Some Bright Spots in Southern California’s Job Market

Some Bright Spots in Southern California’s Job Market

Written by Gary Wartik:

Improvement in the job market remains somewhat uneven, with the Anderson School of Economics at UCLA predicting statewide job growth during 2014 and 2015 at 1.9 percent and 2.2 percent, respectively.  Most students of the job market would consider such growth not sufficient to reflect a real turnaround in the job market, but rather one that only keeps up with the increase in the population at large. All of this is evidenced by the fact that California’s jobless rate is stuck at 9.8 percent, while the US rate is nearly two points less at 7.9 percent.

There are some sectors in Southern California that offer growth figures comfortably above statewide figures.  Beacon Economics in Los Angeles reported October 1 that the San Fernando Valley and areas of West Los Angles led Los Angeles County in job growth with an overall gain of 3.8 percent during the last 12 months.  Some areas of the San Fernando Valley generated job growth of 6.5 percent.  However, some parts of the state’s largest county saw areas lose jobs.  Sadly, overall county wages actually fell by a disappointing 2.3 percent.  The figures reflect that many new jobs are in sectors that historically pay less, such as hospitality/hotels, home care, office workers, unskilled manufacturing positions and retail. Construction-related jobs, which do pay well reflected one of the bright spots in the Los Angeles  County area report, driven by a reported 28 percent increase in the issuance of multi-family building permits.  As well overall construction permits are up an impressive 20 percent this year, adding $2.9 billion to the economy.

Ventura County job figures also continue to improve, according to a report by Dr. Mark Schneipp of the California Economic Forecast Project in Santa Barbara.  During the last 12 months, 5,000 non-farm jobs were created, with strong gains in health-care, leisure-hospitality and, to a lesser extent, in the professions.  As well, construction in Ventura County is offering the prospects of a turn-around as thousands of housing permits have been issued in 2013.  Construction will begin during the next twelve months, particularly in the city of Camarillo. In terms of labor market strength in California, Ventura County is second only to Orange County in creating new jobs.

In Orange County, job growth for the next twelve months is estimated by the Los Angeles Economic Development Corporation at 1.6 percent, which if predictions are correct, would drive the county’s unemployment rate down to 7.1 percent, with predictions of continued job growth sufficient to drive the unemployment rate to 6.5 percent in 2014.  Orange and Los Angeles Counties have been recognized as the manufacturing base in Southern California with some 500,000 jobs.  While many were lost during the recession, the manufacturing sector is reflecting new relative strength. Other Orange County job strengths have been noted in professional and financial services, along with many of the areas reflected in the Ventura County report.

As we note in our reports, however, what is really needed in an economy that is struggling to recover is the creation of more higher wage jobs.  Such jobs generate the ability of workers to spend in the retail and housing sectors, driving the need for more workers in manufacturing and construction. With 70 percent of the economy linked to retail spending, a stronger retail sector will continue to reflect how well the economy is doing to reach full recovery mode.  With a Los Angeles County unemployment rate lingering at 8 percent, pushing that figure down to 7 percent during the next twelve months remains a challenge that collectively faces all aspects of the public and private sectors.

Our next report will look at the job market in Northern California. In the meantime, if you are a mayor, council member, city manager or finance director, and your community is not performing where it needs to be, please contact us at 805-987-7322 about an analysis of your economic development goals.  Also consider refreshing or a writing a new economic development plan to lead to your community to success.  Vision Economics is ready to help.

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