California Named 3rd Top Economy in US, Unemployment Persists

June 14, 2021 Updated: June 14, 2021

Commentary

California was named the third-strongest economy in the United States by WalletHub despite all the state’s metropolitan areas’ unemployment rates being among the worst in the country.

Of the 27 California metropolitan areas tracked by the U.S. Census Bureau, all rank in the bottom half for employment.

Within the state, Silicon Valley (San Jose-Sunnyvale-Santa Clara) had the lowest unemployment rate in April, at 5.1 percent, and ranked 196 of the 389 metropolitan areas measured by the U.S. government agency.

El Centro has the highest unemployment rate in the country, at 16.1 percent, three percentage points worse than the nation’s second-worst unemployment rate, in Yuma, Arizona, with 13.1 percent.

Epoch Times Photo

According to WalletHub’s list of the country’s top state economies, three—Washington, California, and Massachusetts—are traditional tech hubs. Others are up-and-coming Western states—including Utah, Idaho, and Colorado—receiving people leaving California.

The metropolitan area around Logan, Utah, on the Utah–Idaho border, has the lowest unemployment rate in the U.S. at just two percent.

The reason California can rank so high among state economies despite its terrible comparative unemployment rate is that it has so much going for it, including its amazing natural attractions and deep economic infrastructure.

California is home to industry clusters. The Napa Valley and Paso Robles regions are known for sprawling vineyards, and high tech and venture capital are aplenty in Silicon Valley. Los Angeles is a world leader in movie and film production, and Orange County is home to amusement parks and medical equipment producers. It has “pharmabeach” in San Diego, world-class agriculture in the Central Valley, and transportation around the Long Beach and San Pedro ports.

And, of course, California’s beaches, rivers, national parks, mountain resorts, deserts, and other natural wonders draw tourists while enticing entrepreneurs and workers to relocate to the state.

California was deemed to have the third economy in the nation by WalletHub after it considered 29 different economic attributes.

Among those attributes, California was compared to the other 49 states as well as the District of Columbia.

Among the 51 economies, California was ranked fifth in percentage of jobs in high-tech industries, sixth in start-up activity, and ninth in government surplus per capita. It ranked 16th in change in state GDP and 19th in exports per capita.

California’s already-high employment in high-tech sectors—coupled with its strong startup culture within its many industry clusters—greatly adds to its high economic ranking.

Epoch Times Photo

Possibly explaining the vastly different rates of employment within the state, regions with a higher percentage of high-income earners are doing better than regions with more low-income earners. Many workers within the tourism-dependent hospitality industry are low-wage hotel workers, for example.

As of April 1, there were 24 percent fewer U.S. jobs for people earning less than $27,000 than there were in February 2020, before the lockdowns. $27,000 per year equates to $2,250 per month, or $13.50 per hour for someone working 40 hours per week for 50 weeks per year.

During that same time period, though, the number of jobs increased 2.4 percent for people earning more than $60,000, or $5,000 per month. $60,000 per year equates to $30 per hour for a person working 40 hours per week for 50 weeks a year.

Many people working in Silicon Valley earn much more than $60,000 per year.

So, while the California economy is flourishing so much for a subset of the population that it has been named the third economy in the U.S., many other would-be workers within the state remain out of work in cities with some of the worst unemployment rates in the nation.

Tim Shaler is a professional investor and economist based in Southern California. He is a regular columnist for The Epoch Times, where he exclusively provides some of his original economic analysis.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.