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California Unemployment Dips to Lowest Mark of the Pandemic

Thanks to a hiring spree within the hospitality and tourism industry as the result of weakened pandemic restrictions, California employers added 140,000 jobs in February, reducing statewide unemployment to 8.5%.

SACRAMENTO, Calif. (CN) --- Driven by the reopening of restaurants and the tourism industry, California unemployment dropped to 8.5% in February, the Golden State’s lowest mark of the pandemic.  

With the state loosening business restrictions incrementally since the holiday spike of Covid-19 cases dwindled, the hospitality and leisure industry added over 100,000 jobs last month. In total, California employers hired 141,000 new employees, nearly erasing the deficit accrued in December and January under Governor Gavin Newsom’s most recent lockdown order.

California registered the third largest jobless rate decrease in February of any state, but its estimated 8.5% mark remains well above the nationwide figure of 6.2%.

State officials celebrated Friday’s U.S. Department of Labor release, calling it a “milestone” in what has thus far been a slow economic recovery for the nation’s most populous and richest state.

“This month marks the lowest unemployment rate California has seen since the onset of the pandemic last year. Today's news, along with the governor’s announcement this week that California is continuing to expand Covid-19 vaccine eligibility, is a milestone in our ongoing recovery,” said California Labor Secretary Julie A. Su and one of Newsom’s top economic advisors Dee Dee Myers.

The state’s improvement was led by the hospitality and leisure industry, which resumed offering indoor dining in some parts of the state last month and combined to add 102,000 jobs. The hiring surge was a positive sign for the hard-hit industry that is still down nearly 700,000 jobs compared to February 2020.  

Overall, seven of California’s 11 industries added jobs including other services (14,100), education and health services (13,000), manufacturing (8,900), trade, transportation and utilities (8,200) and professional and business services (5,400). Meanwhile, the agriculture industry added nearly 3,000 jobs, tallying gains for the seventh straight month.

February’s performance will likely be repeated or enhanced in March and April, assuming Covid-19 cases continue to drop, says Jeffrey Clemens, economics professor at University of California, San Diego.

“Finally a bit of optimism on the job market front,” said Clemens, who is also co-editor of the Journal of Public Economics. “The February data show the first substantial signs of job market recovery we've seen since the fall.”

The hospitality industry’s February hiring-spree was certainly encouraging, but Clemens emphasized the enormity of the job losses suffered in California over the last year.  

“The jobs market is climbing out of a deep hole,” Clemens added, referencing the fact California is still down 1.6 million total jobs.  

The pandemic-induced stoppage of California’s $3 trillion economy put millions of residents suddenly out of work and sent jobless claims soaring. The state estimates 2.6 million nonfarm jobs were lost last March and April while statewide unemployment peaked at 16.3% in May 2020. 

There was additional good economic news for California last month as officials say tax receipts were up nearly $4 billion over projections. The Newsom administration attributed the healthy figure to lower tax refunds as a result of the state’s recently passed “Golden State Stimulus” which offered $600 payments to low-income taxpayers.

“California’s improving revenue picture is another sign of the growing light at the end of the tunnel as we recover and rebuild from the pandemic,” Newsom said earlier this week.

Statewide unemployment may have sunk a half-point in February, but nearly a dozen of the state’s 58 counties still have double-digit unemployment.

Los Angeles County’s rate fell to 10.9% from 12.7% the previous month, but it remains the only urban county in the double digits. The rest of the list consists of mostly rural, agricultural-producing counties like Kern (10.8%), Imperial (15.9%) and Monterey (10.9%).  

Friday’s unemployment number comes from two mid-February federal surveys of 80,000 California businesses and 5,100 households. California’s March update is scheduled to be released on April 26.

New unemployment claims are also trending in the right direction, as filings were down 12% in California last week compared to the week prior. The 95,000 claims during the week of March 20 were the fourth-lowest total for the state during the pandemic. California has now issued a staggering $130 billion in unemployment benefits since March 2020.

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