The construction industry in California is growing again as the state’s unemployment rate fell below 10 percent for the first time in nearly four years. Experts say growth in single-family housing and construction are good indicators because they signal increased wealth, relatively high-paying blue collar jobs and general optimism.
After a long twilight, business is booming again at Matt Construction as orders come in for hotels, office complexes and other high-end buildings.
The Los Angeles-area company increased hiring by about 20 percent this year, adding 30 employees as more and bigger construction jobs piled up.
Stories like that are a major reason that California’s jobless rate dipped below 10 percent last month for the first time since the recession began. The 9.8 percent unemployment rate reported Friday by the Employment Development Department is down from 10.1 percent in October.
It marks the first time in nearly four years that the rate dropped into single digits. The last time was in January 2009, when the rate was 9.7 percent. The number of unemployed Californians dropped to 1.8 million, also the lowest since January 2009.
The improvement comes as something of a surprise, as leading economists had predicted that California’s unemployment rate would remain in double digits through 2013, but Matt Construction Executive Vice President Al Matt said his Santa Fe Springs-based company has seen a stronger recovery from the height of the recession in 2009, when revenues dropped by half.
"Overall, our revenues are up in 2012 by a substantial amount, as much as 30 percent," he said "It looks like next year will be a similar sort of increase."
California has added more than 564,000 nonfarm payroll jobs since the recovery began in 2010. About 14.4 million Californians were working last month, though California still lagged behind the national unemployment rate of 7.7 percent.
"The job gains have been fairly widespread. We’re finally seeing an increase in construction, particularly single-family housing. I think it’s continued evidence that California’s economy is growing and is recovering," said Jerry Nickelsburg, an economist who teaches at UCLA.
Experts say growth in single-family housing and construction are good indicators because they signal not only increased wealth, but relatively high-paying blue collar jobs and general optimism.
The danger of a downturn still lurks, however, most immediately in the form of the impending “fiscal cliff.”
Business and government officials have warned that fallout from the fiscal cliff could halt California’s recovery. Unless the federal government acts, Bush-era tax cuts and the end of a payroll tax holiday are set to expire, meaning smaller paychecks for workers just as the nation is struggling to recover from the Great Recession.
California’s economy currently continues as one of the fastest-growing in the nation, and labor force numbers show that encouraged workers are coming back, Nickelsburg said.
High-paying technology jobs have helped lead the recovery, and the information sector had the biggest percentage gain in jobs over the last year, up nearly 6 percent.
Yet the recovery varies significantly across the state. Imperial County had a whopping 26.6 percent unemployment rate, while rates in many inland counties remained in the double digits.
The San Francisco Bay Area remained the state’s growth leader, said Stephen Levy, a senior economist at the Center for Continuing Study of the California Economy. The rate was 5.8 percent in Marin County, while San Francisco and San Mateo counties hovered above 6 percent.
Growth in San Diego County also has been strong, Levy said. Los Angeles County and others nearby also have joined the recovery, while the Central Valley is slowly regrouping.
The capitol region, where government is a large employer, still is lagging, Levy said in an email.
"There’s no rebound at all," said Skip Brown, owner of road contractor Delta Construction Co. in Sacramento.
Government was the biggest loser in Friday’s report, down 34,500 jobs in the last year, indicating an overall decline in government spending.
Budget cuts mean less money for government projects like road construction, Brown said. He hasn’t taken a pay check from his own company in five years, and his salaried employees have eaten pay cuts up to 40 percent.
Meanwhile, stricter air pollution standards mean most of his heavy diesel equipment will be illegal to use in California in coming years. Brown said if he can’t sell the 69-year-old firm started by his father, he’ll close the doors once he can no longer operate his paving and grading equipment.
"They’re going to save the world, and in the process they’re putting hundreds of thousands of people out of work," he said of air regulators.
There will be more bad news unless Congress and the president take action before year’s end to avert the fiscal cliff.
Nearly 400,000 Californians face the loss of unemployment benefits next month if no deal is reached.
About $40 billion in extension benefits have been paid to the long-term unemployed in California over the last 4 1/2 years, officials said. The state sent letters last month notifying the unemployed
Californians about the scheduled end of the federal extension program.