California employers cut more workers from their staffs in December, capping a dismal year in which the state lost more than half a million jobs.

Payrolls shrank by 38,800 jobs last month, while the unemployment rate remained flat at 12.4% from the revised figure in November, which previously was pegged at 12.3%.

California’s unemployment rate is the fifth-highest in the nation, after those of Michigan, Nevada, Rhode Island and South Carolina, and it’s significantly higher than the national rate of 10%.

Economists expect the state’s labor market to remain weak as the critical housing sector continues to struggle. Over the last two years, California has lost more than 1 million jobs.

“California is in worse shape than the country in a lot of ways,” said Dan Seiver, an economics professor at San Diego State University. “It’s probable that the recovery here might be even more sputtering than the nation as a whole.”

The state’s unemployment rate in December 2008 was 8.7%. In 2009, it jumped to double digits, where it’s expected to remain this year.

Los Angeles County’s unemployment rate matched the state’s in December, rising to 12.4% from a revised 12.2% in November as the county lost 2,300 jobs.

Other areas of the Southland experienced improvement. Orange County’s jobless rate declined to 9.1% from 9.6% in November, and the Riverside-San Bernardino County metro area rate fell to 14.0% from 14.7%. San Diego County’s jobless rate dropped to 10.1% from 10.6% in November, and in Ventura the rate fell to 10.9% from November’s 11.2%.

The bursting of the housing bubble has battered California, which has seen tens of thousands of related jobs in financial services, retail and the building trades vanish. The construction sector has been pounded particularly hard. California has shed more than 300,000 construction jobs -- nearly one-third of the industry’s labor force -- since the sector peaked at 948,500 jobs in February 2006, according to state figures.

The six counties in Southern California lost 44,800 construction jobs over the last year, with the highest losses -- 13,500 jobs -- occurring in Los Angeles County.

The state in 2009 probably set a record for the fewest homes produced in a single year, the California Building Industry Assn. said last month. Although the data are not yet final, the association forecast that 35,600 homes would be built in 2009, the lowest number since it began keeping track in 1954.

A forecast released this week by the Associated General Contractors of America predicted that there would be no recovery in the industry nationally or in California in 2010. Nearly 1 in 4 construction workers are unemployed, the association said.

“The job loss is pretty widespread and uniform,” said Brian Turmail, a spokesman for the Arlington, Va., trade group.

Some jobless construction workers are trying to stay afloat by pawning their equipment. Amor Pawn Shop in Lynwood is brimming with jackhammers, welding machines and drills, a manager said. Many pawnshops are no longer accepting such tools because there’s no market for them.

Idle construction workers are looking for jobs in other industries. Mario Rodriguez had steady employment as a house framer during the construction boom, saving up enough money to get his own place in Tujunga. Now unemployed and living with his parents in Glendale, he’s lowering his sights. Lately he’s been inquiring about jobs as a cook, cashier and waiter. This week, he stopped by a McDonald’s looking for work.

“It’s hard out there -- everyone says they’re not hiring,” said Rodriguez, standing outside a jobs center in Glendale. He said he has had difficulty finding work because he is on parole for selling drugs. He said the easy money is tempting, but he’s determined to stay straight.

The construction slowdown has hammered the state’s Latino population, which was heavily employed in the industry. About 12% of the nearly 6 million Latinos employed in California worked in construction in the third quarter of 2007, according to the Pew Hispanic Center, and more than 200,000 have lost their jobs since then.

Many lack the language skills or education to transfer easily to other industries. Some are leaving California, said Rakesh Kochhar, associate director for research at the Pew Hispanic Center. Others are returning to lower-paying jobs they might have eschewed during the building boom.

“Hispanics seem to be migrating to old standbys like maintenance, landscaping services, things like that,” Kochhar said. Inquiries about agricultural work have increased, said Piedad Ayala, president of the Ayala Corp., a farm labor contractor in Riverdale, Calif. But water shortages in the Central Valley are causing farmers to plant fewer crops and hire fewer laborers. “We get calls every single day, including ones from people who say if they don’t get a job, they’ll be homeless,” he said.

Adin Orozco, an unemployed Los Angeles construction worker, said he’s been struggling to pay his $300-a-month rent. He now spends his days hustling for odd jobs outside the Home Depot in Hollywood, even in the rain. Sometimes, as many as 300 people show up competing for work, he said.

“Right now, I’m not making any money,” he said.

Because he’s bilingual, Orozco says he’s faring a bit better than other regulars in the crowd, such as painter Mario Sandoval. The Central American immigrant said he wants to stay in the United States because his two children are in school here. But he’s short $100 for the rent this month and hasn’t worked this week.

“It’s possible we’ll leave and go back to Nicaragua,” he said. “We just can’t make it here anymore.”

alana.semuels@latimes.com