California is ending the year on an economic high note, having recovered all of the jobs it lost during the Great Recession and seeing employment continuing to expand.
The state has gained 1.5 million jobs since recovery began five years ago and unemployment has declined from 12-plus percent to 7.2 percent.
With expanding payrolls, consumer spending has increased and state and local government revenue has rebounded sharply.
Low inflation, low interest rates and declining fuel prices contribute to consumer confidence and having crunched the numbers, public and private economists see more good times ahead, at least for the next couple of years.
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So what’s not to like?
Both the recession and recovery have revealed some fundamental faults in California’s $2-plus trillion economy along geographic, economic sector and sociological lines.
The recovery has been largely concentrated in coastal communities, for example, while much of inland California still experiences double-digit unemployment rates.
It’s also been concentrated in a few economic sectors, such as health care, hotels and technology. Employment in others, such as construction, manufacturing and retail trade, is still below its pre-recession peak, as Beacon Economics points out in a recent economic analysis.
The Public Policy Institute of California, meanwhile, notes that despite a sharp decline in the state’s unemployment rate, it still has the nation’s third-highest rate.
Moreover, by a more nuanced measure of employment, which includes discouraged and underemployed workers, California has the nation’s highest rate of “labor underutilization,” 15.2 percent.
And while California has led all states in job-creation recently, that has more to do with its size than its economic vigor. It still is not keeping pace with growth in its working-age population, even though overall population growth has slowed markedly.
“Simply put, jobs need to grow much faster to keep up with growth in the working-age population,” PPIC says.
More than a third of California’s remaining unemployed workers, “have been looking for work for six months or longer, and one in four have been looking for a year or longer,” PPIC says.
This less-than-stellar recovery combines with another California syndrome – sky-high living costs – to generate the nation’s highest poverty rate under an alternative Census Bureau measure, with nearly a quarter of the state’s 38 million residents impoverished.
The danger in focusing on the most superficial indices of economic health, such as the official unemployment rate, is that politicians will pat themselves on the back and not take the steps, such as regulatory reform, that would be needed for broader, sustainable recovery.
We should be striving to lift all boats, not just a few yachts.
Call The Bee’s Dan Walters, (916) 321-1195. Back columns, sacbee.com/dan-walters. Follow him on Twitter @WaltersBee.