Let me offer one hint as to why California continues to be the nation’s No. 1 job market, despite its anti-business reputation.
Ponder a curious employment statistic known as “labor productivity,” which essentially tabulates the bang-for-the-buck that private sector bosses get from their workforce. My trusty spreadsheet reviewed the freshly minted state-by-state tally from the Bureau of Labor Statistics for 2024 for the 50 states and the District of Columbia.
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Last year, California’s 17 million workers created productivity growth of 3.9% – the sixth-best result in the nation and nearly double the median 2% growth for all states.
Those Golden State workplace efficiencies tied 2008 for its third-biggest productivity yearly jump in the 17-year history of this statistic. The only time California did better was 2019’s 5.1% gain and pandemic-twisted 2020’s 8.2%.
Which states had more productive labor in 2024? That was Indiana at No. 1 with 6.3% growth, Rhode Island at 5%, Washington at 4.8%, New Hampshire at 4.3%, and Maine at 4.1%.
Conversely, the worst productivity was found in Nebraska, off 0.3%, and the only state with a decline. Then came Alabama, which was flat, Maryland and Wyoming, up 0.2%, and Vermont, up 0.5%.
And California’s economic arch-rivals? Texas – the No. 2 job market with 13 million workers – ranked No. 24, up 2.2%. No. 3 Florida, with 9.5 million workers, was No. 43, up just 1%.
The math
Productivity is a yardstick for measuring the efficiency juggle between what’s produced in a state and how much labor is needed to get the job done.
Let’s start with output growth. Last year, California ranked No. 9 at 3.6% vs. the 2.7% national median.
The best states were South Carolina at 4.8%, Indiana at 4.5%, and Utah at 4.2%. Oregon was lowest at 1.1%, then Alaska, Minnesota, and Wyoming at 1.4%.
And the rivals? Texas was No. 8 at 3.7% and Florida was No. 4 at 4%.
Next, ponder the time employees were on the clock.
California workers had their collective hours cut by 0.3% last year, ranking No. 37 among the states and below 0.4% median growth nationally. Just so you know, lean-and-mean staffing boosts productivity – at least for this math.
California was not alone with fewer hours worked, as 21 states had declines in 2024. The most significant dips were in Minnesota, off 2.1%, Iowa, off 1.9%, and Indiana, off 1.7%.
On the flip side, Florida workers gained the most hours last year, up 3%. Next came Alabama, up 2.8%, and Idaho, up 2.4%. Texas ranked No. 10, up 1.4%.
The report notes productivity isn’t just what workers do, rather it’s a mix of “many influences, including: changes in technology; capital investment; utilization of capacity, energy, and materials; the use of purchased services inputs, including contract employment services; the organization of production; the characteristics and effort of the workforce; and managerial skill.”
The history
Despite numerous criticisms of California’s business climate, lofty productivity is a long-running economic strength for the state.
Over 17 years, California ranks third-best in this productivity yardstick – averaging 2.4% annual growth vs. a median 1.5% for all states.
And what two states scored better? Tech-smart Washington state is at 3%, and energy-rich North Dakota is at 2.8%.
The national productivity laggards since 2007 were Louisiana and Wyoming, with 0.3%-a-year growth, and Connecticut at 0.5%.
And the rivals? Texas was No. 17 at 1.6% growth while Florida ranked No. 27 at 1.4%.
Paying up
The state’s bosses reward high productivity with generous pay hikes.
California’s 3.8% average annual increases in hourly compensation over these 17 years tied for fourth-best with North Dakota and South Dakota and bested the 3.3% median growth among the states. The only workers who fared better were in Washington (4.4% wage growth), Montana (4.2%), and Utah (3.9%).
This history shows the thinnest raises were in Connecticut, up 2.5% annually, Louisiana, up 2.7%, and Michigan and New Jersey, up 2.8%.
Since 2017, workers in rival Texas averaged 3.2% hikes, that’s a middling No. 31. Meanwhile, Florida ranked No. 8 with 3.6% increases.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at [email protected]