California's Unemployment Crisis
California's Two Economies

By Auren Hoffman

According to statistics compiled by the US Government and mined by BridgePath (, California has a far higher unemployment rate than most of the country (see chart). While areas like the Silicon Valley continue to flourish, much of the nation's most populous state still remains in recession. In fact, only four other states have a higher unemployment rate for 1997 than California (two of them being Hawaii and Alaska -- states with traditionally high unemployment).

California's 6.3% overall 1997 unemployment rate is almost a point and a half greater than the national rate of 4.9%. That rate ranks California fifth worse in the country -- though it is an improvement over 1996 (where the state was plagued with 7.2% unemployment).

The BridgePath analysis suggests that two Californias may exist. Regions like Modesto (13.4%), Fresno (12.5%), Bakersfield (11.4%), and Stockton (10.8%) are experiencing double-digit unemployment like many European countries. Even Los Angeles has 7.0% unemployment. These alarming numbers are offset by regions like the San Francisco Bay Area, the San Diego Area, and Orange County -- which all have unemployment far below the national average. San Jose, for example, has a 1997 unemployment rate of only 3.1% (the lowest in the country).

This dichotomy has come about chiefly due to California's changing economy. Though much of the state's economic progress relies on agriculture, technology is quickly becoming the largest employer. Regions like San Diego, Orange County, and the Bay Area all rely heavily on technology while cities like Bakersfield have been slow to adopt. It is not surprising that all these new growth areas have grown up around world class universities that help spur innovation.

But California's situation is not unique. All around the nation, two economies are springing up -- the educated and the non-educated workforce. In today's economy, even the lowest paying jobs require computer skills, a high degree of education, and training. Though the split is most evident in California because of its size, it is occurring in every state from Vermont to New Mexico.

Federal California 
Date Unemployment (%) Unemployment (%) 
1/96 5.7 7.6 
2/96 5.5 7.6 
3/96 5.5 7.5 
4/96 5.5 7.4 
5/96 5.5 7.3 
6/96 5.3 7.2 
7/96 5.4 7.1 
8/96 5.2 7.1 
9/96 5.2 7.1 
10/96 5.2 7.0 
11/96 5.3 6.9 
12/96 5.3 6.8 
1/97 5.4 6.9 
2/97 5.3 6.6 
3/97 5.2 6.6 
4/97 4.9 6.5 
5/97 4.8 6.4 
6/97 5.0 6.3 
7/97 4.8 6.1 
8/97 4.9

Copyright 1997, Auren Hoffman, All Rights Reserved

Auren Hoffman is an analyst for BridgePath ( BridgePath is a service that helps students and recent graduates find jobs.

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