May 7, 2021

DCTRS

Damascus Center for Theoretical and Civil Rights Studies

California unemployment dips, but joblessness persists

California’s economy is slowly picking up as businesses reopen and new unemployment claims fall, but stubborn joblessness persists as many simply stop looking for work.

In March, employers added 119,600 positions, state officials reported Friday. The Golden State has yet to recover 56% of the 2.7 million jobs lost due to the COVID-19 pandemic.

California’s unemployment rate dropped to 8.3% in March from 8.5% a month earlier but remained far higher than the 4.5% in March 2020, before the virus took hold. And last month’s slide was mainly caused by nearly 40,000 workers quitting the labor force, economists said.

The state’s economy is recovering more slowly than the nation’s as officials have been more cautious in lifting restrictions on businesses than in other states. After New York and Hawaii, California unemployment was the third-highest in the nation, tied with New Mexico. The U.S. jobless rate stood at 6% in March.

“California is clawing back some of the huge job losses suffered during the pandemic, but much progress remains to be achieved,” said Lynn Reaser, an economist at San Diego’s Point Loma Nazarene University.

Payrolls nationally were 5.5% below pre-pandemic levels, as compared to California’s 8.6% drop.

Along with its more restrictive policies to contain the virus, the state’s greater dependence on tourism has devastated its hotel, convention, restaurant and live entertainment industries and accounts for much of the difference with the broader U.S. recovery, Reaser said.

“Many people have either quit their jobs or stopped looking for work,” she said. “Some needed to care for children and for parents. Some feared becoming infected at work. Some despaired at finding a job and opted for unemployment benefits. Still others have simply burned out.”

Ian McFarland, a 33-year-old video editor and aspiring screenwriter, was laid off from a small Los Angeles production company in mid-March last year as the coronavirus began to spread.

“I’m a college graduate with years of experience who interviews well and I still haven’t found a job after looking for twelve months,” he said. “There are just too many people trying to find work in my industry.”

Thanks to a rent-controlled apartment, unemployment benefits and federal stimulus payments, McFarland’s income has been slightly above what he was earning in his minimum-wage job, he said.

But the job hunt remains discouraging. After moving to California seven years ago to build a career in the entertainment industry, “I may need to switch industries,” he said. “I may even have to move back home to Kansas City.”

Although the entertainment industry is recovering more slowly than many sectors, the state’s overall economy is showing encouraging signs since the March jobs numbers, which are collected mid-month.

There are just too many people trying to find work in my industry.

Ian McFarland

Since early April, with the pace of vaccinations accelerating, many California counties have emerged from the most restrictive tiers that regulate business closures, and the number of newly unemployed workers filing for benefits is dropping precipitously.

For the week ending April 10, new jobless claims totaled 91,756, the lowest level since the pre-pandemic week of March 14, 2020, and a sharp decrease from the previous week’s total of 169,902.

“That’s the strongest sign so far of the start of an employment recovery,” said Michael Bernick, a former director of the state’s Economic Development Department. “It’s rooted in the combination of widespread vaccinations, schools reopening and the economic lockdowns being lifted.”

The March report showed a broad recovery with payrolls expanding across ten of the state’s 11 industry sectors. Leisure and hospitality jobs in restaurants, bars, entertainment and lodging accounted for 42,400 new jobs, more than a third of last month’s gains.

Trade, transportation and utilities, which include retail stores, saw the second-highest increase with 32,200 new jobs.