BERKELEY -- The number of unemployed here is on its way down from a peak in 2010 and is lower than Alameda County and California owing to the high number of residents with college degrees, according to a report heading to the City Council next week.

At the end of 2012, Berkeley's unemployment rate was 7.8 percent in a labor force of about 60,000, the report said. That's lower than Alameda County's 8.2 percent unemployment rate and the state's 9.7 percent rate, according to the report prepared by Economic Development Manager Michael Caplan. The numbers are the latest available from the state Employment Development Department.

Berkeley historically has a lower unemployment rate because almost 70 percent of its residents over 25 years old have bachelor's degrees or higher, the report said. The number of those with college degrees in California is 30 percent and 41 percent in Alameda County, according to the U.S. Census Bureau.

"We're moving toward a skill-based economy and a lot of employers are looking for college degrees even in instances where degrees are not necessary," Caplan said. "There's an increase in demand for trained and skilled people and Berkeley's labor force has that advantage."

Unemployment peaked in Berkeley in 2010 at about 13 percent, the report said. By contrast, at the end of the dot com boom in 2000, the rate was about 4.5 percent.

The report underscores the importance of getting a college education for those interested in getting jobs. The unemployment rate between 2007 and 2011 for college graduates in Berkeley was just 3.9 percent while it was nearly 20 percent for those who had not finished high school; 14.6 percent for those who had finished high school and 11 percent for those with some college.

About 20 percent of Berkeley households have some form of income from self-employment, which is almost double the national average of about 11 percent, the report said.

"A lot of the energy and creativity in Berkeley comes from its many artists, crafts people, writers and consultants," the report said.

Doug Oakley covers Berkeley. Contact him at 510-843-1408. Follow him at Twitter.com/douglasoakley.