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California Jobless Rate Dropped. Don’t Expect the Trend to Continue

California’s unemployment rate dropped again in November to 8.2%, marking sixth straight months of improvement as the state added more jobs last month than anywhere else but Texas.

SACRAMENTO, Calif. (CN) — California’s unemployment rate dropped again in November to 8.2%, marking sixth straight months of improvement as the state added more jobs last month than anywhere else but Texas.

The estimate released Friday by the federal government is California’s lowest mark of the pandemic. The state has now recovered nearly half of the over 2.6 million nonfarm jobs lost since March.

While November’s rate represents a marked improvement from a record 16.4% unemployed set last May, the estimate is buoyed by the fact over 300,000 people left the workforce last month. Year-over-year, nearly 600,000 workers have dropped out of the state’s labor pool.

California’s unemployment rate remains well above the nationwide average of 6.7% and as the novel coronavirus continues to strengthen its grip on the nation’s most populous state, next month’s update figures to bring bad news: Friday’s snapshot was taken weeks before state officials ordered a new round of business shutdowns.  

“Unfortunately, we know that the data just released do not reflect the effects of either the latest surge in Covid-19 cases or the current stay-at-home orders,” noted Jeffrey Clemens, economics professor at University of California, San Diego, in an email. “The December data, which are now being collected and analyzed by the Bureau of Labor Statistics, seem very likely to be worse than the November data.”

According to the bureau’s data gathered from a pair of mid-November surveys, California employers added 57,000 jobs. The leisure and hospitality industry did the most hiring of any sector with 27,800 jobs added, followed by the trade, transportation and utilities industry with 19,700.

Since November 2019, California’s unemployment rate has increased 4.3%, seventh highest of any state. California’s year-over-year change mirrors other major states like Texas (4.6%), New York (4.5%) and Massachusetts (3.9%).

The estimated unemployment percentages are garnered from a pair of federal surveys with sample sizes of over 200,000 combined businesses, government agencies and households. Last month’s unemployment rate for California was revised from 9.3% to 9.0% after the surveys’ release.

Friday’s jobs report coincides with a startling new spate of layoffs in the Golden State. 

Last week the state reported a 13.4% increase in initial unemployment filings, bucking the nationwide trend which saw a 2.2% decrease. Californians filed 202,000 first-time claims, making up 23% of all claims filed in the U.S. The total number of unemployment claims filed last week in California (341,000) represents a 600% increase compared to this time last year.

Since the start of the pandemic, nearly 18 million unemployment claims have been filed with the state, swamping its overburdened Employment Development Department. Though the state has dished out over $108 billion in benefits, it’s still struggling to clear a 680,000-case backlog.

The department has also been scammed by fraudsters and allegedly paid out benefits to inmates on death row and a former EDD worker who posed as a sitting U.S. senator. In wake of the embarrassment, lawmakers are calling for major reforms to the embattled department that has largely buckled under the pressure of the pandemic.

Cognizant of the rush of new claims, state officials didn’t celebrate Friday’s slight unemployment downtick and instead urged Congress to pass new pandemic relief.

“As the state faces the ongoing challenge of this pandemic-induced recession, we need to provide financial resources and other support to people so they can stand up their businesses, create jobs, and support their families as we put the economy back together in an equitable and sustainable way,” California Labor Secretary Julie Su said in a statement. “We call on the federal government to do its part to help us recover."

Congress is reportedly nearing agreement on a new $900 billion Covid-19 stimulus package said to include enhanced unemployment benefits, small business loans, rental assistance and direct stimulus checks for most Americans. 

Even if Congress passes much-needed new relief this month for small businesses and extends unemployment benefits, experts predict high unemployment rates to continue until at least the spring.

“I would not expect the relief to result in a large number of new jobs in January or February, but I would expect it to significantly hasten the labor market's capacity to ramp up employment during the spring, as vaccine rollout continues. This is related to why relief for both households and businesses is crucial at this stage,” said Clemens, the UC professor.

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Categories / Economy, Health, Regional

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