Why California Trails Nation in Jobs, and Why We Shouldn’t Worry

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The Public Policy Institute of California has a terrific new report on how California may look in 2025.

Reading the section on the economy, the following bad news jumped out at me: PPIC's researchers predict that California's unemployment rate will remain higher than the rest of the country's employment rate in the future.

But that isn't entirely bad news, or unexpected. California has long had a higher unemployment rate than the country, even in good times. Why?

It isn't a lack of job growth. California produces jobs at about the same rate as the nation. The problem is: California's population grows much faster than the rest of the nation. And so does our state's labor force. This means that, even when the state has grown faster than the rest of the U.S., our fast-growing labor force can keep the unemployment rate high.

This same dynamic helps explain the higher unemployment rates in parts of the Central Valley. The work force in those interior areas has grown quickly, driven by demographics and relatively inexpensive housing that draws more people away from higher-cost coastal areas.

In evaluating the state, PPIC recommends, it's smarter to look at job growth figures, not the unemployment rate. We'll try to take that advice here at Prop Zero.

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