Unemployment Casts a Shadow Over California’s Economy

For decades, California’s behemoth economy has outpaced those of most nations, holding an outsize role in shaping global trends in tech, entertainment and agriculture.

While that reputation remains, the state has a less enviable distinction: one of the nation’s highest unemployment rates.

Nationwide, the rate is 3.7 percent, and in January, the country added 353,000 jobs. California’s job growth has been slower than the nationwide average over the last year, and the unemployment rate remains stubbornly high — 5.1 percent in the latest data, a percentage point higher than a year earlier and outpaced only by Nevada’s 5.4 percent.

With layoffs in the tech-centered Bay Area, a slow rebound in Southern California from prolonged strikes in the entertainment industry and varying demand for agricultural workers, California is facing economic headwinds in the new year. And residents feel it.

The state has historically had higher unemployment than the U.S. average because of a work force that is younger and fast growing, said Sarah Bohn, a senior fellow at the Public Policy Institute of California. Still, she noted, the labor force shrank in California in the past six months — a troubling trend.

“When looking at this shrinking, are there less opportunities and people have just stopped looking for work?” Ms. Bohn asked. “What will this mean for consumers and businesses?”