California Creates the Most U.S. Jobs in July

Economic Straight Talk

  • July was an incredible month for job creation in California, and especially in the Bay Area. Following a volatile summer, the state saw a monstrous increase of 82,600 jobs in July, with 20,800 additions in the Bay Area. This was the largest monthly increase since April 2016. Year to date, the state has added 146,200 jobs this year compared with 225,800 during the same period last year.
  • Government, which is usually a cause of summer volatility in employment numbers, led the increase, with 18,800 jobs added, followed by educational and health services, up 18,600 jobs; and leisure and hospitality, up 15,200 jobs. Other sectors that added jobs in July were professional and business services; construction; information; other services; trade, transportation, and utilities; and financial activities. The manufacturing and mining and logging industries recorded losses.
  • The state’s job-creation trends have been consistent over the last year. Since July 2016, California has added 291,800 positions, with the largest gains in the construction (up 6.6 percent), educational and health services (up 2.9 percent), and leisure and hospitality (up 2.8 percent) sectors. Jobs in professional and business services and information have increased, but at a slower rate: 1.0 percent and 0.6 percent, respectively.
  • The slower rate of hiring in higher-wage jobs reflects tight labor-market conditions that employers face, unable to find qualified workers. Also, the lack of wage growth incentivizes workers to switch to another employer. On the other hand, employers have difficulties attracting skilled workers to lower-paying jobs due to high housing costs in coastal areas of California.
  • According to CompTIA, a tech association that tracks IT sector employment, the industry added about 9,600 jobs in July and more than 70,000 jobs so far in 2017. While the main component of the IT industry added jobs through 2017, tech jobs in non-IT industries have seen a net decline this year. According to CompTIA’s report, a skills gap, location issues, pay, and pipeline gaps are contributing to fewer workers being hired than employers need. In fact, there are currently 61,000 open positions for software-development talent in California.
  • The Bay Area’s job market flourished in July. The San Jose metro area added 7,400 jobs, for a total of 12,800 jobs over the past three months. San Francisco added 3,500 jobs, and Oakland added 6,600 new jobs in July. Job growth was solid in Sonoma, Napa, and Solano counties as well. Southern California also flourished, with Los Angeles County creating 13,000 positions and Orange County adding 7,300 jobs.
  • While the solid job growth is certainly welcome news, an imbalance remains between wage levels and costs of living. According to John Burns Real Estate Consulting, 75 percent of jobs added in the San Francisco and San Jose metropolitan areas in 2016 earned incomes of less than $100,000. At the same time, there were about 15 percent less jobs that earned between $100,000 and $180,000. Lastly, about 40 percent of jobs added paid more than $180,000. The bifurcation in growth in the two income groups and the loss of middle-income jobs is already having an effect on the housing market and households’ abilities to afford to remain in the Bay Area.

Selma Hepp is Pacific Union’s Chief Economist and Vice President of Business Intelligence. Her previous positions include Chief Economist at Trulia, senior economist for the California Association of Realtors, and economist and manager of public policy and homeownership at the National Association of Realtors. She holds a Master of Arts in Economics from the State University of New York (SUNY), Buffalo, and a Ph.D. in Urban and Regional Planning and Design from the University of Maryland.

(Promotional image: iStock/NicoElNino)

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