Economy · July 8, 2013

New California jobs not all for burger flippers

by California Health Report, California Health Report
July 7, 2013

By Daniel Weintraub

If California is hostile to good jobs – as conventional wisdom often suggests — the rest of the country might want to try some of our brand of antagonism.

Over the past year, California businesses have created jobs at a higher rate then the U.S. as a whole.

But what kind of jobs? Is California becoming a ghetto of dead-end employment, of fast-food, retail and other low-wage jobs with limited opportunities for upward mobility?

Actually, no.

The numbers show that California is beating the nation not only in the quantity but also in the quality of the new jobs in our information-oriented economy.

Michael Bernick, a former director of California’s Employment Development Department, called my attention recently to a short report from the American Enterprise Institute, which reported that more than half of the new jobs created in the US in May were in restaurants, retail and office administration, which includes temporary clerical jobs.

The pay for those jobs is among the lowest in the economy. And while there will always be low-paying jobs at the first rung of the upward mobility ladder, more than half the new jobs should not be in that category. It means climbing up to the next step, or even higher, is that much more difficult.

I asked Jordan Levine, an expert on employment trends with Los Angeles-based Beacon Economics, to compare California’s job creation with the nation’s over the past year.

According to Levine, those three low-paying categories accounted for 41 percent of new jobs in the country between April of 2012 and April 2013. In California, though, they were only 28 percent of the new jobs.

California’s new jobs were more likely than the nation’s to be in the information industries, including professional services, and in health care and wholesale trade.

That makes sense, given that the state is still the center of the technology industry. California-based firms – including Oracle, Google, Cisco, Intel, Qualcomm and Yahoo – have thousands of job openings, according to a recent report in Forbes Magazine that listed the 25 tech firms that are doing the most hiring this year.

That’s a reminder that manufacturing, which is not California’s strong suit, is far from the only source of good-paying jobs in the modern economy. California remains attractive to people who want to start or expand their business in software, design, engineering and other technical fields.

Ironically, California employers and workers might also be benefitting from an uncertain national economic recovery that has made companies reluctant to hire new workers.

Instead of hiring more people, many firms are looking to modernize their equipment and technology to become more productive. And with California’s dominance in technology, that’s led to more demand for our products and services, and more jobs.

“There’s been a big push toward productivity and efficiency on the part of business,” Levine said. “Businesses are trying to do as much as they can without expanding their payrolls.

“We’ve created a decent amount of low-wage jobs. But we’ve also created a good amount of high-paying jobs.”

The job picture in California fits with other recent developments in the state’s economy, notes economist Steve Levy. California’s gross domestic product grew at 3.5 percent in 2012, after accounting for inflation, a rate that was fifth highest among the states. Per capita personal income grew from $38,000 in 2011 to nearly $45,000 in 2012. And income tax revenues have exceeded projections by billions of dollars so far this year.

California’s track record is especially impressive given that the housing industry has been all but moribund since it collapsed in the wake of the housing bubble. As homebuilding picks up, jobs in construction, finance, real estate and related fields will begin growing again. And most of those jobs are in the upper half of the wage scale.

Health care jobs, which were a rare bright spot during the recession, might also see more explosive growth with the implementation of the federal health reform law, which is going to bring access to insurance – and health care – to several million people. Federal tax subsidies and reimbursements to the state government will bring billions of dollars into the state, leading to the creation of new jobs to serve the growing demand. And those jobs tend to pay well, with good benefits.

The information technology and bio-technology sectors, meanwhile, are showing no signs of slowing down.

California, like all the states, will always be vulnerable to fluctuations in the national and international economies. If those crash, we’ll go down with them. But for the moment, and contrary to the story a lot of pundits like to tell, California is doing better than most.

Daniel Weintraub has covered California public policy for 25 years. He is editor of the California Health Report at www.calhealthreport.org

This article first appeared on California Health Report and is republished here under a Creative Commons license.

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