Heading Into the New Year, California’s Economy Is Still Very Weak

As California heads into the new year, job opportunities remain scarce and the number of Californians in the labor force – which includes individuals who are working, as well as those who are currently searching for work – has flat-lined. In fact, since the recession began, California’s workforce has increased by just 300,000 (1.7 percent), while the state’s working-age population has jumped by nearly 1.2 million (4.2 percent). This disparity is striking because the labor force ordinarily increases at about the same rate as the working-age population.

Even more striking is the fact that the number of Californians who are not in the workforce has spiked by a substantial 8.9 percent since the recession began – more than twice the percentage increase in California’s working-age population. This trend reflects the fact that many unemployed Californians who were unable to find work have dropped out of the labor force, while others who might want to work never sought a job in the first place. This latter group includes, for example, recent college graduates who decided to pursue another degree rather than look for employment, as a way to “ride out” the weak economy.

On the upside, job growth is expected to pick up modestly in 2011. However, economic forecasters continue to predict a long, slow recovery. The latest Legislative Analyst’s Office forecast, for example, projects that it will take until 2016 for California’s employment to return to pre-recession levels. That means many unemployed workers and their families could face several more years of tough times ahead.

— Alissa Anderson