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Thursday, Dec 7, 2023

L.A. Unemployment Falls Despite Huge Drop in Jobs

While L.A.’s jobless rate dipped to 5.8 percent in January, employers in the county shed almost 88,000 jobs from their payrolls, marking an especially dismal start to the year, according to state figures released Friday.

Even worse, the state Employment Development Department reported in its annual data revision that there were 42,000 fewer jobs showing up on employer payrolls in December than it originally estimated.

The unemployment rate drop from the revised December figure of 6 percent would usually be greeted as good news, but the rate fell for the wrong reason: there were 18,000 fewer people in the labor force in January. More county residents reported they either gave up looking for work or returned to school. What’s more, the labor force of 4.97 million was smaller this January than last January.

The county’s unemployment rate matched the statewide level, but was considerably above the 4.9 percent national rate for January.

But the bigger shock to the local job market was the sharp drop in employer payrolls, which are reported in a separate survey to the EDD. While employers typically shed jobs in January as they let go of holiday hires – especially in the retail sector – this year’s drop of 88,000 payroll jobs was sharper than usual. Adjusting for the seasonal factor, the EDD reported a drop of roughly 14,000 jobs.

Part of the reason may be due to a more cautious hiring outlook among employers amidst the volatility of the equity markets during the early weeks of this year.

“We have seen some slowdown in hiring in response to the volatility of the market,” said Brett Good, senior district president for Southern California with Robert Half International, a Menlo Park staffing firm.

But Good suggested another factor: some employers were so busy in December that they kept their holiday season hires on a few weeks longer, into January. As a result, he said, many of his employer clients reported bigger drops in contingent worker positions in January than typically occurs. This was reflected in what the EDD termed a “larger than normal” seasonal job decline of nearly 14,000 positions in the employment services sector.

Other sectors reporting huge drops were, of course, retail (down 18,800), leisure/hospitality (down 9,900), and entertainment (down 9,300). No sector reported a net gain in jobs.

These January drops come on top of the data revision showing 42,000 fewer jobs in December, a downward adjustment of roughly 1 percent. These jobs were not “lost,” per se; they never really existed in the first place. As a result, total payroll employment in Los Angeles County in December did not top 4.4 million as reported back in January; instead, it came in at just over 4.37 million.

The only bright spot in the employment picture came in the closely watched year-over-year payroll figures. The county gained 93,000 jobs for a robust growth rate of 2.2 percent between January of last year and January of this year.

Leading the way were major gains in health care/social assistance (up 27,100), accommodation/food services (up 19,900), and professional/business services (up 12,400).

The only sector reporting a significant net drop in jobs over the past year was manufacturing, which continued its long-term decline by shedding 7,000 jobs.

Howard Fine
Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

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