, but whether it will be a sustained recovery that will do something about the 1.7 million still jobless California workers is an open question.

Call The Bee's Dan Walters, (916) 321-1195. Back columns, www.sacbee.com/ walters. Follow him on Twitter @WaltersBee.

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