Business
U.S. hiring keeps booming. Why is California lagging behind?
U.S. employers continued hiring new workers at a brisk pace last month, providing fresh evidence that the overall economy remains sturdy, but the new data showed that California is still looking like an underachiever.
California’s job growth has been trailing the national curve all year, and even though it made up some ground in January, the Golden State still lags behind when it comes to adding new jobs.
The state’s unemployment rate also continued a months-long run of exceeding the national average by more than a full percentage point. California’s most recent unemployment rate, for January, was 5.2%.
The national jobless rate went up slightly in February and now stands at 3.9%, marking 25 straight months in which the unemployment figure has remained below 4%.
Across the country, Friday’s report by the Labor Department said, employers added an unexpectedly strong 275,000 jobs last month, many in healthcare along with government and leisure and hospitality.
Still, the pace of hiring nationally has been moderating from even stronger levels last year, and wage gains slowed in February. With a cooling of inflation in recent months, the Federal Reserve is expected to begin reducing interest rates soon, easing financial conditions for businesses and consumers, especially new home buyers.
For California, Fed interest rate cuts can’t come fast enough.
California’s employment report for February will come out in two weeks. The January data released Friday offered a hopeful beginning to the new year: The Employment Development Department said employers statewide added 58,100 nonfarm jobs, a full one-fourth of the nation’s gains for that month.
However, that has not been the general pattern. Even with the burst of hiring in January, only 7.7% of the nearly 3 million nationwide jobs created over the prior 12 months have been in California, which accounts for about 11.5% of the country’s labor force.
Meanwhile, California’s share of the unemployed in the U.S. was 16.6%. And in recent weeks, about one-fifth of all jobless claims filed nationally have come from workers in California.
Why the lagging performance? Economists and business analysts point to a number of factors: Some are cyclical, such as the major role agriculture plays in the state economy. Harsh weather and rising costs have hurt almond and other crop growers, spilling into other parts of the economy, especially in the Central Valley.
Other causes are more systemic, such as the tech industry’s belt-tightening after a few years of what is now seen as profligate hiring. That and some other factors may be long-term trends.
Even more than the nation as a whole, California’s job growth over the last year has been highly concentrated, leaving the state’s workforce more vulnerable. The bulk of the hiring has been in healthcare and social services, followed by government and the hospitality industry.
Missing in action have been key high-paying drivers of the state economy. The entertainment industry, centered in Los Angeles, lost 38,000 jobs in motion picture and sound recording sectors from January 2023 to January 2024.
“The Writers Guild of America and SAG-AFTRA strikes had a profound effect on employment,” the EDD said in its release. Los Angeles County’s unemployment rate rose to 5.4% in January, up from a revised 5.2% in December.
Overall, the state’s information and business and professional services sector, which includes high-paying computer programmers and engineers, was down more than 105,000 jobs in January compared with a year earlier.
Statewide, the EDD said, transportation and trade-related jobs dropped about 10,000 from a year earlier. Similar declines were seen in financial services and manufacturing.
Michael Bernick, an employment attorney with Duane Morris in San Francisco and former director of the Employment Development Department, said part of the state’s underperformance can be traced to the pandemic and the response to it.
“The economic lockdowns in California counties were more severe than in other states, and many small businesses never recovered,” he said.
At the same time, Bernick said, employers in a range of sectors have been unable to fill entry-level jobs, so that the state has experienced worker shortages even with growing overall unemployment. That, along with rising labor costs, appear to be hampering hiring at restaurants and retail establishments.
Another big long-term problem, Bernick and other analysts said, is that California has become an increasingly hard place to do business, with employment rules that make hiring difficult and risky. Add to that the state’s higher costs, which have prompted many businesses and people to move out of California.
“The reason why Texas and Florida are doing well and California isn’t, it’s the cost of housing and high taxes,” said Sung Won Sohn, an economist at Loyola Marymount University in Los Angeles. “We have lost a lot of small businesses.”
He noted, however, that there’s still considerable entrepreneurial dynamism in the state, and that ethnic businesses, which dominate the small-business landscape in the Southland, are very resilient.
Analysts expect hiring nationally to moderate in the coming months. The near-term hiring outlook may be a little more mixed for the state.
Although the number of job openings in California has been dropping, there’s still strong demand for entry-level jobs at restaurants and retail stores and in health services. Whether more people will fill those jobs is another question. Labor participation in California has been lower than in the nation, with many older workers and Latina women remaining on the sidelines of the job market.
Tech layoffs have persisted this year, but there are signs that those cuts may be bottoming out, said Andrew Challenger of the outplacement services firm Challenger, Gray & Christmas.
In January, jobless rates in California varied widely, with a high of 19.3% for Colusa County in the northern Sacramento Valley to a low of 3.7% for San Mateo in the San Francisco Bay Area.
For Southern California, Orange County had the lowest rate at 4.2%. January‘s unemployment rate was 5.5% in Riverside County and 5.4% in San Bernardino County.
Business
U.S. Space Force awards $1.6 billion in contracts to South Bay satellite builders
The U.S. Space Force announced Friday it has awarded satellite contracts with a combined value of about $1.6 billion to Rocket Lab in Long Beach and to the Redondo Beach Space Park campus of Northrop Grumman.
The contracts by the Space Development Agency will fund the construction by each company of 18 satellites for a network in development that will provide warning of advanced threats such as hypersonic missiles.
Northrop Grumman has been awarded contracts for prior phases of the Proliferated Warfighter Space Architecture, a planned network of missile defense and communications satellites in low Earth orbit.
The contract announced Friday is valued at $764 million, and the company is now set to deliver a total of 150 satellites for the network.
The $805-million contract awarded to Rocket Lab is its largest to date. It had previously been awarded a $515 million contract to deliver 18 communications satellites for the network.
Founded in 2006 in New Zealand, the company builds satellites and provides small-satellite launch services for commercial and government customers with its Electron rocket. It moved to Long Beach in 2020 from Huntington Beach and is developing a larger rocket.
“This is more than just a contract. It’s a resounding affirmation of our evolution from simply a trusted launch provider to a leading vertically integrated space prime contractor,” said Rocket Labs founder and chief executive Peter Beck in online remarks.
The company said it could eventually earn up to $1 billion due to the contract by supplying components to other builders of the satellite network.
Also awarded contracts announced Friday were a Lockheed Martin group in Sunnyvalle, Calif., and L3Harris Technologies of Fort Wayne, Ind. Those contracts for 36 satellites were valued at nearly $2 billion.
Gurpartap “GP” Sandhoo, acting director of the Space Development Agency, said the contracts awarded “will achieve near-continuous global coverage for missile warning and tracking” in addition to other capabilities.
Northrop Grumman said the missiles are being built to respond to the rise of hypersonic missiles, which maneuver in flight and require infrared tracking and speedy data transmission to protect U.S. troops.
Beck said that the contracts reflects Rocket Labs growth into an “industry disruptor” and growing space prime contractor.
Business
California-based company recalls thousands of cases of salad dressing over ‘foreign objects’
A California food manufacturer is recalling thousands of cases of salad dressing distributed to major retailers over potential contamination from “foreign objects.”
The company, Irvine-based Ventura Foods, recalled 3,556 cases of the dressing that could be contaminated by “black plastic planting material” in the granulated onion used, according to an alert issued by the U.S. Food and Drug Administration.
Ventura Foods voluntarily initiated the recall of the product, which was sold at Costco, Publix and several other retailers across 27 states, according to the FDA.
None of the 42 locations where the product was sold were in California.
Ventura Foods said it issued the recall after one of its ingredient suppliers recalled a batch of onion granules that the company had used n some of its dressings.
“Upon receiving notice of the supplier’s recall, we acted with urgency to remove all potentially impacted product from the marketplace. This includes urging our customers, their distributors and retailers to review their inventory, segregate and stop the further sale and distribution of any products subject to the recall,” said company spokesperson Eniko Bolivar-Murphy in an emailed statement. “The safety of our products is and will always be our top priority.”
The FDA issued its initial recall alert in early November. Costco also alerted customers at that time, noting that customers could return the products to stores for a full refund. The affected products had sell-by dates between Oct. 17 and Nov. 9.
The company recalled the following types of salad dressing:
- Creamy Poblano Avocado Ranch Dressing and Dip
- Ventura Caesar Dressing
- Pepper Mill Regal Caesar Dressing
- Pepper Mill Creamy Caesar Dressing
- Caesar Dressing served at Costco Service Deli
- Caesar Dressing served at Costco Food Court
- Hidden Valley, Buttermilk Ranch
Business
They graduated from Stanford. Due to AI, they can’t find a job
A Stanford software engineering degree used to be a golden ticket. Artificial intelligence has devalued it to bronze, recent graduates say.
The elite students are shocked by the lack of job offers as they finish studies at what is often ranked as the top university in America.
When they were freshmen, ChatGPT hadn’t yet been released upon the world. Today, AI can code better than most humans.
Top tech companies just don’t need as many fresh graduates.
“Stanford computer science graduates are struggling to find entry-level jobs” with the most prominent tech brands, said Jan Liphardt, associate professor of bioengineering at Stanford University. “I think that’s crazy.”
While the rapidly advancing coding capabilities of generative AI have made experienced engineers more productive, they have also hobbled the job prospects of early-career software engineers.
Stanford students describe a suddenly skewed job market, where just a small slice of graduates — those considered “cracked engineers” who already have thick resumes building products and doing research — are getting the few good jobs, leaving everyone else to fight for scraps.
“There’s definitely a very dreary mood on campus,” said a recent computer science graduate who asked not to be named so they could speak freely. “People [who are] job hunting are very stressed out, and it’s very hard for them to actually secure jobs.”
The shake-up is being felt across California colleges, including UC Berkeley, USC and others. The job search has been even tougher for those with less prestigious degrees.
Eylul Akgul graduated last year with a degree in computer science from Loyola Marymount University. She wasn’t getting offers, so she went home to Turkey and got some experience at a startup. In May, she returned to the U.S., and still, she was “ghosted” by hundreds of employers.
“The industry for programmers is getting very oversaturated,” Akgul said.
The engineers’ most significant competitor is getting stronger by the day. When ChatGPT launched in 2022, it could only code for 30 seconds at a time. Today’s AI agents can code for hours, and do basic programming faster with fewer mistakes.
Data suggests that even though AI startups like OpenAI and Anthropic are hiring many people, it is not offsetting the decline in hiring elsewhere. Employment for specific groups, such as early-career software developers between the ages of 22 and 25 has declined by nearly 20% from its peak in late 2022, according to a Stanford study.
It wasn’t just software engineers, but also customer service and accounting jobs that were highly exposed to competition from AI. The Stanford study estimated that entry-level hiring for AI-exposed jobs declined 13% relative to less-exposed jobs such as nursing.
In the Los Angeles region, another study estimated that close to 200,000 jobs are exposed. Around 40% of tasks done by call center workers, editors and personal finance experts could be automated and done by AI, according to an AI Exposure Index curated by resume builder MyPerfectResume.
Many tech startups and titans have not been shy about broadcasting that they are cutting back on hiring plans as AI allows them to do more programming with fewer people.
Anthropic Chief Executive Dario Amodei said that 70% to 90% of the code for some products at his company is written by his company’s AI, called Claude. In May, he predicted that AI’s capabilities will increase until close to 50% of all entry-level white-collar jobs might be wiped out in five years.
A common sentiment from hiring managers is that where they previously needed ten engineers, they now only need “two skilled engineers and one of these LLM-based agents,” which can be just as productive, said Nenad Medvidović, a computer science professor at the University of Southern California.
“We don’t need the junior developers anymore,” said Amr Awadallah, CEO of Vectara, a Palo Alto-based AI startup. “The AI now can code better than the average junior developer that comes out of the best schools out there.”
To be sure, AI is still a long way from causing the extinction of software engineers. As AI handles structured, repetitive tasks, human engineers’ jobs are shifting toward oversight.
Today’s AIs are powerful but “jagged,” meaning they can excel at certain math problems yet still fail basic logic tests and aren’t consistent. One study found that AI tools made experienced developers 19% slower at work, as they spent more time reviewing code and fixing errors.
Students should focus on learning how to manage and check the work of AI as well as getting experience working with it, said John David N. Dionisio, a computer science professor at LMU.
Stanford students say they are arriving at the job market and finding a split in the road; capable AI engineers can find jobs, but basic, old-school computer science jobs are disappearing.
As they hit this surprise speed bump, some students are lowering their standards and joining companies they wouldn’t have considered before. Some are creating their own startups. A large group of frustrated grads are deciding to continue their studies to beef up their resumes and add more skills needed to compete with AI.
“If you look at the enrollment numbers in the past two years, they’ve skyrocketed for people wanting to do a fifth-year master’s,” the Stanford graduate said. “It’s a whole other year, a whole other cycle to do recruiting. I would say, half of my friends are still on campus doing their fifth-year master’s.”
After four months of searching, LMU graduate Akgul finally landed a technical lead job at a software consultancy in Los Angeles. At her new job, she uses AI coding tools, but she feels like she has to do the work of three developers.
Universities and students will have to rethink their curricula and majors to ensure that their four years of study prepare them for a world with AI.
“That’s been a dramatic reversal from three years ago, when all of my undergraduate mentees found great jobs at the companies around us,” Stanford’s Liphardt said. “That has changed.”
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