California’s recovery variable regionally and by industry

150 150 Loren Kaye

Originally published at Fox & Hounds and posted with permission.

As the California economy struggles to recover, remember that job gains will be very uneven, both regionally and by industry. California is one state politically, but is economically several regions and of course comprises many important industries.

Those drinking from a glass half-full, including Gov. Brown, point out that California has gained jobs at a faster rate this year than the national economy as a whole. A low bar, but true.

Those whose glass seems half-empty would also correctly observe that California’s employment fell so far and so fast, that even this growth falls woefully short of what’s needed to sustain a recovery.

I would add – and illustrate below – that the recovery (in terms of job growth) is highly variable depending on where you live and what you do.

Not surprisingly, the Bay Area and San Diego, with strong technology and health care sectors, are recovering strongly. Not so the Inland Empire and Sacramento, which were heavily dependent on homebuilding and development industries. Sacramento has stagnated more recently as the full force of the recession has landed on the state government sector.

The Central Valley may seem an anomaly, but its middle-of-the-pack fall and recovery masks its desperate pre-existing condition: a structural unemployment gap that even in good times is unacceptably high. The energy boom in the San Joaquin Valley may help boost this region’s prospects.

While manufacturing seems to be enjoying a relatively strong recovery nationally, it has barely nudged the needle in California. Business services and the professions are enjoying a healthy recovery, while construction remains deeply depressed. The true bright spot remains employment in the health care sector.

Loren Kaye is president of the California Foundation for Commerce and Education.


Loren Kaye

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