CA soon could have highest U.S. unemployment rate

Jan. 24, 2013

California’s unemployment rate stayed the same in December, at 9.8 percent, the third highest. But what’s curious is that the unemployment rates of No. 1 and No. 2, Nevada and Rhodes Island at 10.2 percent each, are inching downward and soon likely will be lower than California’s.

Meaning California would have the nation’s highest unemployment rate probably for the first time in its history. And in his State of the State address today Gov. Brown blabbed about how great things supposedly are.

From Nov. 2011 to Nov. 2012, Nevada’s unemployment dropped a sharp 2.8 percentage points, from 13 percent to 10.2 percent. In the same period, California’s unemployment dropped only half as fast, by 1.4 percentage points.

Nevada was hit even harder than California by the housing crash. But its core businesses, entertainment and vice, always will remain attractive. And its 0 percent state income tax rate is drawing in Californian rich folks eager to escape our 13.3 percent top income tax rate after deluded voters imposed Proposition 30. Nevada almost certainly will see its unemployment rate drop below California’s later this year.

Rhode Island’s unemployment went down more slowly, by 0.8 percentage points; it dropped from 11 percent in Dec. 2011 to 10.2 percent in Dec. 2012. That’s less than California’s 1.4 percentage point drop. But I expect that Rhode Island will continue to make progress. For one thing, its Democratic-run political system actually is reforming the pensions of government-worker unions, whereas California is not.

For another thing, California’s higher taxes, stiffer regulations and hare-brained schemes like High-Speed Rail are going to increase unemployment here.

Hoping to excel his late father’s accomplishments with building infrastructure in the 1960s, Brown was enthusiastic in his speech today about his dream for California. The reality will be that he’ll soon be dealing mainly with higher unemployment and declining budgets.