California unemployment rate drops amid COVID-19 restrictions

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California’s labor market improved slightly in August, but the state has only regained a third of the jobs it lost since the COVID-19 pandemic forced thousands of businesses to close.The state added 101,900 positions last month, mostly due to the temporary hiring of federal enumerators, bringing the state’s workforce to around 15.87 million, state officials reported.

In July, employers hired 83,500 workers after Gov. Gavin Newsom and county officials allowed many workplaces to reopen.

Compared with August of last year, California’s payroll was down 9.1%. About 2.6 million jobs were lost in March and April due to the coronavirus.

Nationwide, the wage bill fell by 10.25 million jobs between August 2019 and August 2020, a loss of 6.8%.

California’s unemployment rate fell to 11.4% last month from 13.5% in July. “The slight decrease is not bad news,” said Fernando Lozano, an economist at Pomona College. “But unfortunately, sectors with the most vulnerable workers in services, recreation and hospitality continue to experience rising unemployment.”

August was the first month since March when the pandemic took off, when unemployment was below the 12.3% mark California hit in 2010 at the height of layoffs caused by the Great Recession.

In February, California’s economy was on a roll, with an unemployment rate of just 3.9%.

Los Angeles County’s August unemployment rate, at 16.6%, was far higher than the state and worse than every other county in California except Imperial, where unemployment was 22.9%. LA County has suffered disproportionately from losses in tourism, business travel and the entertainment industry.

What seemed like encouraging news about California’s unemployment rate was tempered by the state’s rate being much worse than the nation’s. Unemployment in the United States fell to 8.4% in August from 10.2% in July.

California has the fifth highest unemployment rate in the country, behind Nevada, Rhode Island, New York and Hawaii.

In the Golden State, as in the country, many people have left the workforce, which includes those who have jobs and those who are looking for work. In August, California’s labor force shrank by 117,000 people, about a third of the drop in the unemployment rate. Since February, 807,000 have dropped out of school.

“People worry about being infected with the coronavirus, have children or other family responsibilities, or see few job prospects,” said Lynn Reaser, an economist at Point Loma Nazarene University in San Diego.

Reaser predicts the California job market will worsen this fall. “Most of the counties in the state are in the smallest of the four risk areas recently established by the governor,” she said. “So many businesses will be limited or closed.”

Unemployed Californians are left with a frayed safety net. The federal government’s weekly unemployment supplement of $ 600, paid to those who qualified for state benefits, expired at the end of July.

California Unemployment Insurance covers about half of average weekly earnings up to $ 450. The federal supplement had allowed many unemployed people to stay afloat and pay for basic living expenses.

“When it rains, it rains,” said Sung Won Sohn, an economist at Loyola Marymount University. “The partial reimposition of economic restrictions due to COVID-19, the wildfires and the end of the federal government’s stimulus package had a significant impact on employment in August.

Congressional Democrats had passed a bill in the House to extend the $ 600 supplement, but it was blocked by the Republican-led Senate, which considers the benefit too generous. The stalemate is expected to continue until the end of the year.

An executive order by President Trump last month authorized $ 300 per week in additional benefits under the Wage Loss Assistance program, but it is set to expire this month. The new supplement does not cover workers who receive less than $ 100 per week in unemployment insurance, excluding 192,000 of the poorest Californians, according to a study by the California Policy Lab.

Even the majority of those who receive the additional payment of $ 300 will receive benefits below the poverty line, with total benefits averaging $ 575 per week, according to the report.

“We expect job growth to get harder from here,” said Scott Anderson, economist at Bank of the West in San Francisco. “Congress’ inability to adopt another tax bailout [and] California wildfires could further delay the state’s economic recovery.

“California was losing net migrants to the cost of living and high taxes even before the wildfires, and these trends are likely to accelerate as more and more people seek greener pastures. This means fewer jobs in sectors like retail, education, health, government and real estate than what would be created if in-migration were more vigorous.

Six of California’s 11 industrial sectors gained jobs last month. The government grew by 66,100, thanks to the census and the hiring of teachers for the school year. Trade, transportation and utilities grew by 26,000, thanks to transportation and warehousing, thanks to job creation by companies like UPS, FedEx and Amazon. The use of general merchandise has benefited from the fact that consumers buy more groceries because they eat less in restaurants.

Leisure and hospitality declined by 14,600, the largest job loss of any industry, with hotels and restaurants continuing to suffer. The sector has lost 561,900 jobs since March.

The slight overall increase in employment in August contrasts with gloomier economic indicators, including “jobless claims well above the national rate,” said Michael Bernick, former director of the California Department of Employment Development . “A sharp drop in job vacancies and consumer spending shows a stalled state economy.”

In August, Los Angeles added 11,500 jobs to its roughly 4 million payroll; unemployment fell to 16.6% from 18.5% in July. Year over year, the county has lost nearly one in 10 jobs.

Orange County gained 3,700 jobs in August for a total of 1.48 million. During the year, the county lost 11.2% of its jobs, the biggest drop in coastal Southern California, with the closure of Disneyland Resort, its largest employer. Its unemployment rate was 9.9% in August, down from 12.4% in July.

The Inland Empire, made up of Riverside and San Bernardino counties, gained 15,400 jobs in August for a total of 1.4 million, as warehouses exploded with a nationwide increase in e-commerce. Compared to a year earlier, the region lost 8.6% of its jobs. Unemployment was 11% in August, down from 13.4% in July.

Northern California’s strong tech sector allowed many employees to work from home during the pandemic, mitigating job losses. San Francisco’s unemployment rate was 8.8% in August. San Mateo and Santa Clara counties were at 7.5%.

In a statement on the August Jobs Report, California Secretary of Labor Julie Su praised the state’s new laws protecting workers and providing benefits to small businesses. “A lasting recovery depends on the willingness of every Californian to do what they can to slow the spread of this virus,” she said, “including giving workers the choice to stay home in the event of need to isolate yourself and follow public health orders.

California’s payroll figures come from a federal survey of 80,000 California businesses. The unemployment rate is taken from a separate survey of 5,100 households.

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