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Saturday, May 21, 2022

The Number

Unemployment in L.A. County stood at 8.1 percent in July. And in Lancaster, it was 12.3 percent, while in nearby Acton it was 6.3 percent and in La Cañada Flintridge only 3.3 percent. Or was it? While most of us assume that government employment rates are accurate, it’s another story when it comes to the figures for cities, especially smaller ones. Kimberly Ritter, an economist at the Los Angeles Economic Development Corp., said the numbers follow what economists call the Law of Large Numbers. “The bigger the sample, the more accurate the estimate is,” she said. “That’s why when we give an unemployment figure for the U.S., it’s closer to the true number than for a small place like Acton.” According to the California Employment Development Department, unemployment figures for cities and Census designated places, or unincorporated areas, are calculated from the county total. Basically, the agency multiplies the county unemployment rate by the labor force population for each city, based on ratios that existed in 2000. “This method assumes that the rates of change in employment and unemployment since 2000 are exactly the same in each city and CDP as at the county level,” the methodology states. “If this assumption is not true for a specific city or CDP, then the estimates for that area may not represent the current economic conditions. Since this assumption is untested, caution should be employed when using these data.” Also, the larger numbers, such as the state or L.A. County, are seasonally adjusted to take account of the school year for teachers, harvest times for agriculture or holidays for retail. However, the numbers for individual cities are not adjusted, making comparisons difficult. “When you get down to cities and Census designated places, those are fairly rough estimates,” Ritter said. – Joel Russell

Joel Russel
Joel Russel
Joel Russell joined the Los Angeles Business Journal in 2006 as a reporter. He transferred to sister publication San Fernando Valley Business Journal in 2012 as managing editor. Since he assumed the position of editor in 2015, the Business Journal has been recognized four times as the best small-circulation tabloid business publication in the country by the Alliance of Area Business Publishers. Previously, he worked as senior editor at Hispanic Business magazine and editor of Business Mexico.

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