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Michael Bernick
Adjunct Fellow; Counsel to Sedgwick LLP; former Director, California Employment Development Department
California and Human Capital and Labor
Michael Bernick, the former director of the California labor department, the Employment Development Department (EDD), joined the Milken Institute in February 2004, as a research fellow, focusing on job creation and workforce development projects.
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"The Counterlife" in California employment
By: Michael Bernick
June 22, 2011
   
   
"The Counterlife" (1986) is the fourth installment of Philip Roth's series focusing on novelist Nathan Zuckerman. The book includes a number of familiar Roth themes: midlife doubts and reconsiderations, marital fidelity and infidelity, Jewish identity in America and Israel. But it's especially notable for its use of counter-narratives. Sections of the book jump across time, across characters, across chronologies, across facts, so that by the end of the book there are no clear storylines.

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All of which brings us to the subject of California's labor market and the task of teasing out the multiple, sometimes contradictory storylines at work. The most recent California monthly employment numbers, released last Friday, show an economy that continues to struggle to generate jobs. The state unemployment rate fell from 11.8 percent to 11.7 percent, but as most commentators pointed out, this was due to a drop in the size of the civilian labor force, from 18,028,000 in April to 17,993,000 in May. The state actually lost 29,200 payroll jobs.

The main employment narrative for California is that the state continues to struggle in job creation due to slow national recovery, exacerbated by a housing bust that was more pronounced here than elsewhere. The latest Anderson School forecast, released on June 15, predicts that the state will continue to have slow net employment growth through 2012, as the housing market, especially in Inland California, remains flat.

A second narrative that has gained force in the past few months comes primarily from the state's manufacturing and business groups. It tells the story of a skills mismatch. California employers have jobs, but cannot find skilled applicants. This theme has also been taken up nationally (by Robert Samuelson) and on this very blog (by Armen Bedroussian).

There is a third employment narrative or counter-narrative that we need to keep an eye on: Technology and globalization may be creating a California economy that simply needs fewer workers in certain sectors such as retail, finance and business services.

Of course, the pattern in California since World War II is one of jobs being eliminated through automation, technology or trade; fears of permanent high unemployment are nothing new. But this job elimination has usually been followed by new types of jobs being created through the very same forces of technology and trade. The 1980s recession saw the state losing heavy manufacturing jobs due to automation and international competition; a good part of our aerospace and defense base eroded in the 1990s recession; and in the early 2000s, we had the dot.com bust. In all three cases, though, new occupations eventually arose that had not even been envisioned a few years earlier, including jobs in Internet commerce, education and information technology.

The history of the last 50 years in California suggests that someday soon technology and globalization will once again create jobs that don't exist today. However, past is not always prologue. Last Friday's job numbers suggest that the job replacement cycle we've seen in the past is no sure thing in California's future.

A version of this posting appeared in Fox & Hounds.