Central Valley

California unemployment highest in a decade; Merced County has fourth-highest in state

Unemployment inched up to 6.9 percent in California last month, the highest rate since January 1997, state officials said Friday. The new rate was a tenth of a percentage point higher than the month before.

Northern San Joaquin Valley unemployment also continued to climb last month, as the region remained on of the hardest places in the state to find a job.

At 11.8 percent, Merced County has the fourth-highest unemployment rate in the state after Imperial, Alpine and Sutter counties. Stanislaus County’s jobless rate rose a tenth of a percentage point over the previous month, to 10.9 percent. San Joaquin County's rate was 9.8 percent.

The numbers released by the Employment Development Department showed the effects of the economic slowdown deepening throughout the state. They also appeared to reflect the impact the slowdown is having on the state treasury: Government jobs declined during the month, particularly in Sacramento.

Although it wasn't immediately clear what caused the state government job loss, "it could well be the budget," said Lynelle Jolley, spokeswoman for the state Department of Personnel Administration. With the state struggling with a $15.2 billion deficit, and the budget two weeks overdue, "departments are doing everything possible to eliminate vacancies," she said.

As for the overall economy, "the numbers say we're in a mild recession," said Stephen Levy of Palo Alto's Center for Continuing Study of the California Economy. "We've had job losses in five of the last six months."

Statewide unemployment is as high as when the state was struggling to recover from the recession of the early 1990s. California's unemployment is tied with Mississippi's for the third highest in the nation, behind Michigan's 8.5 percent and Rhode Island's 7.5 percent.

Across the state, employers reduced payrolls by 12,800 jobs during June and have cut 39,900 jobs in the past year, a reduction of 0.3 percent.

Levy said "it's a mild recession as measured by job losses" but probably feels worse to many Californians who are coping with falling home values and stock portfolios, and rising gas and food prices.

"It looks like a decelerating economy, more of what we've been seeing," said Howard Roth, chief economist at the state Department of Finance. "It looks like it's not just housing now, it's other sectors."