California Jobless Rate Climbs Amid New Covid Shutdowns

The latest round of coronavirus shutdowns has pushed California’s unemployment rate to 9% as the state’s jobs recovery continues to lag behind rest of the nation.

Amid a stay-at-home order for Covid-19 that has closed most salons in California, a sign outside this San Diego barbershop invites passersby to call up for appointments. (Courthouse News photo/Barbara Leonard)

SACRAMENTO, Calif. (CN) — Coinciding with the state’s latest coronavirus lockdown and ending seven consecutive months of improvement, California’s unemployment rate jumped to 9% in December.

Growing nearly a full percentage point from November’s survey — which was taken before most counties were again forced to close portions of their economy — California’s jobless rate continues to soar past the nationwide average of 6.7%.

According to California’s Employment Development Department, Friday’s figure represents the first month-over-month joblessness rise since April 2020. The state’s sluggish recovery continues with a loss of 52,000 jobs last month after a minor gain of 5,000 in November.

State officials said the disappointing update is a stark reminder of how hard the Golden State has been hit by the pandemic.

“Nearly a year ago, California was experiencing record-long job growth and record-low unemployment,” said California Labor Secretary Julie Su in a statement. “The numbers we see today reflect the challenges we’ve faced and the work that needs to be done — as a state, as a country and as individuals.”

California’s unemployment rate stood at a healthy 3.9% in December 2019. But the pandemic of course has since ravaged the nation’s most populous state.

The number of jobless Californians is up by nearly 1 million compared to December 2019, while a staggering 523,000 have also dropped out of the workforce.

Since the pandemic began, the state has now processed over 19 million unemployment claims and issued over $114 billion in benefits. The added stress has led to a claims backlog of nearly 1 million at the department that has also been plagued by a massive multi-billion-dollar fraud ring.

Unemployment in the Golden State peaked at a record 16.4% this past May but had decreased steadily up until Friday’s report. According to the state, workers have recovered nearly 45% of the 2.6 million nonfarm jobs lost at the outset of the pandemic.

Jeffrey Clemens, economics professor at University of California, San Diego, says the data compiled in the survey taken mid-December is beginning to show the damaging effects of the state-mandated holiday shutdowns that continue to impact most of the state.

“This month’s report captures some of the bad news we’ve been expecting as we’ve looked at previous months’ reports,” Clemens said. “This is the first report to reflect both the fall surge in Covid-19 cases and the restrictions that were implemented in the lead-up to Thanksgiving.”

Perhaps the few bright spots in the update, Clemens noted that the construction industry and professional business industries added what are presumably higher paying jobs.

Leisure and hospitality industry continues to take the hardest hit of any California industry, reporting 117,000 job losses. The industry has seen a decline of 610,000 jobs since December 2019.

The December losses in restaurant and hospitality jobs further highlight the inequality of California’s economic recovery.  

While low-wage workers continue to lose their jobs at an alarming rate, the state’s higher earners have been relatively untouched by the ongoing pandemic-induced recession. Last month, income tax receipts came in 21% above the current budget’s expectations and in his 2021-22 budget proposal, Governor Gavin Newsom is banking on a $15 billion surplus spurred largely by the strength of the booming personal income taxes. 

In a recent report, the state’s Legislative Analyst’s Office suggests December’s healthy collections can be attributed to an “unusually high” number of year-end bonuses.

The U.S. Bureau of Labor Statistics is scheduled to release its state-by-state unemployment breakdown Jan. 26.

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