California Jobs Report Worse Than It Looks

Don’t be fooled by the new California jobs report out Friday that shows statewide unemployment falling below six percent for the first time in nearly a decade. The state added almost no jobs last month – and 32,000 people stopped looking for work.

The headline looks great: California’s unemployment rate dipped below six percent in September and is now the lowest it’s been since November 2007.

But not so fast.

“The main reason unemployment dropped from 6.1 to 5.9 percent was the drop in the labor force,” says Chapman University economist Esmael Adibi.

Indeed, 32,000 California job-seekers were so discouraged that they couldn’t find work, they simply stopped looking. In fact, the state added just 8,200 jobs last month:

“That’s dismal,” Adibi says. ”That’s very paltry job growth by any standard.”

The unemployment rate in the four-county Sacramento area dropped nearly 1.5 percent over the last year. It’s now at a non-seasonally adjusted 5-point-2 percent. The region added just 300 jobs in September.

Adibi says the rough patch for California’s previously-booming job market could stem in part from economic woes in China and Europe that are affecting the state's manufacturing industry.

All that said, California has alternated good and bad months for the better part of the last two years – and one bad month does not make a trend.

Clarification: Our story originally said that 125,000 Californians stopped looking for work in September because they couldn't find jobs. That is the "non-seasonally adjusted" number. The "seasonally adjusted" number of distressed Californians who left the job market last month, which is generally considered to be a more relevant measurement, is 32,000.