California Laggin’ – State’s Economic Recovery Stalls
New data released this morning (Sept. 18) from the Bureau of Labor Statistics shows California’s unemployment rate in August fell to 11.4% from 13.3% in July. That figure places California with the fifth highest unemployment rate in the nation. Only Nevada, Rhode Island, New York, and Hawaii have higher numbers. While the state’s unemployment rate is trending down from its peak of 16.4%—for comparison, California’s unemployment rate during the Great Recession remained above 12% for nearly all of 2010—more recent figures point to the state’s recovery lagging behind. For the week ending September 12, Californians filed over 230,000 new unemployment claims, making up nearly 30% of the nation’s total. New York, the state with the second highest number of claims, processed unemployment for just over 60,000 people in the week.
Making matters worse, to pay for record high levels of unemployment insurance, California has had to borrow more than $12 billion from the Federal Unemployment Account. California is one of 16 states to borrow from this national program, but it holds 40% of the outstanding debt. Bay Area Council Economic Institute Chair and Stanford professor Mark Duggan co-authored an op-ed on the topic that appeared in Sunday’s Wall Street Journal, arguing that unemployment insurance taxes are likely to increase to pay for this borrowing, which could further dampen the state’s recovery.