California adds jobs; unemployment falls to 9.4% California's economic recovery continued to outpace the nation's in March as its unemployment rate fell to 9.4%, the lowest in more than four years for the Golden State. The state increased its payrolls by 25,500 jobs and pushed down the jobless rate from 9.6% in February, according to data released Friday by the state Employment Development Department. But the economic picture was not all rosy. Although jobs were added because of a rising housing market and continued consumer spending, 14,900 people dropped out of the workforce, mirroring a national trend of job seekers who become discouraged and give up looking for work. "California is doing better relative to the national economy, and year-over-year job growth is stronger," said Esmael Adibi, director of Chapman University's A. Gary Anderson Center for Economic Research. But the labor force shrinking is not indicative of a strong and healthy economy. California is now tied with Mississippi for the third-highest unemployment rate in the United States, behind Nevada and Illinois. The Golden State has enjoyed a relatively robust recovery even as the nation dealt with slowing growth. In March, the country gained a mere 88,000 jobs; more than 1 in 4 positions created were in California. The nationwide unemployment rate dropped to 7.6%, but only because hundreds of thousands of the jobless left the labor force. Consumers, who have been a major force in revving up the country's economic engine, are now feeling the pinch of higher payroll taxes. Californians are dealing with higher sales taxes as well, economists said. The Conference Board reported that consumer confidence tumbled last month as the across-the-board federal spending cuts known as sequestration started going into effect March 1. The sequester will also affect an estimated 400,000 Californians who have been out of work for more than six months. Starting April 28, their weekly unemployment benefits paid out by the U.S. Treasury will be slashed 17.7%. That's a huge worry for Los Angeles resident Gabriela Cadle, 42, who would see her unemployment check cut by $25. Cadle has been trying to find work as a bookkeeper for months and has moved in with her college-age son to save money. "Twenty-five dollars is my son's transportation, so that means less money for food, more cutting somewhere else," she said. If you have a job, it's not a lot of money and you don't think about it. But when you don't have anything, it's a lot. Companies are waiting longer to hire and requiring applicants to jump through more hoops, said Michael Bernick, former director of California's Employment Development Department. And those who are hired are receiving more meager benefits. Bernick said the job market remains hyper-competitive, especially for members of the baby boomer generation. He pointed to the state's labor force participation of 63.3%, the lowest in the last decade, as evidence that not all is well with the economy. "A good number of people in their 50s and 60s aren't working not because they want more leisure time," Bernick said. They want to work but can't find anything. Friday's employment report showed that gains were notched in leisure and hospitality, with 7,600 jobs added. A rebounding housing market pushed construction jobs up by 3,800. And professional and business services enjoyed the biggest gain, adding 15,800 positions. Brandi Britton, a district president of professional staffing firm Robert Half International, said she's seen Southland companies recently bring on new employees after years of staying as lean as possible. But many are interested in taking temporary workers instead of full-time hires. "Companies do like the idea of a temporary hire, because both parties have opportunities to test the waters with each other," she said. However, in places like the start-up hub of Silicon Beach, hiring has picked up significantly for skilled full-time workers, she said. California's diverse economy cushions the state somewhat even if the nation stumbles in the coming months, said Stephen Levy, director of the Center for Continuing Study of the California Economy. Many sectors such as entertainment, technology and tourism are not directly affected by government budget cuts, he said. "If we get construction jobs back, we could start to have an outsized recovery compared to the nation," he said. Counties in Southern California continued to show encouraging job gains in March. Los Angeles County added 23,700 nonfarm jobs, and unemployment fell slightly to 10.2% from 10.3% in February. The information industry, including motion picture and sound recording, led the gain. Professional and business services, educational and health services, and leisure and hospitality also added positions. San Diego County added 8,300 positions, and its jobless rate slipped to 7.7% from 8% the month before. Orange County added 5,100 jobs and its unemployment rate declined to 6.3% from 6.6%. The Inland Empire, which includes Riverside and San Bernardino counties, gained 3,500 jobs, and its unemployment rate fell to 10.5% in March from 10.9% the month before. The gains were concentrated in government and educational and business services. The Bay Area, including San Francisco, San Mateo and Marin counties, added 4,600 positions. Unemployment fell to 5.8% from 6% in February. Many of the long-term unemployed say they've seen the economy pick up slightly and are waiting for that to trickle down. Downtown Los Angeles resident Denise Harris, a musician who also goes by the stage name Silkiie, said employers are more responsive to her applications. She's surviving on food stamps and is hoping to find a job - anywhere - after four years without work. "I've been looking for so long, but I haven't lost faith," said Harris, who is in her 50s. I just keep looking.