California Quietly Revised FY2023 Job Growth Down From +325k Jobs to Just +50k – High-Paying Tech and Professional Jobs Hit Hardest
In February 2022, CNN Business reported the previous month’s US job growth on the first Friday of the month, as is customary. What isn’t as well-known is that just before the Bureau of Labor and Statistics report is released, the ADP Research Institute releases its own privately obtained data. The ADP handles the “payroll of about one-fifth of all privately-employed individuals in the US,” according to Investopedia. CNN Business reported on the ADP numbers as well.
On February 2, 2022, CNN Business reported the ADP claimed there was a loss of 301,000 private-sector jobs.
On Friday, February 4th, 2022, CNN Business reported a “surprisingly strong jobs report”, citing the creation of 467,000 jobs.
That’s a one-month difference of 768,000 jobs between the two reports.
The discrepancies, however, are not simply limited to the federal government’s numbers. Last week, California’s Legislative Analyst Office revised the state’s job numbers downward for the entire FY2023. California originally estimated adding 325,000 jobs for the year however, after the “rebenched,” numbers are much worse: California only added 50,000 jobs between September 2022 and September 2023.
The newly benched numbers are not as promising as originally reported. The originally-estimated numbers continued an upward trend from 2022’s growth but now show a more plateaued growth line.
The downward revision isn’t the only problem for the Golden State. The field with the largest downward revision was Professional Services, with 131,000 jobs removed from the original estimate. Leisure and Hospitality and Trade/Transportation/Utilities were reduced by 47,200 and 46,600, respectively. Finance lost 35,800 jobs, and Information lost 33,400. Only two industries were revised upwards: Health added a meager 11,100 jobs while Government added 24,100.
This revision has thrust the unemployment rate up to 5.1% (5.2% after the January 2024 jobs report), underperforming the national unemployment rate of 3.7% (in January).
It Gets Worse…
According to Just The News, “because the top 1% of income earners, who often are in professional services, pay 45% of the state income taxes, declines in the industry could lead to significant revenue declines for the state.” California currently has a $73 billion deficit. Billion with a “B.” And the Golden State is $1.6 trillion, with a “T,” in debt.
While Governor Newsom is currently rallying California residents to ensure their ballot was counted in favor of passing Prop 1, his marquee $6.4 billion spending deal to combat homelessness, he is bound to face huge budget obstacles in the immediate future. Just The News reports:
California’s Democrat legislature proposed just $2.1 billion in spending cuts, with California Governor Gavin Newsom proposing $8.5 billion in cuts. Both pale in comparison to the state’s $73 billion deficit.
Because of 2004’s Proposition 58, the state is required to pass a balanced budget each year in which revenue is not outstripped by recurrent expenditures, including debt financing. The governor can call a fiscal emergency to address the budget problem within 45 days. If the legislature cannot reach an agreement to pass a balanced budget within 45 days, it is prohibited from acting on any other bills or entering recess until a balanced budget is passed. Prop. 58 also banned borrowing to cover deficits except in the case of short-term borrowing to cover cash shortfalls in the general fund.
Should revenue expectations continue to decline, California legislators and the governor may be left with no choice but to cut tens of billions of dollars from the state’s $209 billion proposed budget.
In contrast, Florida Governor Ron DeSantis is enjoying a $5.3 billion surplus, despite spending $118.7 billion, the most in Florida’s history. All without a state income tax. Gov. DeSantis and Gov. Newsom faced off in a bizarre debate last November, pitting a then-presidential candidate against an anticipated challenger lurking in the shadows behind the 81-year-old Joe Biden.
According to the Los Angeles Times, California’s population has shrunk by 500,000 people between April 2020 and July 2022. The number of residents leaving surpassed those moving to the state by 700,000. These losses are after the 2020 US Census stripped the most populous state in the Union of one electoral vote in 2020.
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