California unemployment rate dips to 6.9%

(CN) — Employers in the Golden State added 45,700 payroll jobs in November, helping to drop California’s unemployment rate to 6.9% — a welcome change from October’s 7.3%.

While the state has gained a number of the jobs the pandemic shredded — in November 2020, the state’s unemployment rate was 8.7% — California remains above the national rate of 4.2% with the highest unemployment rate of the 50 states.

Among the benchmarks states want to see is a return to their pre-pandemic employment levels. Sung Won Sohn, professor of finance and economics at Loyola Marymount University, said California has recovered 69.6% of the jobs lost during the pandemic, while the country overall has regained 82.5% of lost jobs.

“California has a disproportionate share of its employment in leisure and hospitality which has recovered slower than the rest of the economy from the pre-pandemic peak,” Sohn said, adding the emergence of the omicron variant has likely played a role. “Clearly, the omicron scare has had some effect on slowing economic activities in November. People-contact sectors such as leisure and hospitality added less than 7,000 jobs, down from 26,400 in October.”

Jeffrey Clemens, associate professor of economics at the University of California, San Diego, also seized on the lagging leisure and hospitality numbers as cause for concern. He said the sector remains 335,200 jobs below its February 2020 level.

“Workers who were previously employed in this sector are trying to move to greener pastures. Many workers have left this sector looking for higher paying jobs in a safer environment,” Sohn said, noting that the sector could take years to fully rebound to its past employment level.

According to the statistics from California’s Employment Development Department, the professional and business services sector saw the biggest increase in employment with 18,800 jobs added, along with gains in most other industries.

“Almost all the increase in employment has come from Los Angeles and San Diego counties, where retail stores saw many people returning to shopping,” Sohn said.

The mining and logging, information and construction sectors saw small dips in the number of jobs added.

Clemens said the number of jobs added in November was “the state’s smallest monthly gain in 2021,” suggesting a slowdown.

“This slowdown in job growth is worrisome in that California remains more than 800,000 jobs short of its pre-pandemic employment level,” Clemens said.

Using U.S. Bureau of Labor statistics, Clemens said California’s labor market is recovering “more strongly” than New York but “more weakly” than Texas, where employment fully recovered to its pre-pandemic level this month. The number of jobs in California remains 4.6% lower than before the pandemic, while New York’s figure is still nearly 8% below, Clemens said.

“If it weren't for labor shortages, the employment gain in November would have been much higher,” Sohn said. According to Sohn, higher wages and plenty of open jobs are not propelling workers to return to work in a hurry.

Along with California, the states with the highest unemployment rates were Nevada (6.8%), New York (6.6%), New Jersey (6.6%) and New Mexico (6.2%). States like Texas (5.2%), Pennsylvania (5.7%) and Florida (4.5%) remain above the national average as well.

Imperial County again had the highest unemployment rate statewide at 15.5%, though this was an improvement on October’s 17.7.%. Colusa County followed at 10.3%, an unemployment increase from 8.3% in October.

Los Angeles County saw improvements from a month ago, dropping from 7.8% to 7.1%. Similar drops occurred in San Diego (4.6%), San Francisco (3.3%), Orange (4.1%), Sacramento (5.1%) and Fresno (7.0%).

The next state unemployment update occurs Jan. 21.

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