For decades, California’s behemoth economy has outstripped that of most nations, playing a huge role in shaping global trends in technology, entertainment and agriculture.
While that reputation remains, the state has a less enviable distinction: one of the highest unemployment rates in the country.
Nationally, the rate is 3.7 percent, and in January, the country added 353,000 jobs. California’s job growth has been slower than the national average over the past year, and the unemployment rate remains stubbornly high — 5.1 percent in the latest figures, a percentage point higher than a year ago and just above the Nevada’s 5.4 percent.
With layoffs in the tech-focused Bay Area, a slow recovery in Southern California from protracted entertainment industry strikes and diverging demand for agricultural workers, California faces economic headwinds in the new year. And the residents feel it.
The state has historically had higher unemployment than the U.S. average because of a workforce that is younger and growing faster, said Sarah Bohn, a senior fellow at the Public Policy Institute of California. However, he noted, the labor force has shrunk in California over the past six months — a troubling trend.
“When we look at this contraction, are there fewer opportunities and have people stopped looking for work?” asked Mrs. Bone. “What will this mean for consumers and businesses?”
During the early part of the pandemic recovery, California’s unemployment rate was not extreme — 4 percent in May 2022 versus 3.6 percent nationally, according to the Bureau of Labor Statistics. But the situation worsened.
About 36,000 Californians working in the information industry, which includes technology, lost their jobs last year. Several companies based in the state — Google, Meta and X, formerly known as Twitter — have cut tens of thousands of jobs to cut costs as the industry increasingly focuses on artificial intelligence.
In recent weeks, Snap, the Santa Monica-based parent company of messaging app Snapchat, announced it would cut about 500 employees, 10 percent of its global workforce. And Northrop Grumman, the aerospace giant, signaled it planned to lay off 1,000 workers in the Los Angeles area.
Despite several months of bruising, the unemployment rate in San Francisco and Silicon Valley remained relatively low — 3.5 percent in the city and 3.2 percent in San Mateo County — suggesting many workers found new jobs relatively quickly.
The outlook is worse in Southern California, where the fallout from last year’s entertainment industry strikes is still taking its toll.
Nearly 25,000 workers lost their jobs in Hollywood, according to a report released in December by the Otis College of Art and Design in Los Angeles. While extended work stoppages by the Writers Guild of America and SAG-AFTRA ended last fall, some industry-dependent jobs never returned, and many people struggled to find full-time work.
Los Angeles County’s unemployment rate is about 5 percent, with jobs in the information industry, which includes film and sound recording jobs, accounting for a large portion of the hole.
During the strikes, some restaurants and other small businesses that relied on Hollywood workers closed permanently, and others that downsized have not returned to previous levels, said Kevin Klowden, executive director at the Milken Institute. tank in Santa Monica.
The suspension of streaming development has put increased financial pressures on many studios, Mr. Clowden said, adding that “top TV production is generally accepted to have already happened before the strike.”
“There are a lot of stories about actors and crews struggling to find consistent work because of the slow ramp-up of new productions,” he said.
After a Hollywood strike in 2007-8, it took a year for the industry to recover and this time – with persistent losses – it will take even longer, Mr Klowden said.
For parts of the state where agriculture is a key industry, the economic situation is even more dire.
In Imperial County, a section along the Mexican border known for agricultural production, the latest unemployment rate was about 18 percent, up 3.1 percentage points from a year earlier. And Tulare County, in the Central Valley, has an unemployment rate of about 11 percent, up 2.7 percentage points. Automation was a factor.
In a survey released this fall by the Public Policy Institute of California, about one in four Californians said the availability of good-paying jobs was a big problem in their local area.
There are financial bright spots. The state has seen job growth in education and health care, along with the leisure and hospitality industries.
“California is the stage pole of the American economy in terms of American recovery — in terms of job creation, innovation, entrepreneurship,” Gov. Gavin Newsom said in January as he unveiled his budget.
Mr. Newsom’s office released an analysis of the state’s economic outlook for the coming year, noting that “while unemployment in California may be rising somewhat faster than the nation, it is rising from an extremely low level, reflecting a tight labor market that is adjusting to more sustainable growth after recovering so quickly in the wake of the pandemic-induced recession.”
Dee Dee Myers, director of the Governor’s Office of Business and Economic Development, said in a statement, “There are many reasons to believe that California’s economy will continue to grow faster than the nation’s economy.”
He noted a recent directive by Mr. Newsom to create a master plan for career education that connects students to job opportunities. A priority is to lower barriers for people seeking government jobs — including college degree requirements that aren’t necessary for some jobs, according to an outline of the directive.
But increased unemployment will have ripple effects in the state for a while, said Robert Fairlie, a professor of economics and public policy at the University of California, Los Angeles. Unemployment reduces overall earnings, he said, which translates into lower consumer demand and investment.
“There is a negative multiplier effect on the state economy from the higher unemployment rates we are seeing,” Mr Fairlie said.
Elyse Jackson is among those feeling the sting.
Ms. Jackson, 27, has been without a steady job since December 2022. An art department coordinator for feature films in Los Angeles, she had hoped to find work soon after the strikes ended last fall.
“Rehiring and new productions have been so slow,” said Ms. Jackson, a member of the International Theater Workers Alliance. She has run up $15,000 in debt in recent months and is struggling to pay rent on the apartment she shares with her partner in the Echo Park neighborhood.
Unable to keep waiting for jobs in her industry, she recently filled out dozens of applications for administrative jobs around town. He hasn’t heard yet.
“In terms of skill sets, I’m definitely qualified for these jobs,” Ms. Jackson said. “There just seems to be a lot of competition because of the market and unemployment.”