The last time California ranked 51st for job growth before 2023 was the year Bill Clinton was sworn in as president, Beanie Babies were introduced, the first “Jurassic Park” hit the big screen, and Whitney Houston’s “I Will Always Love You” was No. 1 on the charts.
Yes, 1993 was a long time ago.
My trusty spreadsheet – looking at revised employment stats for California, 49 other states, and the District of Columbia from the Bureau of Labor Statistics – found the Golden State bosses adding workers at a 0.87% rate in 2023.
While any job growth is good, that hiring pace looked meager in an otherwise strong US labor market. California’s hiring pace also was less than half the 2% rate nationally. Second-slowest was D.C. at 0.91%.
Please note, the fastest job growth was happening in key economic rival states. Nevada and Florida gained 3.4% and Texas rose by 3.3%.
California’s economy juggled numerous challenges in 2023, including a weakening technology sector, labor unrest making it the nation’s strike hub, and population outflow – which created a shortage of workers to hire. There’s no doubt the state’s reputation as a tough place to do business doesn’t help.
Some California industries are in reverse gear. State jobs stats show noteworthy job cuts in the movie business, off 25% – major strikes all but shut production; at temp agencies, off 14% – drops common when hiring slows; lending, off 9% – rising rates slashed borrowing; and at warehouses, off 5% – online shopping has cooled.
And geographically speaking, some of California’s biggest job markets were weak: San Francisco jobs fell by 1% while employment grew only 0.3% in Los Angeles County and rose 0.4% around San Jose.
But tumbling to the bottom of the hiring rankings isn’t California’s style.
Remember 1993? When a California house cost $190,000, L.A.’s Metro subway opened, and the first PDF documents were created.
Looking back over 50 years, that year was the only other time that California was the worst state for job growth. The state’s job count shrank by 1% in 1993 largely due to a major loss of aerospace work and the fallout from a real estate crash.
Think about who’s been No. 51 in hiring more often since 1974: DC (6 times), Michigan (5 times), Alaska and West Virginia (4), and Louisiana, New York, North Dakota, and Wyoming (3).
One year earlier
It’s a swift reversal for California.
In 2022, coming off some of the nation’s tightest pandemic business limitations, jobs grew statewide by 5.5% – the fourth-best increase among the states. But replacing all the jobs lost during the coronavirus economic chill ended abruptly.
California’s 4.6-percentage-point drop in hiring pace between these two years was exceeded only by Nevada’s 4.9 dip. Nationally, job growth was off, too, but only by 1.6 percentage points.
Now over the years California has been more likely to be a hiring leader than laggard.
Last year was the state’s seventh year in the bottom 10 in the past half-century, ranking it No. 26 among the states for bad job markets. The states earning this dubious distinction most often were West Virginia (25 times), then Connecticut (22), Pennsylvania and Rhode Island (20), and DC and New Jersey (19).
But 2022 was California’s 13th year in the top 10 for hiring. But that’s not nearly a national high.
Nevada’s been in the top 10 in 38 of these 50 years. Next comes Arizona and Florida with 33 years, Idaho at 30, Utah at 29, and Texas at 26.
Bottom line
Yes, California – the nation’s largest job market – has consistently outperformed most states.
Over 50 years, California’s 1.8% average annual growth ranks No. 19 and beats the 1.5% national pace. Tops? Nevada at 3.8%, Arizona at 3.1%, Utah at 2.9%, Florida at 2.6%, and Idaho and Texas at 2.5%.
And even over the last 10 years, the state has been above average. California ranked No. 14 with 1.7% job growth vs. 0.9% nationally. Tops? Utah, Idaho and Nevada at 2.9%, Florida at 2.6%, Arizona at 2.4%, and Texas at 2.2%.
However, last year’s sluggish hiring pace should be a wake-up call to state leaders – political, business and labor – that California cannot take its long-running job-creation success for granted.
California is a pricey place to live and do business and there’s plenty of lower-cost, high-quality competition that have proven to be viable options for bosses and workers.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at [email protected]