Why Is California's Unemployment Rate So High? (hardwood floors, foreclosed)

[AA702]

There are layoffs in almost every type of job field. I have some family members that were working in stable technology jobs and were laid off. It comes down to people not spending money and companies are feeling the pinch. Some companies even over hired during the "good times", so now they have to let people go. Real Estate agents and some mortgage brokers are usually self employed and I do not think you can even count them in the unemployment line because they do not qualify for an unemployment check (maybe a few only). I agree with cobmw with cutting taxes. The state of CA needs to make their government spending a lot less and cut all services that are not critical. Less government spending and less tax burden for employers will help create more jobs and stable jobs equal confident employees that will be confident consumers.

[Soccersupporter]

Originally Posted by cobmw

California's unemployment rate now stands at 9.3%. That's worse than all but one or two states. My question is why? California supposedly has the seventh largest economy in the world. It has the high-tech industry, tourism and agriculture industries, pharmaceutical companies, finance companies, and the entertainment industry. Then why is the unemployment rate climbing so fast? How can jobs be disappearing so fast?

And how can it be turned around? Perhaps time to get serious about promoting business in California. Maybe some tax cuts?

Until housing turns around CA will continue to get worse. Housing usually leads the economy into recession but it also is the first to lead the economy out of a resession. People have to stop being afraid to spend their money but it appears that it may take some time for that to turn around.

[AA702]

After 9-11, the economy tanked..the .com bust and so forth and so on. In 2002.. this housing debacle took off and got us out of a recession. Well, now the bubble busted and made a lot of greedy people rich and now its taking its toll on everyone. It will recover, but people will have to get use to living within their means and not using credit to aquire material things which shows wealth, but in reality will just add to more debt that they can no longer afford.

[Ultrarunner]

Originally Posted by cobmw

Still a little hard to understand. California has a workforce of about 18 million people. Of that a little over one million are employed in construction and real estate combined. So how could the housing slowdown in itself cause unemployment to rise so fast? All industries must be cutting workers. As someone said the housing dump must be taking the other industries with it.

It's the trickle down effect... people aren't spending to set up new households and that ripples through the economy...

[phloxy]

Isn't something like 2/3 of the U.S. economy driven by consumer spending? I don't see how that's sustainable.

[Ultrarunner]

Originally Posted by phloxy

Isn't something like 2/3 of the U.S. economy driven by consumer spending? I don't see how that's sustainable.

No matter what the problem is... it's always "Our" fault...

It's our fault for not saving enough and it's our fault for not spending enough... jeez

[hsw]

Prob a more complex analysis

Suspect CA (like much of US economy) is restructuring in many ways

All workers, jobs, consumers or taxpayers aren't created equal

Consumer-driven demand is not sustainable if typical US consumer is not creditworthy; is now older (boomers) and has dwindled savings for retirement and buying discretionary stuff

Many industries are fairly discretionary...housing (many families can easily rent a small apt, not own a house); travel&entertainment (can watch stuff for nearly free at home on an old TV); retail (most Americans have more clothes and junk than they need for next 2-3 yrs); food (most Americans are obese and no one needs soft drinks or salty snacks, etc); healthcare (gonna die of a heart attack or cancer by 70s anyway; obesity and diabetes, etc are self-created problems); etc etc

Many workers (esp retail, tourism, construc, etc) have poor basic English and math skills (incl US-born whites), so not really employable in many high-income industries like tech

CA is a dynamic economy, so many cos. are laying off contract workers, in addition to 5-10% of their workforce....if everyone worked for gvt or a union (like in EU), we'd have similarly crappy economies...and IIRC, Germany's unemployment rate is already >>10%, despite its socialism

Many low-skill jobs, workers and unemployed will leave higher-cost, higher-tax CA for more logical places in US...or RoW...perhaps a good thing...

Agree, need tax cuts...the top 1% pay some 40% of all taxes...creative entrepreneurs should be encouraged to start new businesses w/new jobs in CA....gvt should fire more of its inept workers to cut costs for businesses amd taxpayers; perhaps those low-skill ex-gvt workers should look for work outside CA...perhaps WashDC is last refuge for inept socialists and their many "workers"...at least before heading to socialist EU in search of "work"...

[sheri257]

The explanation is pretty simple. California housing boomed the most so ... the bust is also worse than everywhere else. The housing bust is what's driving this recession ... just as it drove the depression of the '30s.

We basically have more foreclosures than anywhere else which means the credit crunch is worse here, as well as everything else that goes with the housing crash.

Also industries like tourism and entertainment always get hit really bad during recessions because that's discretionary spending so ... that's also going to hit California worse than other states.

[sheri257]

Originally Posted by Soccersupporter

Until housing turns around CA will continue to get worse. Housing usually leads the economy into recession but it also is the first to lead the economy out of a resession. People have to stop being afraid to spend their money but it appears that it may take some time for that to turn around.

At least for housing ... it really boils down to lending, not spending. The housing market isn't going to pick up until lending loosens up. The problem is that the banks aren't going to lend when they still have a gazillion bad mortgages on the books.

[cobmw]

I have never heard of a housing bust having anything to do with the 30's depression. Where did you hear this? What is your source?

As I recall the causes of the great depression were the market crash of '29, bank failures, trade protectionist policies and the drought that occurred during that time.

I don't think many people even had mortgages. Could you tell us where you heard that a housing bust contributed to the 30's depression?