Steve Julian: On Tuesdays we talk with business analyst Mark Lacter. Mark, what's the real unemployment rate?
Mark Lacter: I'm gonna give you a catch all answer that economists love, Steve: It all depends! If you're in Malibu, the unemployment rate is 4 percent &ndsah; if you're in Compton, it's over 19 percent.
You know, there are gonna be new national numbers coming out on Friday, but what we're seeing so far in this recession, like all recessions, is a
wide disparity in how people are faring.
Julian: Now the March jobless rate for all of Los Angeles County was, what, 11.4 percent?
Lacter: Yeah, which is bad enough – actually, it's the highest it's been since 1976. But L.A County, of course, is a hugely diverse economy, so the needs of a city like Hermosa Beach, where the unemployment rate is under 5 percent, are really a lot different than they are in a place like Lancaster, where it's almost 16 percent.
Now, there's always going to be a division of haves and have-nots – and even in good times the unemployment rate is higher in lower-income communities than it is elsewhere. But the big concern is that even after the recession is officially over – and that's probably gonna be the next several months – unemployment is gonna remain high well into 2010, perhaps 2011.
Julian: Businesses won't be ready to expand?
Lacter: Or they're not gonna be able to – but it's also because the economy is likely to go through some fundamental changes, and the jobs that were counted on might not be around anymore. That means there's gonna be more of a need for government to help out with re-training programs and low-cost consumer and business loans.
Also, increased funding to help people who are homeless or require health care. You know, some of those needs are being provided in the stimulus package, but President Obama has avoided targeting low-income communities. He's saying that if the economy is strong it's gonna lift all boats. What's not clear is what happens if the economy is not so strong.
Julian: I'm gonna interrupt you, Mark, for one second to ask you, are you sitting by your toaster? We're having some phone problems.
Lacter: Yeah. It's that old (laughs), that old teeny, tiny phone here that we're having some problems with.
Julian: OK. Well, let's move on. So here we have federal stimulus money coming to California, and it's a state where population is slowing down the growth.
Lacter: You know, that's right. California's rate of growth in 2008 was about the same as 2007 – 1.1 percent. No big surprise here. When the economy started to slow, there just wasn't as much incentive to come to California.
Even among illegal immigrants, there was a noticeable slowdown because the kinds of entry-level jobs that are typically available have been harder to come by. And growth also varies by location, Steve. Riverside County, which had been going like gangbusters during the housing boom, saw a significant drop in 2008, and this year is probably gonna see more of the same.
Julian: Now in some way, Mark, is this a good thing?
Lacter: You know, it might seem to be – you know, if the growth rate slows down, it means less congestion, less pressure to keep building schools, not as much strain of the health care facilities, that kind of thing.
But there are downsides, and one of the biggest is a smaller labor pool, which means that businesses are less likely to want to stay here or expand their operations here. And that leads to less business activity, less development – and that leads to higher unemployment for construction workers, retail workers, lots of folks.
Julian: You saw that the Forbes magazine list of the worst cities to find jobs, and three metro areas in California were at the bottom of the list?
Lacter: Yeah, San Bernardino Riverside, Sacramento, and Oakland. And these were some of the same areas that had the strongest growth just a few years ago.
You know, one other fact to remember is the state's monster budget deficit. That makes it less inviting for people or businesses to want to come to California – also means less in the way of tax revenues.
Now, none of this is gonna be forever, and once the economy improves, we're gonna start to see a pickup in population growth. California has too many other things going for it, but what happens between now and then, that's the concern.
Julian: Mark, thanks so much.
Lacter: Thanks, Steve.
Julian: Mark Lacter is a contributing writer for Los Angeles Magazine and writes a business blog at
LAObserved.com.
Listen
