One Indicator Shows California’s Recovery Is Incomplete

One Indicator Shows California’s Recovery Is Incomplete

Despite assurances that California’s economy is a treasure to behold – “We are world-beating in terms of our economic growth,” says Gov. Gavin Newsom – the post-pandemic recovery has a gaping hole in it. State unemployment is the highest in the country.

Federal data for October show that the jobless rate improved from September’s 7.5% to 7.3%. That puts the state in a last-place tie with Nevada, and far off Nebraska’s best-in-the-nation 1.3%.

Texas and Florida, rivals in many ways, posted far better numbers in October, 5.4% and 4.6% respectively.

The Bureau of Labor Statistics also reports nine of the 15 metropolitan areas posting the highest jobless rates in the country are in California. This includes the Los Angeles-Long Beach-Anaheim metropolitan area statistical area, which has an unemployment rate of 7.1% – 373rd in a list of 389 metro regions.

Newsom can brag about California “dominating in every category,” and being home to the “fastest growing companies, the most influential companies in the world,” as he did at October’s California Economic Summit.

But an economy that has a jobless rate as high as this state’s isn’t fully healthy, a fact that hasn’t gone unnoticed. The Public Policy Institute of California’s November survey found that 52% expect bad times ahead, while only 47% expect good times. Four months earlier, the outlook was just the opposite: Only 44% expected bad times ahead, while 54% thought the future looked good.

Legendary California journalist Dan Walters recently pointed out that eight of the 10 states with the lowest unemployment rates in October were red states, and nine of the 10 states with the highest jobless rates were blue. It’s a sharp reminder that public policy plays a substantial role in joblessness.

“It could just be coincidence, of course, but maybe those red states with low unemployment rates have regulatory and tax policies that encourage job-creating investment and maybe California and the other blue states with high jobless rates are perceived as being hostile to business,” he says.

Walters was being charitable. Taxes and regulation always impact job numbers, and both are uniquely heavy burdens for California businesses. Regulation stifles innovation, which promotes job growth, and we know taxes negatively affect employment because lawmakers say as much when they hand out tax breaks to companies expecting them to put people to work.

Lockdowns also figure in the state’s high jobless rate. Many businesses that were forced to close never reopened, and some that did still aren’t operating at full capacity. By October, the state had regained only a little more than two-thirds of the 2.7 million jobs that were lost due to the lockdowns.

California policymakers have come to think they can do whatever they want, and the hard work of previous generations that built this state will save them from the negative economic consequences that spin off their plans. It doesn’t work that way, though. There’s too much garbage in, garbage out in Sacramento.

Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute.

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