Why California employment keeps booming
Our entrepreneurial culture nimbly evolves industries
Labor Day 2017 finds California in the midst of an employment boom that has lasted more than seven years. Since February 2010, the state has gained nearly 2.6 million jobs. How long will this boom last?
As we look over the ups and downs of employment in our state since World War II, we find a tremendous resilience in the face of ongoing job losses through automation, deindustrialization, defense and aerospace cuts, and dot.com busts. Though numerous factors are responsible for this resilience, on this Labor Day we might single out the state’s entrepreneurial culture and ability to bring more and more Californians as stakeholders into the free-market economy.
Let’s start with the numbers. Since World War II, California has had four lengthy periods of employment growth, including the current one now in its 89th month. The longest period occurred in the 1960s, totaling 113 months, and there were growth periods of 91 months in the 1980s and 92 months in the 1990s.
In each of these growth periods, the job losses, when they came, started slowly and were largely unanticipated — no dramatic event triggered them. In June, California saw a loss of 3,200 jobs, and California economists expected that we could be entering a period of job contraction. But in July, the economy rebounded with an addition of 82,600 jobs — a third of the jobs added nationwide. We’ll know better in the next two to three months as new job numbers come in but, based on the previous post-World War II expansions, this expansion could well continue for some time.
Will this hold true for a changing economy? A number of prominent entrepreneurs in 2017, including Elon Musk, Mark Zuckerberg, Richard Branson and Stewart Butterfield have raised the specter of technology eliminating jobs (and the accompanying role of a universal basic income to offset those job losses). That automation and technology will lead to high unemployment is by no means a new concern in California. Throughout all of the state’s growth periods, policymakers and commentators in the state have warned of largescale job losses.
And they were partly correct, in that automation and technology, along with globalization, have eliminated many jobs and even whole occupations in the state, first mainly in manufacturing and then more widely in services. For instance, the late 1970s and 1980s saw the end of most of the automobile production and much of the heavy manufacturing in California. In the 1990s, dramatic job losses occurred in the relatively wellpaid aerospace employment, a foundation of California’s earlier job growth. In just three years, between 1991 and 1994, aerospace employment in the state went from 337,000 jobs to 191,000 jobs.
What saved the California economy during these disruptions and others, of course, was that a greater number of new jobs were created, including many jobs connected to technology not remotely envisioned when the old-economy jobs were being destroyed. Though the current advances in artificial intelligence might mean this job disruption is differ-
ent, California has responded to each previous dislocation with renewed job growth. It has done so not through job growth in one or two industries, but across nearly all industries. In the past 12 months, as the state has added 276,300 jobs, nine of the state’s 11 industry sectors gained jobs, led by educational and health services (72,900 jobs added), leisure and hospitality (52,600 jobs) and construction (51,000 jobs). Manufacturing showed a small drop of 14,100 jobs, though the state still retains a vibrant manufacturing sector, with nearly 1.3 million manufacturing jobs.
Kevin Starr, California’s pre-eminent historian, who died away this year, often spoke on the state’s culture of entrepreneurship as an explanation of employment growth. By this he meant not only that risk-taking has been part of our state’s DNA, but also that employment growth has followed expanding businessand home-ownership, small-business development, and voluntary associations — a model of growth contrasting with the competing 20th century model of big government and big business. This Labor Day brings a new book by Californian Mauricio Lim Miller that updates and expands upon Starr’s message.
Miller, a MacArthur Foundation winner in 2012, has grappled with employment and poverty issues since the late 1970s in California: for 22 years as head of Asian Neighborhood Design in the Bay Area and since 2001, as head of the Family Independence Initiative. Miller’s book, “The Alternative: Most of What You Believe About Poverty Is Wrong,” sends the message that individuals and families have the capacity to lead themselves out of poverty by pooling resources, and sharing efforts in building educational attainment, savings, and assets, particularly ones linked to employment.
With an estimated 3.7 million-plus small businesses in California, we have achieved a high level of entrepreneurship, driving our job growth. Miller urges us to continue this entrepreneurship, and focus our antipoverty strategies around it. As we do, we should be able to continue our job resilience — whatever automation brings.