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California unemployment rate inches down to 7.3% in October

The rate remains well above the national average even though the state added more jobs than any other last month.

SACRAMENTO, Calif. (CN) — A decline in new coronavirus cases helped jumpstart California’s economy as employers last month added nearly 100,000 jobs, the most of any state.  

At 7.3%, California continues to claim the highest unemployment rate alongside Nevada but in October the Golden State contributed 18% of the nation’s total jobs gain. Bouncing back after a sluggish September in which it was outgained by both Texas and Florida, California added in every major employment sector for a total gain of 96,000 nonfarm jobs.

Southern California set the scene for the October hiring spree with Los Angeles and San Diego counties accounting for nearly 70% of the growth. Since February, California has on average added over 100,000 jobs per month as it continues to bite into its still-massive pandemic-induced jobless crisis.  

Economists cast California’s robust monthly job growth as a sign the nation’s most populous state has turned the corner on the latest wave of the pandemic that stymied its famed tourism industry for parts of the summer.

“California continues to beat the shackles off the delta virus and recover,” said Loyola Marymount University economist Sung Won Sohn. “If it weren't for labor shortages, the employment gain in October would have been much higher.”

Across the main 11 job sectors, professional and business services contributed 39,000 new jobs, followed by leisure and hospitality (21,000) and trade, transportation and utilities (14,000). Only the government sector (-4,000) reported job losses last month.

Overall, the American economy had a roaring October as employers added 531,000 jobs. The total exceeded economists’ expectations and the country’s unemployment rate dropped to 4.6%, the lowest mark of the pandemic.

Though California’s jobless rate remains well above the national average, Governor Gavin Newsom celebrated the latest jobs report.  

“We’ve averaged six-figure job growth for nine months straight — an unprecedented achievement — but there’s more work to be done and we’re supporting those hardest hit by the pandemic and getting folks back to work,” he said on Twitter.

While many states, including Texas, are approaching or have returned to pre-pandemic employment levels, California has only recovered 67% of the 2.7 million jobs lost at the outset of the pandemic. Reaching the coveted milestone continues to be difficult as the state’s labor force has shrunk by 41,000 workers since January 2020.  

In addition to a declining workforce, the slowing pace of hirings at bars and restaurants is preventing the state from a full economic rebound, says Jeffrey Clemens, associate professor of economics at the University of California, San Diego.

Clemens says returning to pre-pandemic employment is contingent upon whether the leisure and hospitality industry can fully recover. The hard-hit sector remains nearly 17% below its February 2020 employment level.

It could take “years” for the sector to recover if its labor pool continues to shrink, warned Sohn.

“Food services, drinking places and accommodations are having tough times attracting workers despite much higher wages,” Sohn said. “Many workers have left this sector looking for higher paying jobs in a safer environment. Some have returned to school wanting to get skills.”

Meanwhile California continues to account for a major share of the nation’s total jobless claims.

Despite making up around 12% of the total U.S. workforce, Californians filed one-fourth of all unemployment claims last week. At 61,000, new jobless claims in California increased for the first time in three weeks.

According to data derived from the pair of federal surveys, California has far more unemployed than any other state at 1.3 million. Next is Texas, at 769,000 unemployed, followed by New York (639,000) and Florida (490,000).

Joining California with unemployment rates above the national average of 4.6% are states like Texas (5.4%), New York (6.9%), Illinois (6%), Pennsylvania (6%) and Nevada (7.3%).

Statewide, unemployment rates remain high in a variety of sparsely populated areas. Imperial County reported a 17.7% rate, followed by Tulare with 9.2% and Colusa at 8.3%.

Los Angeles County’s jobless rate dropped from 8.2% in September to 7.8% last month, while San Diego (5.3%), San Francisco (3.9%), Orange (4.7%), Sacramento (5.8%) and Fresno (7.6%) also saw improvements. The next state unemployment update is scheduled for Dec. 17.  

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