The job growth rate in Los Angeles is slowing. According to a report from Beacon Economics, the job growth rate is slowing dramatically. In May of 2016, the year-over-year job growth was 3.1%—outpacing the nation and California—in May2017, the numbers dropped to 1.1%. The tight labor market and L.A.'s phenomenal growth may behind the slowdown. We sat with Robert Kleinhenz, economist and Executive Director of Research at Beacon Economics, for an exclusive interview to talk about the job growth in Los Angeles and how tech jobs it into the equation.
GlobeSt.com: How has the job growth rate begun to slow?
Robert Kleinhenz: If you look at year-over-year wage and salary job growth in May of 2016, the growth rate was 3.1%. In May of 2017, it slowed to 1.1%. Basically, the growth rate for the state was but in half. Job gains a year ago were3.2% year-over-year, but by the time we get to May 2017, it has slowed to a 1. 1% growth rate. It is slower than the state as a whole. For four years, California's job machine was moving at a faster clip that the nation. It has only been in the last month that we are now matching the gains at the national level.
GlobeSt.com: What is driving the slow down in job growth?
Kleinhenz: The first manifestation of a very tight labor market is that the unemployment rate is as low as it has been in 20 years, and maybe longer than that. The unemployment rate hasn't been as low as it has been in Los Angeles County on record going back to 1976. That is pretty remarkable, considering all of the ups and downs that we have been through. What is interesting is that we are still seeing entry into the labor force. The labor force for the county still rose by 1.5% last month in year-over-year terms. We have people coming into the workforce, but they are not well matched to the jobs that are out there. We don't have data to tell us where the mismatches occur, but nationally, skilled labor jobs are going under-severed, and service jobs have more jobs than they can fill. That is limiting growth in Los Angeles County, but also for the state as a whole.
GlobeSt.com: Are tech jobs slowing as well?
Kleinhenz: L.A. County contributed the lion's share of the job gains in professional, scientific and technical services for the state as a whole in May. Of the 11,700 jobs added in this sector in May 2016 to May 2017, L.A. had 9,700. We are seeing big gains in tech in Los Angeles County. We are still seeing growth in the Bay Area, but it is just not as dynamic as we have seen before. The job gains that we are seeing in L.A. are smaller than they had been, but they are still are still the biggest source of tech job growth right now.
GlobeSt.com: Is this slowdown in employment growth typical for a market?
Kleinhenz: We had huge unemployment during the great recession, so we had a lot of capacity there that had to be absorbed. We had unemployment rates in California that got into the teens. You might expect that with such high unemployment, it was going to take a while to absorb all of the unemployed labor, but by May of June of last year, we had effectively absorbed all of that excess labor supply. Now, we are running in line with the nation as a whole.
The job growth rate in Los Angeles is slowing. According to a report from Beacon Economics, the job growth rate is slowing dramatically. In May of 2016, the year-over-year job growth was 3.1%—outpacing the nation and California—in May2017, the numbers dropped to 1.1%. The tight labor market and L.A.'s phenomenal growth may behind the slowdown. We sat with Robert Kleinhenz, economist and Executive Director of Research at Beacon Economics, for an exclusive interview to talk about the job growth in Los Angeles and how tech jobs it into the equation.
GlobeSt.com: How has the job growth rate begun to slow?
Robert Kleinhenz: If you look at year-over-year wage and salary job growth in May of 2016, the growth rate was 3.1%. In May of 2017, it slowed to 1.1%. Basically, the growth rate for the state was but in half. Job gains a year ago were3.2% year-over-year, but by the time we get to May 2017, it has slowed to a 1. 1% growth rate. It is slower than the state as a whole. For four years, California's job machine was moving at a faster clip that the nation. It has only been in the last month that we are now matching the gains at the national level.
GlobeSt.com: What is driving the slow down in job growth?
Kleinhenz: The first manifestation of a very tight labor market is that the unemployment rate is as low as it has been in 20 years, and maybe longer than that. The unemployment rate hasn't been as low as it has been in Los Angeles County on record going back to 1976. That is pretty remarkable, considering all of the ups and downs that we have been through. What is interesting is that we are still seeing entry into the labor force. The labor force for the county still rose by 1.5% last month in year-over-year terms. We have people coming into the workforce, but they are not well matched to the jobs that are out there. We don't have data to tell us where the mismatches occur, but nationally, skilled labor jobs are going under-severed, and service jobs have more jobs than they can fill. That is limiting growth in Los Angeles County, but also for the state as a whole.
GlobeSt.com: Are tech jobs slowing as well?
Kleinhenz: L.A. County contributed the lion's share of the job gains in professional, scientific and technical services for the state as a whole in May. Of the 11,700 jobs added in this sector in May 2016 to May 2017, L.A. had 9,700. We are seeing big gains in tech in Los Angeles County. We are still seeing growth in the Bay Area, but it is just not as dynamic as we have seen before. The job gains that we are seeing in L.A. are smaller than they had been, but they are still are still the biggest source of tech job growth right now.
GlobeSt.com: Is this slowdown in employment growth typical for a market?
Kleinhenz: We had huge unemployment during the great recession, so we had a lot of capacity there that had to be absorbed. We had unemployment rates in California that got into the teens. You might expect that with such high unemployment, it was going to take a while to absorb all of the unemployed labor, but by May of June of last year, we had effectively absorbed all of that excess labor supply. Now, we are running in line with the nation as a whole.
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