SAN FRANCISCO (AP) — California’s economy kept humming in September, dropping the unemployment rate to a record low four per cent statewide and under two per cent in San Francisco and some of its neighbouring counties, a level that economists once thought impossible.
“That is almost unthinkable,” said Sung Won Sohn, professor of economics at Loyola Marymount University. “It flies in the face of economic theory.”
However, the explosive job growth has done little to close the gap in wages, making California — and San Francisco in particular — one of the most unequal places in the country as high-wage earners push up prices for everyone else.
From 1980 to 2015, the top earners in San Francisco saw their wages jump 120 per cent while the lowest earners saw their wages increase just 20 per cent, according to an analysis published last week by the Federal Reserve Bank of New York.
Corey Cantu makes USD16 an hour tending an artisanal cookie kiosk in downtown San Francisco and pays USD850 a month for a bedroom “the size of a closet” in a condominium he shares with four others in the city.
“I see a lot of people in designer clothing and can tell (the economy) is booming for them but it’s not booming for me,” Cantu said. “It feels like we’re disposable as employees working (for) minimum wage.”
Across California, unemployment fell to four per cent last month, the lowest on record under a methodology the state has been using since 1976. California’s economic growth is now in its 115th consecutive month, breaking the previous record of 113 months set in the 1960s.
The job growth is not limited to the diverse and complex economies of Silicon Valley. Fresno and Kern counties, located in the heart of California’s agricultural region in the Central Valley, have historically had double-digit unemployment rates for most of the past 40 years. In September, Fresno’s unemployment rate was 5.3 per cent while Kern’s was six per cent. Meanwhile, homeless populations in California continue to grow in the strong economy.
Over the past two years, homeless populations have jumped 17 per cent in San Francisco. Last month, Los Angeles County reported a 12 per cent year-to-year increase in its homeless population.
“Why are there so many homeless people if this economy is booming? That’s crazy!” said Ernest Lew, an estate planning attorney, when told about the report. Lew said he is doing well because a lot of his clients work at Google, Facebook and other tech companies. “This economy is booming for some people, but a lot more people are hurting,” Lew said as he walked his dog in the financial district.
While the economy is booming, trouble could be looming.