NEW YORK (CNNMoney) — The unemployment rate has been falling lately in Los Angeles County, but not for the right reasons.
Last month, the jobless rate for the county fell to 11%, down from 12.4% a year earlier.
While that’s far higher than the 8.1% unemployment rate for the nation as a whole, it nevertheless seems to show progress for the City of Angels… right?
Wrong. In Los Angeles, the falling unemployment rate is slightly misleading, just as it has been for the country overall.
When surveyed by the government, fewer L.A. residents say they’re unemployed compared to a year ago. But it’s not because they’re finding jobs. It’s because they’re dropping out of the labor force altogether.
Just over 100,000 of workers have left the Los Angeles labor force since the beginning of the year, according to seasonally adjusted data from the California Employment Development Department.
The decline stands in stark contrast to other major metropolitan areas. New York, Chicago, Washington D.C., and San Francisco are all seeing their labor forces grow.
So what’s going on in Southern California?
The real estate boom and bust hurt L.A. far more dramatically than those other cities, and a lack of construction jobs may partially explain why some workers have stopped looking for employment. Construction jobs have recently started to come back slowly, but in L.A. they’re still off by about 50,000 jobs from 2007 levels.
Other large Western cities affected by the housing bust, like Las Vegas and Phoenix, have also reported declining unemployment rates over the last year, partly due to their shrinking labor force.