California Employment Hooks Downward Once Again

Last month I suggested that the little hook downward in California employment, reported for July, was a troubling sign. Today, fresh data was released from the State of California, and the downward move has continued. Whereas employment levels had just managed to hang on above the 16 million person level in July–in August they slipped back below, to 15.968 million. | see: California Employment in Millions 2000-2010.

Let’s consider the context here. Lower interest rates and several trillion in monetary and fiscal stimulus over three years has produced, at best, a small but brief cessation of job losses in California, the largest state in the union. As my work here at has also shown, over the past year and a half, California is one of a handful of states that is extremely sensitive to the price of oil. 75 dollar oil is too high for California’s economy, which is massively leveraged to a road and highway transport system that was built out on 12 dollar oil. Meanwhile, a severe debt-deflation remains underway in California as asset values in all real estate continue to fall from highs that will never be seen again–not in real terms, anyway. The headwall to any improvement in job creation largely comes from these two factors. And, helps us make sense of the following fact: in August of 2000 the total number of employed persons in California stood at 15.994 million. And in August 2010? Answer: 15.968 million.

One of the fallacies you will hear in financial media is the idea that flat job growth now means that “at least things are not getting worse.” That’s just not true. The liabilities and the costs from a growing population roll onward in the United States whether jobs are created or not. Flat job growth is just a more moderate actuarial nightmare for the system, as job losses.


Further Reading: State of California LMIE Monthly Labor Newsletter.

  • C185pilot

    Gregor, California is certainly dependend upon cheap oil, but not any more so than most other States

    west of the Mississippi. What California has is a very corrupt government and very entrenched public

    unions with their engorged pensions and entitlements. Certainly California cannot afford both high cost oil and a bloated, overpaid public sector.

  • > built out on 12 dollar oil

    Have you looked at international supply chains? I've been working in supply chain management field since early 90's — I suspect a great deal of the manufacturing offshoring decisions and execution was done with $12-18 a barrel oil. Not sure what is going to happen next as it is nontrivial systems engineering problem to figure out. I don't think manufacturing will go to Mexico given the failed state issue – should be interesting to figure out what happens . Long lead times + higher transport costs will certainly change things again.

    I'd bet

    -Heavy goods like furniture moving back to US (“Peak Demand” and high Oil prices make long lead times especially risky)

    – Shoes to Brazil — Brazil is about 7 days to get to US ports (on east coast) and can do short manufacturing runs. They were losing business to China because of a $0.25 cost per pair difference a few years ago (@ 35 dollar oil) — Flexibility and Cost should help them.

    – Not sure on computers — Folks like Wistron, Foxconn and other Chinese/Tawainese manufacturers do huge volumes. Perhaps Peak Demand and high oil costs move assembly closer to home. Shift changes at these factories in Suzchou were impressive to behold – might have a negative impact on Chinese employement in that beautiful city (factories – not so much)


  • Wayne

    It's the same story in Florida: August 2000 total empoyment 7.228 million; August 2010 7.125 million, which was down 102,900 from July. This while the population grew by about 1.8 million.

  • Dougdillon1956

    Will be at the ASPO in a couple of weeks in DC. Can I meet you there? Or, if you are not coming is there anything I can do for you at the conference (ask specific people specific questions, etc.)?

  • Dougdillon1956

    Will be at the ASPO in a couple of weeks in DC. Can I meet you there? Or, if you are not coming is there anything I can do for you at the conference (ask specific people specific questions, etc.)?

  • NeutralObserver

    Those of you hoping oil prices will affect offshoring need to think again. Shipping a kilo from Australia to Los Angeles by sea requires only twice as much carbon as shipping by truck from LA to San Francisco. And the cost of oil is only 25% of the cost of shipping by sea. Oil will have to be about 4 times more expensive for it to have an effect on offshoring. Not that we will never see a 4X increase in oil prices, but this is more of an issue for our grandchilren than it is for us.

  • Militiades

    Some might say that the overpaid job exporting corporate CEO's are a bigger danger to the American public than overpaid public unions.

    Funny how those free traders seem to always find that the jobs they need to cut are never their own.

  • What you fail to take into account is that rail is more efficient than truck, of course. I respect your opinion, but wages in the US may meet Chinese wages as the two more toward one another. Of course, currency manipulation is another great way to favor off-shoring. The other problem is Chinese goods are not durable, and while Americans may be drawn to those products in the near term. Longer term some will begin to get away from them when possible. I think what happened to America Car Manufacturing in the 1980s as Japanese makers took over the markets due to their improvements in quality. China is not really making anything that lasts. The model to make it cheap and hope you replace it in 6 months with a similar cheap product. For a kitchen sink that adds up to the same marginal cost of an American sink, which means the Chinese model is not a long lasting one. Oh well. Let's see.

  • Democritus

    If only public employees had stagnant incomes like almost everyone else then our economy would perk right up.


  • Yeah it is the fault of the government and not the scarcity of energy/oil. LOL. Once we lower taxes like Bush did they the economy will start up again. Whoops! We did that and what happened? That darn spike in oil prices crashed the economy.

    So … what are you talking about again? I am confused by your linkage to politicians.