One year earlier, the unemployment rate was 6.8%; since then, 885,000 jobs have been lost. Only four states have higher unemployment rates—Michigan (14.1%), Oregon (12.4%), Rhode Island (12.1%) and South Carolina (12.1%). The national average also rose, to 9.4%. The average for the Western US is 10.1%--the highest average since September 1983.

Government posted the largest single decline in employment in California in May, dropping 14,200 jobs, according to the California Employment Development Department. All sectors save two [education and health services] lost jobs during the month, according to the agency.

"A full recovery will not happen overnight — it will take time, which only further underscores the need to continue the economic stimulus measures I fought for in the February budget," Governor Arnold Schwarzenegger said in a statement. "There is no greater priority right now than to stimulate the economy, create jobs and get California back on the road to prosperity."

Schwarzenegger has proposed billions of dollars in cuts to education and social welfare programs, and laying off an additional 5,000 state employees, in response to the current $24.3-billion deficit for the fiscal year that starts July 1.

In a speech on Thursday he said if the full deficit isn't addressed the state will run out of cash by July 24, he said, adding that two days ago the credit rating agency Standard & Poor warned that the state budget, "if it is not done on time" or done with "partial solutions or rosy assumptions, would result in another drop in the state's credit rating.

Schwarzenegger made the statement just prior to saying he would not sign the most recent budget proposal from the State Legislature because it includes more tax increases. Four months ago the state implemented the biggest tax increase in its history in order to improve its balance sheet.