Why a Typical Economic Recovery Is Bad News for California Workers

According to last Friday’s employment report, California added 30,200 new jobs in June, and the unemployment rate declined to 8.5 percent. These latest jobs numbers further confirm that California’s job market is improving faster than analysts had predicted. Economic projections as recent as this past May estimated that on average the unemployment rate would remain above 9% throughout this year. So in terms of the basic trend, this is good news. But if we look more broadly at the numbers, the picture is less rosy: California’s current recovery is very similar to the jobs recoveries that followed the 1990 and 2001 recessions. Since the Great Recession was a one-of-a-kind event — and the deepest economic downturn in generations — any indication of a “typical” recovery is bad news for California’s workers.

Since California’s jobs recovery began in February 2010, 803,000 new jobs have been created. During an equivalent period of 40 months following the 1990 recession, 755,000 jobs had been added. After the 2001 recession, the state had added 750,000 jobs by this point in its jobs recovery.  As the chart shows, recent employment growth closely tracks these two prior post-recession periods of job growth.

But this chart also shows just how severe the Great Recession was for California, especially compared to the 1990 and 2001 recessions. Even with the labor market outperforming expectations, California will not reach pre-recession employment levels anytime soon. As of June, there were still 529,000 fewer jobs than there were on the eve of the recession. Assuming that the average monthly job growth over the past year continues, California will not reach its pre-recession jobs level until July 2015 — two years from now. Moreover, this measure actually underestimates the length of time it will take to return to the pre-recession jobs peak, because it does not include the additional jobs needed to account for the natural growth of the working-age population.

So, despite this past Friday’s somewhat upbeat report, the 1.6 million Californians who are still unemployed will face a continually weak job market for some time to come.  They will need renewed support from state and federal lawmakers as the state continues to pull itself out of the massive jobs hole left by Great Recession.

— Luke Reidenbach