Hard Times, California

Sep 8, 2008

The news media and U.S. officials sometimes try to make it seem that high unemployment is concentrated in the industrial heartland, which they belittle as the old rust belt, states like Pennsylvania, Michigan and Ohio. Yet California–with by far the biggest population and biggest and most diverse economy in the country–also has the fourth highest unemployment rate in the country–tying it with Illinois.

In July 2008, the latest figures released, California’s unemployment rate hit 7.3%–its highest level in 12 years. Other figures also confirm the worsening job market. The number of long-term unemployed, whose unemployment benefits have run out, has also jumped. And the number of workers who are forced to try to survive as their hours have been cut from full-time to part-time has increased by more than 800,000, or by one-third, in just one year.

Just as ominously, the proportion of the population in the labor force is also much lower–as many workers seeking work have simply given up.

In fact, the California labor market never really recovered from the 2001 recession. It took four years after the 2001 recession for the number of jobs to simply catch up to the level in 2000, before the recession. And during those years, more than 60% of the new jobs were in housing-related industries, including real estate, finance and residential construction–that is, they were a product of the real estate bubble, which was especially huge in much of California.

While the job growth during the bubble years helped offset the drop in jobs in other sectors during that time period, those sectors tied to real estate have now led to a new sharp drop in the number of jobs.

As the job market grows ever worse, more working people are having no choice but to look to government programs to keep their heads above water. By late 2007, the number of families seeking cash assistance through the CalWORKS Program (the latest downsized version of the old welfare program) rose for the first time in several years, despite harsher requirements meant to make it more difficult for families to get aid.

In addition, close to 100,000 more California households received food stamps in May 2008 than did one year earlier, an 11% increase. The number of children in the state’s “Healthy Families” program, which provides them some form of health coverage, also increased by 58,000 or 7.1% in one year.

Of course, even as masses of people flood into these programs, Republican and Democratic officials are busy finding ways to cut the benefits, that is, when they are not making it more and more difficult to get them in the first place–under the guise of what they call a state “budget crisis”–thus, spreading hardship and misery in the biggest, richest and supposedly most modern of all economies.