With the state’s grand reopening less than a month away, California accounts for nearly 40% of new jobs nationally but statewide unemployment remains over 8%.
SACRAMENTO, Calif. (CN) — Building momentum ahead of its planned summer reopening, California generated over one-third of the nation’s new jobs last month — though its jobless rate held steady at 8.3%.
While California’s unemployment rate remains well above the nationwide average and is second highest behind Hawaii, employers added over 100,000 jobs for the third consecutive month as restaurants and entertainment venues reopened in limited fashion. Overall, California contributed 38% of the country’s 266,000 new jobs and has nearly halved its pandemic unemployment peak of 16%.
California added a total of 101,800 jobs in April, but hiring slowed compared to gains seen in March and February.
State officials celebrated the news and are confident the hiring trend will persist as California continues to offer small businesses billions in grants and tax breaks while loosening pandemic restrictions.
“California is roaring back, as we accounted for nearly 40% of the nation’s job growth in April — led by our leisure and hospitality industry — and are well positioned for continued recovery as we fully reopen June 15,” said California Labor Secretary Julie A. Su and one of Governor Gavin Newsom’s top economic advisers Dee Dee Myers in a joint statement.
With indoor dining resuming in each of the state’s 58 counties for the first time since March 2020, the hospitality and leisure industry led the way again with 62,800 new jobs. The industry, which suffered severely through multiple shutdowns, regained 200,000 jobs over the last three months.
Even with the substantial growth, the industry remains “severely depressed,” said Jeffrey Clemens, economics professor at University of California, San Diego. He noted the sector is still down 577,000 jobs, a figure representing 40% of the remaining jobs lost during the pandemic that California has yet to make up.
Clemens says there is plenty of hiring left to do within the industry and used Texas as an example. With pandemic restrictions long lifted, Texas’ hospitality industry is now down just 12% compared to 28% in the Golden State.
“This suggests that there is room for considerable growth as restrictions are relaxed and economic activity comes back,” Clemens said.
Friday’s jobs report also reveals many businesses are finally ready to bring workers back into the office, as the professional and business services industry reported nearly 20,000 new jobs. Education (11,200) and other services (10,500) rounded out the month-over-month job gains.
There are several factors slowing the nation and California’s comeback, specifically skyrocketing raw material prices and labor shortages.
Loyola Marymount University economist Sung Won Sohn pointed to sluggish gains in manufacturing as proof businesses are struggling to find goods and employees.
“If it weren’t for the shortages of everything from lumber to labor, employment gains would have been higher,” he said in an email. “Short-staffed restaurant owners are working overtime. Truck drivers are impossible to find even after a hefty increase in hourly wages. Loading docks at warehouses are keeping trucks idle as there aren’t enough workers.”
California has nearly slashed its unemployment rate in half since last spring, but Sohn says the next big boost will likely come once extra unemployment benefits expire and when schools return to in-person learning in the fall.
“It could take as much as a couple of years before economic activity returns to the pre-pandemic level,” Sohn said, noting California’s workforce has shrunk by 483,000 since the pandemic.
Meanwhile the number of people filing for new unemployment benefits is steadily dropping nationwide, but California continues to buck the trend in a negative way.
California’s totals have essentially stagnated for the last six weeks while much of the country has seen major decreases in new unemployment filings. The discrepancy can largely be attributed to the fact many California public schools have yet to return to full-time instruction and some parents have quit to take care of their children. According to Friday’s report, California has 1.6 million unemployed residents.
Causing more strain is the state’s failure to fix stubborn, but highly publicized problems at the agency responsible for sending jobless residents aid.
Despite hordes of bad publicity, billions lost to fraud and promises of reform by state leaders like Newsom, the embattled Employment Development Department’s backlog continues to grow. As of Thursday, the department still has over 1 million claims awaiting action for 21 days or longer and the average claimant is being forced to call 13.5 times before getting through to an EDD employee.
Since March 2020 California has now paid out $145 billion in unemployment benefits, including up to $31 billion to fraudsters. To fund the staggering total, California has borrowed over $20 billion from the federal government, more than double amount of any other state.
The estimated unemployment percentages come from a pair of federal surveys with sample sizes of over 200,000 combined businesses, government agencies and households. The next update is due on June 23.
The slowdown in the nation’s most populous state sums up a disappointing April for America’s job market.
April’s labor market growth came in about 1 million jobs short of expectations and the nationwide unemployment rate rose from 6% to 6.1%. Experts cast the update as one of the most disappointing of all time and warned the country was over 8 million jobs behind pre-pandemic levels.
According to the surveys from the U.S. Bureau of Labor Statistics, nonfarm employment increased in just nine states. Along with California, New York (29,200), Colorado (17,000) and Washington state (14,700) tallied major job gains.
Michigan and Alabama took the largest hit, losing 19,200 and 12,400 jobs, respectively.
Statewide, unemployment is over 10% in seven counties, highlighted by Los Angeles at 11%. Rates in other major counties include San Diego (6.7%), San Francisco (5.4%), Orange (6.2%), Sacramento (7.2%) and Fresno (9.6%).