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Monday, January 24, 2022

For these indicators, unemployment in California has reached a new high.

The Review Says reviews various rankings and scorecards that assess geographic location, noting that these scores are best seen as a combination of art and data.

Hum: The unemployment gap between California and the United States this summer reached its widest spread in four decades.

A source: Source: Quarterly unemployment statistics for the state, country, and California’s top economic rivals Texas and Florida in my robust spreadsheet since 1980. Key math? Track the percentage difference between state and national unemployment.

Background: California’s unemployment rate improved to an average of 7.53% this summer, but it’s still 47% above the 5.13% level in the US. In 42 years, no quarter has seen a wider gap between state and national unemployment.

And the harsh restrictions on doing business in California during this pandemic era are undoubtedly one of the culprits.

Consider the growing gap. In early 2020, shortly before the coronavirus hit the economy, this discrepancy was only 14%, in California – 4.33% versus 3.8% in the United States. Since 1980, the variation has averaged 21% – 7.24% – 5.98%.

Next, consider two economic colleagues who have applied weaker measures to prevent a pandemic. In the summer, Texas’s unemployment rate of 5.9% was 15% higher than the nation’s, making it the 20th largest lag behind the United States since 1980. Meanwhile, Florida’s 4.97% unemployment rate was 3% below the national average.

Details

There has been a lot of talk about California unemployment and what the recovery trends or the data itself should be. I thought that comparing this key indicator of jobs with national criteria (all using the same math) would at least soften some of the questions about this data.

Let’s take a look at the unemployment chart …

Boom 1980s: This wild period included a recession driven by sky-high interest rates, a rapid recovery, and abundant real estate development.s, the oil price crash and some historical stock market crashes.

In the midst of all these shocks, California’s unemployment rate was actually lower than the nation’s – 7.21% versus 7.27% – and was close to 7% in Texas or 6.46% in Florida.

In these three states, the soon-to-be-extinct savings and loan industry was the source of real estate finance. Recent attempts by these lenders to delay the collapse by aggressively lending to developers have temporarily stimulated the local economy. However, this useless tactic ultimately made bailing out the industry much more expensive.

Ailment of the 1990s: The collapse in loan capital has hit real estate markets that used to have juice. The California economy has also suffered from the loss of aerospace jobs following the eases of Cold War tensions and cuts in defense spending.

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California’s unemployment rate rose marginally over the decade to 7.4%, 28% higher than the national rate of 5.76%. Unemployment in Texas fell 12% to 6.18%, while Florida averaged 6.03% after falling 7%.

Bubble ripening 2000-2008: Another wave of easy money – this time from lenders to homeowners – helped create a hot business climate. California unemployment fell 20% to 5.91%, just 15% above the national level of 5.13%. Texas fell 13% to 5.35%, while Florida averaged 4.04% after falling 33%.

Bursting bubble 2009-2014: Once again, weak lending led to economic pain. California unemployment rose 78% during and after the Great Recession, averaging 10.5% – 28% above the national level of 8.24%. Unemployment in Texas rose by almost a third, to 7%, and in Florida, more than doubled, to 8.84%.

Rebound 2015-2019: It took a while to heal from what turned into a global economic crisis. When the recovery began, unemployment in California dropped in half to 5% – just 13% above the national level of 4.41%. Texas fell 40% to 4.17% and Florida averaged 4.9% after falling 44%.

The era of the pandemic: The emergence of the health and wealth coronavirus has ended the recovery and has crippled California’s economy more than the country.

Since spring 2020, the statewide unemployment rate has doubled to an average of 10.07%, 32% higher than the national average of 7.64%. Texas grew 84% to 7.68%, while Florida averaged 7.03% after rising 43%.

Warning

Let’s note the history of the rise in unemployment in California. Since 1980, the state unemployment rate has averaged 7.27%, compared with 6.24% nationwide; 6.12% in Texas; and 5.91% in Florida.

It is all too easy to blame the government’s supposedly “anti-business” attitude for such a long-standing gap in unemployment. California’s employment structure – with a large number of seasonal and temporary jobs – is an important factor.

Bottom line

Nonetheless, Californian workers have paid a high price for choosing a state to tackle the pandemic with aggressive preventative measures that have strangled many industries.

It could be argued that the September defeat of Gov. Gavin Newsom’s recall suggests that Californian voters agree with this trade-off between health and wealth. But there is less than a year left until next election day, when Newsom is likely to press for re-election.

Jonathan Lansner is a business commentator for the Southern California News Group. You can reach him at [email protected]

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