(The Center Square) – Despite Gov. Gavin Newsom bragging about California being the world’s fourth-largest economy, the Golden State isn’t striking gold for jobs.
California continues to have the highest unemployment rate of any state and is among a handful of states with rates at 5% or higher, according to a review of statistics across the U.S. by The Center Square.
The national rate in August was 4.3%, up 0.1% from July, according to a new U.S. Bureau of Labor Statistics report.
Overall, 35 states ended August with rates below the national number and 13 states and the District of Columbia had rates higher than the national figure, according to Congress’ Joint Economic Committee’s monthly report. The panel got its numbers from the Bureau of Labor Statistics.
California’s rate for August was 5.5%, unchanged from July, the bureau reported. Nevada is the state with the second-highest rate at 5.3%, down 0.1% from July.
D.C., meanwhile, has a higher jobless rate, at 6%.
Back in the West, states saw their unemployment rates remain the same or drop or rise slightly. August rates included 3.3% for Utah, 4.1% for both Arizona and New Mexico, 4.5% for Washington state, 5% for Oregon and 4.2% for Colorado, according to the Joint Economic Committee and the U.S. Bureau of Labor Statistics.
Reasons for California’s poor jobs performance vary from the state’s high cost of living to minimum-wage laws, governmental regulations and slow growth in creating new positions, Dr. Wayne Winegarden of the Pacific Research Institute told The Center Square Tuesday. PRI is a California think tank.
“It’s too costly for companies to hire people here,” said Winegarden, a senior fellow in business and economics and director of PRI’s Center for Medical Economics and Innovation.
California companies understand workers don’t want to deal with the state’s high costs for things such as housing, so firms let employees work remotely from home in other states, Winegarden said.
Besides housing, Californians have to deal with the nation’s highest gas prices. The average in California Tuesday was $4.655 a gallon, well above the national average of $3.171, according to AAA.
Additionally, the state’s $20-an-hour minimum wage law for fast-food employees has led restaurants to cut back on staff, Winegarden said. He called the decline in fast-food employment “significant.”
He cited the example of McDonald’s using kiosks and touch screens for food orders instead of hiring employees to stand behind the counter.
“Those kiosks cost money, and they may not have been worth the expense if you could pay someone less than $20 an hour,” Winegarden said.
He noted most of the state’s job gains are in retail and public and private health care as the baby boomer generation enters its senior years.
“There are nursing shortages and doctor shortages,” Winegarden said.
But he noted both the nation and California are seeing weak growth in manufacturing.
“We’ve had a certain number of high-profile companies leaving California for Texas,” Winegarden said.
The economist conceded California is the world’s fourth-largest economy, but he said that’s because Germany fell from fourth to fifth because of its stagnant growth. California and Germany switched places.
California has the same problem with stagnation, Winegarden said.
“We’re not adding enough jobs,” Winegarden said. “We’re averaging less than 4,000 jobs a month.”
California added 3,800 net payroll jobs in August, according to the Joint Economic Committee and the Bureau of Labor Statistics.
The solution will involve policy changes, Winegarden said. He said California needs to roll back on minimum wage and get rid of “burdensome regulations.”
Winegarden, meanwhile, discounted tax credits for TV shows and movies as a means of keeping productions in California and boosting the economy.
“It’s never a good deal. All the states play the same game,” Winegarden said. “A better way to win the game is to have an environment where you don’t have to bribe someone to stay.”
