On Wednesday, the Labor Department released data on unemployment rates by metropolitan area, and the numbers show that California is quickly racing toward recovery. The state is home to all 10 of the 10 metropolitan areas with the fastest-improving unemployment rates, according to the data.
|Metro Area||April 2012||April 2013||Rate change|
|El Centro, Calif.||27.9||24.0||-3.9|
|Yuba City, Calif.||18.6||15.3||-3.3|
|Santa Cruz-Watsonville, Calif.||12.2||9.9||-2.3|
Source: Bureau of Labor Statistics. Data are not seasonally adjusted.
Those are impressive declines, but it's not entirely clear that the Golden State is truly full of golden opportunities for workers seeking out jobs. Below, a few reasons why California seems to be cleaning up in the race for a labor market recovery.
1) Noisy Numbers
What would cause nearly all of California's metro areas to show such steep declines in jobless rates? It may simply be the volatile nature of labor market data.
"My feeling is what you're seeing here is more than anything else a kind of a statistical fluke," says Chris Thornberg, founding partner of Beacon Economics, a California-based economic research and consulting firm. "Almost certainly you're going to see unemployment bump back up again next month."
He points out that the state's seasonally adjusted jobless rate fell by 0.4 percentage points from March to April, according to Labor Department data released earlier this month, a decline Thornberg calls "ridiculously large."
2) Underground Workers
Plenty of people in California are working without "working" in the Labor Department sense, says Thornberg.
"A lot of our workers, largely due to the huge numbers of immigrants, don't necessarily end up in the formal economy," he says. People who do odd jobs for cash, work for tips only, and sell goods at fairs and roadside stands are examples of workers who might be participating in an informal economy, off of any establishment's payrolls.
He points out that the Labor Department's employer survey of job losses has never quite squared with households' reports of job losses. The question of whether people identify as "working" or not when they are not on official employment rolls may mean that unemployment counts do not accurately estimate the number of people working in California's economy.
3) Lots of Big Cities
Two other states saw jobless rate swings comparable to California's: Rhode Island and Nevada. The Labor Department counts jobless rates in three metro areas in Nevada and only one Rhode Island metro area. The total for California, meanwhile, is 26. In other words, even if a statistical anomaly is causing the state's job numbers to drop sharply, the state has 26 opportunities to exhibit strange swings. Rhode Island, meanwhile, has one.
4) The Data Are Right
It's not as if the state's job market is, in fact, stagnant; far from it. Even if the state employment numbers aren't spot-on — and right now, there's no way to tell if they are — the state's economy is growing at a healthy pace, says Thornberg.
"You're seeing an economy that really is moving forward," he says. "The hotels are busy, restaurants are busy, it's just a great time."
In addition, a state rocked by the foreclosure crisis is getting a boost from a fast-healing housing market. That could be contributing to recent rapid improvements in the job market. It's also true that the state saw its unemployment figures spike during the recession. All of the 10 cities listed above have remarkably high jobless rates, at 9.9 percent or over, meaning that many parts of California have plenty more room for improvement than other U.S. cities, and are moving quickly toward recovery.