State Posts Modest Gain in Payrolls

Employment growth in California remained sluggish last month as the economy added a modest 8,800 jobs, many of them in the temporary-help industry.

The state did outshine the country as a whole, which expanded payrolls by just 21,000 in February. Still, the report Friday from California’s Employment Development Department showed that the state, like the nation, continued to be stuck in an economic recovery that is producing few jobs.

By economists’ estimates, California needs to create around 20,000 net new jobs monthly to keep pace with the growth of the labor force. But since last summer, employers statewide have been generating on average less than half that number every month.

California’s unemployment rate held steady in February at 6.2%, but that was partly because some people gave up looking for work and were no longer counted as officially unemployed. Nor was it easier for many jobless workers to get back on their feet: The proportion of the 1.08 million unemployed Californians out of work for more than six months rose again last month, to a little more than 24%.

The weak hiring in February came after the state added an upwardly revised 26,100 positions in January, which had raised hopes of a long-awaited recovery in the job market. Both California and the nation have endured a long period of anemic job growth, even as the economic expansion nears 2 1/2 years. And that has given rise to questions about whether the historic link between economic growth and employment gains has changed.

Some economists expect California’s reservoir of faster-growing industries -- including defense, technology, tourism and international trade -- to give it an edge in job creation over the rest of the country.

“It’s going to kick in during the second half” of the year, predicted Esmael Adibi, an economist at Chapman University in Orange. He said hiring had been weaker than anticipated because businesses had met rising demand largely by outsourcing and through a surge in productivity. But the rapid productivity increases of late aren’t sustainable, he said, and employers will have little choice but to add workers.

Others, however, weren’t so confident. And the latest employment report was not encouraging.

Although there were solid employment gains last month in construction and business services -- notably employment agencies -- the budget-strained government sector cut its payrolls and manufacturing continued to shed jobs.

Additionally, the state’s education and health-services sector, a major source of growth in recent years, declined by about 2,000 jobs in February.

“In terms of the number of job gains, February was obviously disappointing,” said Keitaro Matsuda, senior economist at Union Bank of California. Nonetheless, he noted that January and February marked the first back-to-back months of job growth in more than a year. What’s more, he added, the Bay Area economy, the primary culprit in the state’s labor woes, appeared to be bottoming out.

The February jobless rate for the Bay Area was 5.7%, down from 6.8% a year earlier. The unemployment figure for Southern California was 5.3% last month, down from 5.8% a year ago.

Economists also said they were pleased by increases last month in construction and financial activities, which may be getting a second wind from the recent drop in interest rates. Financial institutions, including mortgage brokers and bankers, added 3,300 jobs. The construction sector, meanwhile, took on 4,800 more workers in February.

The building of new homes and schools is driving that growth, offsetting a falloff in heavy construction work because of the state’s fiscal problems, said Ben Bartolotto, research director at the Construction Industry Research Board in Burbank. Despite expectations of an eventual rise in interest rates and a cooling of the housing market, Bartolotto said, thus far there’s no indication of a slowdown yet.

The recent payroll gains at temporary-help firms also suggest that employers may be gearing up to add to their staff.

However, many businesses and people who monitor the job market say employers don’t seem ready to hire.

Paul Darricarrere, who owns the Buggy Whip restaurant in Westchester and also runs an import-export company, says business has been improving in recent months. But he doesn’t have plans to add bodies. One big reason: Costs, including workers’ compensation, have gone up faster than his sales.

Adlai Wertman, chief executive of Chrysalis, a Los Angeles-based organization that helps economically disadvantaged workers find jobs, also isn’t hopeful of a quick turnaround.

“It’s still very much an employer’s market,” he said.