Still a Ways to Go, But California Labor Market Continues Recovery From COVID-19 as Jobs Are Added, Unemployment Falls

Friday, August 21, 2020

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(Source: Beacon Economics)

California’s labor market continued to recover from the effects of the COVID-19 pandemic in July, with total nonfarm employment in the state expanding by 140,400 positions, according to an analysis released jointly by Beacon Economics and the UC Riverside School of Business Center for Economic Forecasting and Development.

“The addition of over 140,000 jobs in July is certainly a positive sign,” said Taner Osman, Research Manager at Beacon Economics and the UCR Center for Economic Forecasting. “But to place this figure in context, if we continue to add jobs at the same rate as in July, it will take until July 2021 to return the state’s labor market to the position it was in February 2020.”

Year-over-year employment growth in California now stands at -9.4%, one of the largest annual declines on record, only trumped by figures from earlier this year. The state has continued to perform slightly worse than the nation, where nonfarm employment declined by 7.5% over the same period. In July, there were over 1.6 million fewer people employed in California than in July 2019.

The state’s unemployment rate fell to 13.3% in July, a 1.6-percentage-point decline relative to June, but a far cry from the 4.0% rate from one year ago. The majority of those who have joined the unemployment rolls, however, still report the nature of their unemployment to be temporary, although a shrinking share of the unemployed report this way.

The month-over-month decline in the state’s unemployment rate was aided by a decline in the state’s labor force, which contracted by 167,200 during the month, as some workers gave up looking for work. From a year-over-year perspective, the state’s labor force has declined by 3.0%, nearly 600,000 people, a deeper decline than the 2.1% drop in the nation overall.

Key Findings:

After declining in June, Government payrolls rebounded in the latest figures, adding 36,000 positions in July. This was the highest month-to-month gain by any sector in the state. State Government was responsible for the bulk of the gains, with payrolls increasing by a sizeable 31,700 positions in July. Government jobs have been slightly more insulated from the fallout of the COVID-19 pandemic than their private sector counterparts, although the sector is still down 6.2% over the last year.

The relaxation of public health mandates and business adaptation allowed a significant number of Retail sector establishments to re-open their doors in the first half of July, which increased payrolls by 28,800 during the month. Health Care and Other Services have also benefited from the relaxation of public health mandates, with jobs expanding by 23,700 and 17,300, respectively, during the month. However, with the reimplementation of business closures in the second half of July, certain businesses in Retail Trade and Other Services will temporarily shutter their doors. Health Care has been largely spared from the latest orders.

The Construction sector was the only sector to post declines in July, shedding 14,800 during the month. From a year-over-year perspective, Construction payrolls are down 6.3%, slightly better than the labor market as a whole. Renewed builder confidence and an uptick in business activity should give way to an increase in construction activity in the coming months.

In Southern California, Los Angeles (MD) saw the biggest job increases, where payrolls grew by 47,400 during the month. The Inland Empire (7,200), San Diego (4,300), and Ventura (4,200) also added a significant number of jobs during the month. Over the past year, Orange County (-12.0%) saw the steepest job losses in the region, measured by percentage decrease, followed by San Diego (-10.0%), the Inland Empire (-9.5%), Los Angeles (MD) (-9.4%), and Ventura (-9.0%).

In the San Francisco Bay Area, San Francisco (MD) experienced the largest increase, with payrolls expanding by 8,600 positions in July. Santa Rosa (6,200), San Jose (4,400), the East Bay (1,600), and Vallejo (600) also saw payrolls expand during the month. Over the past year, the East Bay (-12.6%) has had the steepest declines in the region, followed by Vallejo (-11.2%), San Rafael (MD) (-11.1%), San Francisco (MD) (-10.7%), and San Jose (-8.2%).

In the Central Valley, Sacramento experienced the largest monthly increase as payrolls expanded by 4,800 positions. Payrolls in Fresno (2,500), Merced (2,500), and Yuba (800) increased as well. Over the last year, Yuba (-10.8%) had the steepest declines followed by Stockton (-10.6%), Chico (-10.5), Modesto (-10.4%), Bakersfield (-9.6%), and Sacramento (-9.0%).

On California’s Central Coast, Santa Barbara added the largest number of jobs, with payrolls increasing by 5,500 during the month. Payrolls in San Luis Obispo (2,800), Salinas (2,700), and Santa Cruz (700) also increased. From a year-over-year perspective, Santa Cruz (-14.7%) shed positions at the fastest rate, followed by San Luis Obispo (-13.3%), Salinas (-12.4%), and Santa Barbara (-8.5%).

Category: Economic News