More Californians Giving Up Job Search

California’s jobless rate has stabilized, but don’t break out the champagne just yet. The unemployment rate has stopped rising because hundreds of thousands of jobless Californians are giving up their search for work. Consequently, fewer Californians are being counted as unemployed, even if they want jobs.

The state’s jobless rate held steady at 12.4 percent in December – equal to November’s revised rate, and just one-tenth of a percentage point lower than October’s rate. The unemployment rate flat-lined in December because more than 100,000 Californians dropped out of the workforce that month. This marked the largest monthly decline in the state’s labor force since the recession began and the eighth consecutive month that the workforce shrank. In total, California’s workforce has declined by nearly 400,000 individuals since April.

With another 38,800 jobs lost in December, more workers have simply become too discouraged about their job prospects to search for employment. The number of Californians who want a job and are available to work but are too discouraged to look for employment has more than tripled over the past two years. These jobless Californians are not tallied in the official unemployment rate once they go more than four weeks without searching for work. As a result, the top-line numbers in today’s unemployment report make the current economic situation look much rosier than it really is.

Given that hundreds of thousands of Californians have left the workforce in recent months, California’s jobless rate is likely to remain high even after hiring picks up. Many, if not most, of those workers will eventually come back to the labor force to search for work, adding to the total number of unemployed who are competing for jobs. Indeed, the latest forecasts from the Legislative Analyst’s Office and the Department of Finance project that California’s annual jobless rate will remain in the double digits through 2012. This makes it even more important for Congress to provide another extension of unemployment benefits before they expire in late February.

— Alissa Anderson

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