Manufacturing continues to be a sluggish sector. (Photo Credit: John Guenther)
If you asked Californians to give one word to describe how they feel about their state’s economic chances in 2014, the answer you’d receive would be “mixed.” At least that’s the sentiment reported by the Public Policy Institute of California in their January report “California’s Future: Economy.”
According to a previous PPIC poll, 46 percent of Californians believe the economy “will face good times” over the next year, versus 44 percent predicting bad times on the horizon. The reality is probably in the middle, and the data put forth by PPIC reflects that. Basically, if you think the nation at large is on good footing, you think the state is on good footing as well.
“The broadest measure of California economic performance – employment growth – follows the nation’s growth rate very closely,” the report says. Job growth in California has outpaced the long-term average for the last two years.
That’s the good news. The bad news is that while California has done well in job creation, its unemployment rate is still stubbornly high – higher than the nation at large at 8.9 percent to 7.3 percent. Still, that’s two percentage points lower than just a year ago, and a higher unemployment rate than the nation isn’t exactly a surprise.
“The state’s economy generates jobs at a rate similar to the national rate, but this is not enough to keep up with California’s faster-growing population,” the report says. “So California unemployment is likely to remain above the U.S. level for some time to come.”
The report adds that, while the state is recovering and the high unemployment and costs can be explained or offset by the state’s strengths, there are several challenges ahead. Uneven growth will be a constant challenge, as regional economies can be vastly different in negative and positive ways. While there tends to be high unemployment in the inland regions, low housing costs contribute to the growth of the workforce there, points out the author.
This is why the California Economic Summit puts so much importance in the need to develop its initiatives from a consensus of regional leaders from all over the state.
In addition, the PPIC report sees the value in using education as a weapon against the boom and bust and income inequality, as highly educated workers fared better during the Great Recession and the 21st-century economy demands workers who can fill the skills gap.
“Highly educated workers were somewhat protected from the impact of the Great Recession and are likely to do better during future boom and bust cycles,” the report says. “Promoting education is thus an important strategy for ensuring economic opportunity across the income spectrum and addressing income inequality.”
A highly skilled workforce ready to take the jobs that are being created is so critical to California that it’s one of the California Economic Summit’s Action Teams. We know eventually our state is going to be hit with another recession. If we don’t want the word recession to have a foreboding adjective in front of it, California needs a workforce that is skilled, educated, and ready for the jobs that California is proving will come.