California Unemployment at 22 Percent

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Tom Abate, Chronicle
San Francisco resident Elena Duran represents an unfortunate job trend that isn't reflected in the unemployment rate.

For years, Duran has been a full-time server at a downtown hotel. But the recession has cut so deeply into business that her hours were cut to half time in July.

"It's better than a layoff, but it still requires a lot of sacrifices," said Duran, who, along with her working husband, supports three sons.

Because she works, Duran doesn't count in California's 12.2 percent unemployment rate.

But her situation is captured by a broader measure, the underemployment rate, which, in addition to the jobless, includes people who could get only part-time work as well as those who want jobs but were too discouraged to look.

The state Employment Development Department estimates that this underemployment rate hit 21.9 percent in September.

That figure includes 1.9 million jobless Californians, 1.4 million people who had to work part time, and 865,000 adults loosely described as discouraged.

"Underemployment is at the highest level since we started keeping these records in 1994," said economist Sylvia Allegretto of the Institute for Research on Labor and Employment at UC Berkeley.

The Employment Development Department, which publishes the state's jobless rate, has not typically calculated underemployment.

Dynamics of jobless recoveries

Paul Wessen, an economist with the department, said one reason is that the broader measure tends to rise and fall in concert with the traditional jobless rate, so both indicators provide the same signal.

"All the data tell us that this is the worst economic downturn since World War II," Wessen said.

But Allegretto said the underemployment rate is worth tracking because it helps explain the dynamics of so-called jobless recoveries - times when growing economic output does not bring a strong rebound in hiring.

Recessions since the early 1990s have been followed by relatively sluggish job recoveries.

Economist Amar Mann of the Bureau of Labor Statistics in San Francisco said the agency started to publish a national underemployment rate after the 1990s recession.

"A lot of researchers were asking for this data," he said.

Fuller picture of market

San Francisco labor attorney Michael Bernick, a former head of the state Employment Development Department, said the underemployment rate offers a fuller picture of the modern labor market primarily because it captures how many workers are cut to part time when the economy is in recession.

Bernick said employers who need to cut costs often choose to reduce hours as an alternative to layoffs, which can be better for employees and presumably for the business because it retains trained workers.

But he said the practice may mean that the unemployment rate won't drop quickly as the economy recovers, because employers tend to bring part-timers back to full time before they make new hires.

Wessen said the department is considering putting more emphasis on the underemployment rate. "This measure has hit the radar more of late," he said.

Californians' challenges

Meanwhile, Californians face difficulties that the statistics only begin to describe.

Santa Rosa resident Lori Houston used to put in 40 to 60 hours a week as a self-employed communications specialist. But since January, she has been working half as much because her clients have cut back in the face of their own financial woes.

Houston said she has been seeking contract or full-time work for months, to no avail.

"I've been turning over every stone," she said. "It's a tough market out there."
Adding skills during search

Mark Gutierrez of San Jose, who has been looking for work in sales and distribution for more than a year, has fended off discouragement by adding new skills, such as Web design, while actively job hunting.

Gutierrez said he has a promising lead while he keeps an eye on his dwindling finances.

"Something has to break my way soon," he said.