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California on Track for Longest Job Expansion in Recorded History

06/25/19 | Laura Barton

California added 19,400 jobs in May bringing the unemployment rate down to 4.2 percent.

California added 19,400 jobs in May bringing the unemployment rate down to 4.2 percent, according to the latest report from the state Employment Development Department. The lowest unemployment rate, 4.1 percent, was seen in second half of 2018.
Current job growth is at a 111-month expansion — the second-longest since 113-month expansion of 1960s.
With 282,700 jobs added over the last year, the 1.6 percent pace of employment growth lines up with the growth rate nationally. Still, California’s 19,400 jobs gain accounted for a lion’s share of national monthly job growth, contributing 26 percent.
While the state’s unemployment rate declined slightly in May, the driver is unfortunately declining labor force which declined by 49,800 in May, following a 51,800 decline in April. On an annual basis, labor force showed only a small improvement of 136,400 or 0.7 percent growth.
In May, 7 out of 11 industries added jobs, with largest gain in construction (12,800), suggesting increase in new home construction. The second largest gain was in leisure and hospitality, up 4,500 jobs, and government, up 1,800 jobs. In annual comparison, there is a relatively consistent growth in education health services followed by professional and business services, and a loss in financial services.
Regionally, Los Angeles continued with the largest job gains adding 8,200 between April and May, with gains largely in leisure and hospitality, a seasonal gain that also reflects the strength of the area’s tourism industry. Employment services reflected another large gain, up 4,600 jobs. Within construction’s gains, the largest relative increase was among building finishing contractors, up 4 percent over the month, and 15.2 percent over the year. Information sectors, mostly driven by motion picture and sound recording, showed the largest monthly declines, while finance and insurance have seen the largest overall annual declines, down 3,400 jobs in total year-over-year. The region’s employment growth over the year remains focused in health care and social assistance, which account for about 30 percent of the growth.
In the Bay Area, gains were broad based across the regions, and most regions saw the unemployment rate decline again falling below the year-ago bottom. In San Francisco-San Mateo region, up 7,100 jobs, monthly gains were led by accommodation and food services, construction, and financial services, with a loss in private education and health services. Over the year, the region gained 44,900 jobs.
In Santa Clara-San Benito region, up 4,900 jobs, gains were also led by leisure and hospitality as summer seasonal hiring kicked in. The region also saw strong gains in information and professional services. Over the year, job gains in information and computer and electronic product manufacturing suggests the area continues to be a big draw for tech innovation.
Alameda and Contra Costa counties added 6,100 jobs in April, with construction’s specialty trade contractors leading the gain. Over the year, the area added 19,100 jobs with over a third in health care and social assistance, followed by a similar gain in professional and business services
In Marin, Napa and Sonoma counties, unemployment rate also declined dropping to lowest rates since May 2018. However, falling unemployment rates are due to declining labor force which was down 0.6 percent in Sonoma year-over-year, down 1.2 percent in Napa, and mostly flat in Marin.
Figure 1 summarizes annual changes in employment, number of jobs added in high-income sectors, and the share of total jobs that were high income jobs by region.
Column titled Percent in High Income Sectors illustrates how many of the jobs added in each region were in high income sectors, which include financial activities, professional and business services, and information sector. In San Francisco and San Jose metropolitan areas, about 50 percent of job growth is in high-income sectors which contrast notably other regions, particularly Los Angeles where the diverse economy still hasn’t gained traction with higher-income employment growth.

Figure 1

Notes:

East Bay Area includes Alameda and Contra Costa counties
Los Angeles includes Los Angeles County
San Francisco incudes San Francisco, Marin, and San Mateo counties
San Jose includes Santa Clara and San Benito counties

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