2019 WAS AN ‘IMPRESSIVE’ YEAR FOR CALIFORNIA EMPLOYMENT GROWTH

Labor Force Continues Expansion Although Annual Growth Remains Lackluster

By: Beacon Economics and the UC Riverside School of Business Center for Economic Forecasting and Development

January 24, 2020 — Nonfarm employment in California capped off 2019 with modest gains, according to an analysis released jointly by Beacon Economics and the UC Riverside School of Business Center for Economic Forecasting and Development. The latest figures released by the California Employment Development Department reveal that employment in the state grew by 12,600 jobs in December. Since December 2018, California has added 310,300 jobs, which is equivalent to a 1.8% year-over-year increase, exceeding the nation’s growth rate of 1.4%. 

“December marked the end of an impressive year for the state’s economy with California adding over 300,000 jobs,” said Taner Osman, a Research Manager at Beacon Economics and the UCR Center. “That rate of growth far exceeds the national growth rate and was quicker than the state’s growth rate in 2018 of 1.6%.” 

California’s unemployment rate held steady at 3.9% in December, maintaining its record low. Over the year, the state’s unemployment rate has fallen from 4.1% to 3.9%. The state’s labor force also expanded for a fourth straight month, growing by 52,300 workers in the latest numbers. This reverses the contraction of the labor force that was seen in the first half of 2019. Since December 2018, California’s labor force has expanded by 36,900 workers, a relatively lackluster year-over-year increase of 0.2%. At the same time, the nation’s labor force grew by 0.9%. 

Key Findings: 

• The Other Services sector added more jobs in December than any other sector in the state’s economy, boosting payrolls by 4,200 positions. Establishments in this sector are primarily engaged in activities such as equipment and machinery repairing, dry cleaning and laundry services, personal care services, and pet care services. The Government sector also had a strong month, increasing payrolls by 3,400 positions. Professional, Scientific, and Technical Services (3,300), Administrative Support (3,300), Educational Services (3,200), and Health Care (2,000) also experienced relatively strong job gains. 
• Over the period from December 2018 to December 2019, Educational Services saw the fastest growth (4.5%). This was followed by Construction (3.6%), Health Care (3.4%), Administrative Support (3.2%), Professional, Scientific, and Technical Services (2.4%), and Real Estate (2.2%). 
• Despite total job growth in the state, payrolls decreased in a handful of sectors in December. Information posted the largest decline, where payrolls declined by 3,900. Still, employment in the sector has expanded by 2.1% since December 2018. Payrolls in Leisure and Hospitality (-2,400), Real Estate (-1,100), Wholesale Trade (-900), and Manufacturing (-600) also contracted during the month.
• In Southern California, job growth was led by Orange County, where payrolls grew by 6,000. San Diego (4,300), El Centro (100), and Ventura (100) also enjoyed job gains. Payrolls declined by 5,200 in Los Angeles County and by 1,300 in the Inland Empire. Over the past year, San Diego (2.3%) saw the fastest job growth in the region, followed by the Inland Empire (2.0%), Los Angeles County (1.5%), and Orange County (1.4%). 
• In the San Francisco Bay Area, the San Jose region led the way, where payrolls expanded by 1,500 positions in December. Job growth also occurred in the East Bay (900), Sonoma County (700), and Marin County (300). At the same time, payrolls declined by 400 in San Francisco County. Over the past year, Marin County (3.2%) saw the fastest job growth in the region, followed by San Jose (2.9%), San Francisco (2.6%), Sonoma County (2.0%), and the East Bay (1.7%). 
• In the Central Valley, Stockton saw the biggest monthly gains, where payrolls increased by 700 positions. Fresno (600), Sacramento (500), and Visalia (500) added jobs as well. Over the past 12 months, Yuba (4.0%) saw the fastest growth, followed by Merced (3.7%), Hanford (2.2%), Madera (2.0%), and Fresno (2.0%). 
• On the Central Coast, Salinas added the greatest number of jobs, with payrolls growing by 800 positions over the month. In Santa Barbara, 100 positions were added to local payrolls. From December 2018 to December 2019, Salinas (3.1%) added jobs at the fastest rate, followed by San Luis Obispo (1.6%), Santa Cruz (1.4%), and Santa Barbara (1.2%). 

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Beacon Economics is an independent economic research and consulting firm based in Los Angeles. The UCR School of Business Center for Economic Forecasting and Development is the first world-class university forecasting center in the Inland Empire. This analysis was authored by Christopher Thornberg, Taner Osman, and Brian Vanderplas. Learn more at www.beaconecon.com and www.ucreconomicforecast.org.