California Employment Year in Review: Recovery Broadens, Accelerates

Bing Bai Analysis, Employment, Income & Wealth

California Combined Jobs and Employment

There is some good news in terms of private sector employment in California: employment growth has accelerated somewhat, is more broad-based in terms of geographic spread, and has extended from the coastal regions to some Inland areas. There are even some zip-codes that have more jobs now than they had at the height of the last boom in August 2007. The bad news: In most areas, less than one third of the jobs lost have been recovered so far since January 2010, the lowest point marked by the data for California employment overall, and most of those areas are Inland. And there are still a few places that have shed jobs, even compared to January 2010. This information combined just once more confirms that California has a long, long way to go.

The California employment year in review conducted by ISEA finds the job recovery in California has strengthened and broadened in the second year of the recovery as compared to the first year. Researchers compared maps of year-over-year job growth from November 2009 to November 2010 with those of November 2010 to November 2011. Job growth in the first year of recovery (11/2009 to 11/2010) was concentrated in the San Jose area, Orange County, and Central Los Angeles County. The job growth in the second year of recovery (11/2010 to 11/2011) has been more geographically spread and has expanded to San Diego County, the Inland Empire, and the Sacramento area. Those areas were still shedding jobs or idling in the first year of the recovery. In the second year of the recovery, they have started adding jobs with a few pockets of significant job growth in excess of 3%. Although job growth in California has improved significantly since the recession low, most areas in the state have not even recovered a third of the jobs they lost during the recession. In fact, some areas are still losing jobs as compared to the state’s overall lowest point of private employment in January 2010, such as some small pockets in Palm Springs and Sacramento. The share of jobs recovered is consistent with the pattern of job growth, i.e., the coastal areas have already recovered a larger share of jobs than the Inland region. In particular, the San Jose and Oakland areas as well as downtown San Diego have recovered the largest shares of jobs with a few pockets showing full recovery or even adding jobs as compared to August 2007, the height of the market before the recession. On the contrary, the Inland region, Central Valley and other areas in Northern California have not been that lucky, especially the Sacramento area has been at the lower end of the job recovery.

Major Regions in California

NORTHERN CALIFORNIA

  • The most recent year-over-year job growth figures for Northern California (NC) show that job growth has improved significantly with more areas adding jobs and less areas idling compared with the previous year. In November 2010, only the areas around San Jose, Modesto, Santa Rosa, San Cruz, and Salinas had seen year-over-year job growth in excess of 1%, while Napa, Fairfield, and Sacramento areas had seen significant job losses (in excess of -3%). This year, until November 2011, most areas in NC have started adding jobs with 1% to 3% job growth and a few small pockets that have seen significant job growth (more than 3%) such as San Jose, Santa Cruz, and Stockton. Especially the Sacramento area has turned around from shedding jobs to moderate job growth (1% to 3%). However, job growth in Santa Rosa and Modesto has slowed (less than 1% job growth).
  • The maps showing the share of jobs recovered shows that some zip-codes in the San Jose and Oakland areas have added more jobs than they lost during the recession (dark green color on the map), while most other areas in NC have only recovered less than 33% of jobs lost (orange color on the map). Moreover, the small pockets in Napa and Sacramento (red color on the map) have lost jobs even compared to the lowest employment point in January 2010.

CENTRAL VALLEY

  • This past year, the year-over-year job growth in the Central Valley has stretched to the two extremes. Some places have seen significant job growth (more than 3%) such as Hanford, Visalia, and Bakersfield, while some other areas such as Merced and Fresno are still shedding jobs. A year earlier, almost the reverse picture emerged: most areas in the Central Valley had seen scattered moderate (1% to 3%) to significant (more than 3%) job growth with some areas in Fresno, Hanford, and Bakersfield showing idling (-1% to 1% job growth).
  • Most areas in the Central Valley have recovered less than one third of jobs lost so far, with two notable exceptions: Hanford has recovered substantially more, while Madera struggles.

SOUTHERN CALIFORNIA

  • Job growth in Southern California (SC) has expanded to the Inland region since November 2010. The Inland Empire and San Diego County have improved noticeably: a year earlier, job growth in these areas was either dormant or negative, now they have started adding jobs with a few areas showing significant job growth (more than 3%) such as southern and northern parts of San Diego County, San Diego Downtown, eastern Palm Springs, Winchester and a few scattered areas in San Bernardino. The northeastern area of Palm Springs, still losing jobs a year earlier, has at least stopped doing so.
  • Most areas in SC recovered less than one third of jobs lost during the downturn. Central Los Angeles County, Orange County, and San Diego County have fared better, as they recovered more than one third of jobs lost (yellow color on the map). Only few small locations have recovered all the jobs lost. They can be found in in San Diego County, Downtown San Diego, Pasadena, San Gabriel, Whittier, and Rialto.

The researchers combined non-seasonally adjusted data on private sector employment by industry and county/MSA from the California Employment Development Department (EDD) with business pattern data by Zip code and industry from the U.S. Census Bureau to arrive at their projected values. This allows them to arrive at estimates at the zip-code level concurrently which are otherwise only available with about 9 month delay from the EDD. The researchers point out that, given the data available to them, their projected values are only rough approximations of the true values, and that accuracy is higher for counties with smaller geographic spread and larger populations. Economic Theory suggests that estimates are slightly biased downwards for the centers and upwards for the periphery. The correlation coefficient between employment level data by zip-code produced by ISEA researchers and sample data by zip-code from the EDD is 0.9. Despite those shortcomings, the observed patterns should still be helpful for decision makers in politics, businesses and organizations to determine where to best direct their efforts. A more detailed comparison of the EDD data with the ISEA estimates can be found on the ISEA webpage under “Analysis”.

Additional Maps

California Annual Changes In Employment in Populated Areas Nov10-Nov11

California Annual Changes In Employment in Populated Areas Nov09-Nov10

California Share Of Jobs Recovered in Populated Areas Jan10-Nov11

Northern California Annual Change In Employment Nov09-Nov10

Northern California Share of Jobs Recovered Jan10-Nov11

Southern California Annual Change In Employment Nov09-Nov10

Southern California Share Of Jobs Recovered Jan10-Nov11

Inland Empire Annual Change In Employment Nov09-Nov10

Inland Empire Share Of Jobs Recovered Jan10-Nov11

Los Angeles County Annual Change In Employment Nov09-Nov10

Los Angeles County Share Of Jobs Recovered Jan10-Nov11

Orange County Annual Change In Employment Nov09-Nov10

Orange County Share Of Jobs Recovered Jan10-Nov11

San Diego County Annual Change In Employment Nov09-Nov10

San Diego County Share Of Jobs Recovered Jan10-Nov11