Los Angeles County employers added nearly 42,000 jobs to their payrolls during the 12 months ending in June for a growth rate of 0.9%, according to recent state figures.
While that may seem like a lot, the total is down from the previous 12-month stretch, when the California Employment Development Department reported that 60,000 jobs had been added to payrolls, for a growth rate of 1.3%.
A major factor behind the slowdown in job creation is the county’s shrinking labor force, according to Christopher Thornberg, founding partner of Fairfax-based Beacon Economics.
“The county’s labor force has contracted by a little more than 1% over the past year,” Thornberg said. “That means employers in certain parts of our economy can’t get enough people to fill positions.”
Chris Thornberg
Thornberg attributed the shrinking labor force in part to the high cost of housing that is driving many residents to seek housing outside the county or the state. Another factor is rising labor costs.
In all, employers reported 4,605,000 jobs on their payrolls in June, according to the EDD data. The health care/social assistance sector led the way with a huge gain of nearly 48,000 jobs.
“Of course, with an aging population, there’s more demand for health care,” Thornberg said. “But this level of growth is more than one would expect from demographics alone. I suspect that part of this is due to the increase in Medicaid spending in recent years.”
An increase in home health care may also be a factor, he noted.
Despite all the talk of the film industry leaving Los Angeles County, payrolls for the sector actually rose by 7,300, or 6.9% for the 12 months ending in June.
“This just goes to show that contrary to reports in the media, it’s not all doom and gloom for the industry,” Thornberg said. “Historically, this has been a very volatile industry, with good periods and bad periods.”
On the other side of the ledger, the manufacturing sector posted the biggest loss in payroll jobs for the 12 months ending in June, shedding 15,500 jobs. About 60% of those job cuts came from the durable goods subsector, which includes the making of machinery, aerospace products and furniture. (For more on the manufacturing losses, please see sidebar.)
Financial activities, construction and professional/business services also saw significant drops in jobs.
Meanwhile, on the month-to-month front, employers shed about 6,500 jobs in June compared to May, according to the EDD. That reversed much of the gain of 13,000 jobs between April and May.
Seasonal declines in education as the academic year ended accounted for the entire drop and then some. Adding up private schools, K-12 public schools and state universities, the sector shed 8.600 jobs.
The EDD also releases a seasonally adjusted payroll jobs figure for Los Angeles County, which accounts for expected seasonal fluctuations in sectors like education. The seasonally adjusted figures showed a drop of 800 jobs in June, very little movement considering the total is around 4.6 million.
Outside of education, employment services (staffing firms) was the only other sector to show a significant loss of 5,000 jobs.
L.A. County’s unemployment rate held steady at 5.8% in June for the third straight month. It also matched the rate in June of last year.
The EDD data showed that components behind the unemployment rate showed very little movement in June: the labor force declined by about 1,000 to 5.07 million while the number of residents reporting they were employed rose by 1,000 to 4.78 million. The number reporting they were unemployed dropped by 2,000 to 292,000.
The county’s 5.8% unemployment was above the statewide June average of 5.4% and way above the nationwide 4.1% level.
Thornberg said this was due in part to the high concentration of unskilled workers in the county. But he cited another factor: the statewide $20 per hour minimum wage mandate for the fast-food industry. As the cost per worker increases along with the minimum wage, employers adjust by hiring fewer workers, he said.
As for the effects of the federal raids seeking to deport undocumented immigrants, since the EDD data tends to be collected during the second week of the month, that was likely too early to show a significant impact.
The EDD also reported the June unemployment rates for the county’s 88 cities and dozens of communities, though unlike the countywide figure, these figures are not adjusted for seasonal factors.
For the county’s two largest cities, Los Angeles and Long Beach, the June unemployment rates were 6.0% and 5.8%, respectively. Among cities with labor forces exceeding 10,000, Lomita had the lowest unemployment rate at 2.8%, while Calabasas had the highest rate at 8.6%.
The EDD reported the unemployment rate for one of the fire zones – Altadena – but only for the Malibu portion of the Palisades fire zone. In Altadena, the rate was 6.2% in June, compared with 6.0% in the same month of last year. In Malibu, the June rate was also 6.3%, compared with 4.1% for the same month last year.