Whether it’s the continued foreclosure crisis, the impact of state budget cuts or the cumulative effect of depressed consumer spending, it’s now extremely clear that the state’s employment picture shows no sign of bottoming out, reaching an all-time high in the post-war period.
California’s unemployment rate took an unexpected leap in July, reaching a post-Word War II high of 11.9%. The increase contrasts with the national rate, which declined slightly over the same period, and reflects ongoing weakness in the state’s battered construction and financial services industries.
The state lost a net 35,800 jobs last month, more than any other state, the U.S. Labor Department said today. It has lost 760,200 jobs over the last year.
Every category of nonfarm jobs in the state except education and health services experienced year-over-year losses. The construction sector was the hardest hit, shedding 18.6% of its jobs. Manufacturing jobs fell 8.7% from the same time last year.
Job loss did slow relative to the previous two months. But I don’t think anybody believes that 11.9% is a floor. Los Angeles, where the jobless rate jumped 0.7% in just a month, is one of the worst big cities to find a job in America. The city has 15,000 homeless veterans. And areas of the Central Valley and the Inland Empire are in far worse shape. It’s basically a depression in those parts.
And we are just starting to add a round of painful state budget cuts to increase the economic shortfall. Whether it’s closing parks that provide economic benefits, or dropping or cutting aid to 100,000 IHSS recipients, or wiping out the entire domestic violence budget, the cuts will not only force the poor and infirm to slip through the cracks and cause mass suffering and even death, but the economic impact will be profound. Caregivers will lose their jobs. Relatives will shift their schedules to care for their families. Productivity will reduce. It’s just a plain fact that lowering public spending during a deep recession will negatively impact the economy. Consumers aren’t spending, companies aren’t trading and businesses aren’t investing. Government is the spender of last resort. And that spending has been slashed.
I honestly don’t know where the bottom is.
This is proof that the Hoover economics that both parties engaged in during the many recent budget showdowns have caused a measurable, and therefore empirically verifiable, contraction in our state’s economy compared with the nation as a whole.
The U.S. went down from 9.4% from 9.5% while we climbed to 11.9% from 11.6%, showing that we here are headed in a different direction.
We all know why.
Simply put, hard dollars (never mind the effect on consumer confidence) were taken out of the system that were only partially backfilled by the federal stimulus.
Also remember: this is essentially the U3 number. Wider measures would probably show that roughly 1 in 4 people are underemployed.
We will be pushing 13% unemployment before much longer.
What bugs me is that nobody in state government – at least that I can see – is talking about economic recovery. It is a taboo term. The zeal to slash spending has become all-encompassing, consequences be damned.
Free fallin’, yeah we’re free fallin…
of creating and maintaining such extraordinary unemployment levels for such a long time — and indeed in California to keep pushing those levels upwards — is to put immense pressure on labor to achieve concessions: lower pay, fewer benefits, less retirement security, no job security whatsoever.
Productivity has increased astronomically while wages are flat or declining. This indicates 1) that the same amount of work (and in some cases, more work) is being done by far fewer people in many industries, and 2) that the profits from this work is all accruing to the 1%ers — and then some.
This is an operative Third World model for California’s economy, and it is quite deliberate. Businesses and the state government are colluding in this forced impoverishment of the mass of Californians. They are using the economic crisis to institute long term structural change — in government and in private employment. And so far it is stunningly successful.
The absence of any Federal intervention (either now or during the permanent budget crisis) and the absence of any Federal re-employment or jobs program — in fact, the complete indifference of the Federal government to the continuing increases in unemployment and underemployment in California and widely throughout the nation — indicates that Hooverism isn’t confined to the Corner Office in Sacramento but it has a warm and cozy home in Washington DC, too.
Apparently working people are just too frightened to fight back, but in those few instances when they do challenge the Powers That Be, strangely they tend to win. IHSS employees, for example, have fought wage cuts and won both in court and at various public hearings. This should be a strong example to other employees facing similar conditions that fighting back — if you’re unified — works, but for some reason it’s not.
Yes, there are serious economic problems in California, and yes adjustments have to be made, but it does not have to happen on the backs of ordinary working people — unless, of course, that’s been the plan all along.
The Mayor of Los Angeles freely predicted last spring that unemployment will reach 15% in the city. I think the real number could be as high as 20% with the state flirting with 15% unemployment before anything changes.
This environment makes it all but impossible for an expansion of the welfare state and Barack Obama could very well be a one-term president with Republicans making major gains in the House as well as the US Senate.
If things continue, Democrats could lose 20 house seats in 2010 and 5-7 senate seats with Republicans easily retaining the governor’s mansion.
Democrats need to come back to the center if they want to survive this economy or it will be throw the bums out nest year…