California again outpaces U.S. in job growth as state unemployment rate drops to 5.1%

The California economy started 2017 on a strong note, with employers adding a net 9,700 jobs in January and the unemployment rate dropping to 5.1%, according to data released by the Employment Development Department.

January was a banner month for the country — which gained a net 227,000 new jobs. But California continued its years-long trend of outpacing the national economy in job growth, piling on jobs at a year-over-year rate of 2%, faster than the national rate of 1.6%.

The unemployment rate in the state has improved markedly since January 2016, when it was 5.7%. But California’s jobless rate of 5.1% still puts it above the national rate of 4.8%.

The state’s education, health, and professional and business services sectors were the most energetic in the first month of the year, padding their payrolls by a combined 32,300 jobs.

January was less kind to workers in trade, transportation and utilities, traditionally among the state’s strongest industries. Employers in that sector cut their labor forces by 21,100.

The state has been adding fewer jobs in the last two months than it did earlier in 2016, a trend that economists say may be here to stay were fewer people without a job and looking for work.

“Overall job growth has been losing momentum. With the labor market tightening, it’s becoming tougher to find workers,” said Mark Vitner, a senior economist at Wells Fargo.

Vitner said it was possible that companies were reacting to the increase in the state’s minimum wage, from $10 to $10.50, in January.

“The hikes of the minimum wage we saw in the state combined with a lackluster holiday shopping season may have caused folks to cut back on employment,” he said. If the retail numbers don’t bounce back in February, he said, “maybe there’s something there.”

Los Angeles County lost 78,700 jobs in January, a large chunk of them in retail and wholesale trade, as well as transportation, warehousing and utilities.

Hospitality businesses in the county, which include restaurants, also took a hit, cutting 19,000 jobs.

Juan Millan, a labor market consultant with the state Employment Development Department, called those declines — which are not adjusted for seasonality — a “normal” part of the business cycle.

“It’s a seasonal thing. Every January the employment goes down in retail trade and hospitality because of the end of the holiday season,” Millan said. He noted that over the last decade, the county has lost an average of 89,467 jobs in the month of January.

The seasonally adjusted unemployment rate in the county declined to 4.9% in January from 5.6% the same month a year earlier.

Some economists have recently expressed concern, though, that Los Angeles isn’t doing a very good job at creating high-paying jobs. A recent report by the Los Angeles Economic Development Corp. found that since the recession, the county has replaced jobs in manufacturing and finance, which tended to pay well, with less remunerative restaurant gigs and low-level positions in healthcare.

Los Angeles County is among the most economically unequal large metro areas in the country, according to a study released this week by PolicyLink and the USC Program for Environment and Regional Equity.

Seven percent of Angelenos who work full time are living below the poverty line, compared with a national average of 4.7%, the researchers found. The report also said that the county’s jobs recovery has been spearheaded by industries such as food services, which don’t offer people a foothold in the middle class.

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UPDATES:

2:20 p.m.: This article was updated with additional data on job gains and losses, and the results of a study by PolicyLink and the USC Program for Environment and Regional Equity.

This article was first published at 9:20 a.m.