July 28, 2021

DCTRS

Damascus Center for Theoretical and Civil Rights Studies

California economy loses momentum amid COVID-19 surge

Hundreds of thousands of Californians dropped out of the workforce in November as businesses sharply curtailed the pace of hiring — trends that economists suggest are growing ever more dire.

Golden State employers added 57,100 jobs last month, bringing payrolls to a total of 16.19 million, California officials reported Friday. That was a dramatic slowdown from the previous month: In October, when hopes were high that the COVID-19 pandemic was abating, payrolls grew by 145,600.

“This was the lowest job gain since the recovery began,” said Taner Osman, research manager at Beacon Economics, a Los Angeles consultancy. Given this year’s devastation, he said, “adding 57,000 jobs is a drop in the ocean.”

California has regained fewer than half of the more than 2.6 million nonfarming jobs it lost in March and April due to the COVID-19 pandemic.

The state’s unemployment rate fell to 8.2% in November. That’s down from 9% in October but exceeds the nationwide rate of 6.7%.

But the unemployment rate counts only people who are actively looking for work. Economists said November’s drop reflected a massive exodus of Californians from the labor force: 327,600 who had stopped seeking employment.

“California’s economy lost momentum in November as COVID infections started to climb and federal support programs ran dry,” said Lynn Reaser, an economist at San Diego’s Point Loma Nazarene University.

Monthly changes in labor force can be volatile, “but the pandemic’s overall impact has been stark,” Reaser said. “As of November, California’s labor force was down a striking 627,000 from its February level.”

Women, many of whom have taken leave to care for children and elderly family members, account for two-thirds of the drop in the labor force, according to Pomona College economist Fernando Lozano. “And the data suggest that the largest change in the labor force participation is among persons with a college degree or more education,” he said.

Cumulative cases of the coronavirus in California have soared from about 800,000 in mid-October to more than 1.77 million this week, according to data from The Times. As of Friday, the number is on pace to double every 30.6 days.

The November jobs numbers are based on surveys taken during the second week of the month and thus do not reflect stricter lockdowns that began in early December. Most of the state’s population is now under stay-at-home orders. Thousands of businesses have shut down, and others are limping along under restrictions to limit the number of customers at any one time.

Job postings in California are down 23% since January, and small-business openings and revenue are both down 28%, according to Opportunity Insights, an economic research group based at Harvard University.

In the first two weeks of December, more than 380,000 Californians filed new unemployment claims.

The state accounted for more than a fifth of U.S. claims, despite having just 11% of the nation’s civilian labor force.

“California is falling further behind the rest of the nation in employment,” said Michael Bernick, a former director of the California Employment Development Department who tracks jobs data. “No government program at this point will turn around hiring until the schools reopen, businesses reopen, and immunization is widely achieved.”

Economists say California’s recovery will depend to a great extent on two factors: the success of a mass vaccination program and the generosity of federal aid for millions of unemployed workers, teetering businesses and cash-strapped state and local governments.

With federal programs covering 750,000 jobless Californians set to expire late this month, Congressional leaders this week were furiously negotiating a $900-billion package, but economists say additional relief will be needed by early next year to jump-start a full recovery.