California’s 5.3% unemployment rate in February was the highest in the nation.
My trusty spreadsheet, looking at labor statistics dating back to 1976, could only find 11 other months in which the state achieved this dubious ranking. Consider the economic malaise of the early 1990s (August to December 1994) and the coronavirus cooling (March to August 2021).
This adds to our previous mention in this space that 2023 was the first year since 1994 that the state ranked last in the nation in percentage point job growth.
To be fair, California has historically been the nation’s leading job creator. At the same time, it’s a reasonable bet that in any given month, California will rank high on the unemployment scorecard.
Consider that unemployment in California ranked second highest among states in 72 months out of 48 years. He has been third 52 times, fourth 35 times and fifth 49 times.
Thus, over an average month since 1976, California unemployment has ranked 10th among the states. Only five regions experienced worse situations: Alaska, the District of Columbia, West Virginia, Mississippi and Michigan.
And by the way, here’s another example of California’s persistently high unemployment rate: Its best month in unemployment rankings since 1976 was the 29th best month in October 1987.
Yes, the best finish was a measly 29th place.
Why so high?
California has high concentrations of workers in businesses with strong seasonal fluctuations: hospitality, agriculture, and retail. Other economically unstable sectors that are major employers in California include technology, real estate and entertainment.
Additionally, California’s renowned entrepreneurial courage has a downside: risk-taking creates a higher-than-average failure rate. It can also increase unemployment.
Consider one indicator of chronically high unemployment from my spreadsheet: How often over the past 48 years has a state’s monthly unemployment rate ranked among the 10 highest in the country?
This is not a Top 10 to envy.
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By this measure, California has ranked in the Top 10 in 63% of months since 1976. Only four other countries have ranked more frequently: Alaska at 78%, DC at 69%, Michigan at 66% and West Virginia at 63%.
Note that California’s economic rivals were in the middle of the pack: Texas was No. 21 with 17% and Florida was 24th with 15%.
It should be noted that 12 states have never made the Top 10: Colorado, Iowa, Kansas, Maryland, Minnesota, Nebraska, New Hampshire, North Dakota, South Dakota, Utah, Vermont and Virginia, an economically and politically diverse mix.
Conclusion
California’s high unemployment rate in February is hard to shake.
Look, California’s astronomically high cost of living makes people with solid finances think about moving — much less those who are missing a paycheck.
But let’s mention that the state’s chronically high unemployment over the past half-century has come as California has created more jobs than any other state since 1976.
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This represents 9.7 million new jobs, or 13% of all hiring in the United States. Even California’s 119% job growth rate exceeded the 92% job expansion seen in the rest of the country.
We shouldn’t ignore the pain of unemployment, but this rate of 5.3% in February, the best in the country, is historically low. California has had an average unemployment rate of 7.2% since 1976.
These statistics suggest that California employers have benefited from the large supply of applicants that unemployment can create.
These same numbers also indicate that California workers, if nothing else, have been very flexible.
PS: Consider Nebraska, where the average monthly unemployment ranking since 1976 is 48th. This is the lowest among the states. But Nebraska employers have added only 477,000 workers over the past 48 years, 95 percent fewer than California’s hires.
Jonathan Lansner is the Southern California News Group’s business columnist. He can be contacted at jlansner@scng.com
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