California Hiring Slows in June; Unemployment Rate Steady

Hiring in California slowed down in June as employers attempted to coax reluctant workers back to pre-pandemic jobs.

California, the nation’s most populous state, gained 73,500 jobs in June, which would have been an eye-popping increase before the pandemic. The record for most jobs added in one month since 1990 was 98,500 jobs in April 2016. But California has exceeded that total six times in the past 14 months, including three times this year.

Those big gains are possible because of the huge job losses at the start of the pandemic. In March and April last year, 2.7 million jobs were lost after Gov. Gavin Newsom issued the first statewide stay-at-home order in the U.S. in an attempt to slow the spread of the coronavirus. California has since regained just over 1.4 million of those jobs, or 54.2%.

The unemployment rate did not change from May, staying at 7.7%. May’s unemployment rate had originally been 7.9%, but state officials changed it this month after reviewing more numbers. It is still well above the 5.9% rate for the nation.

“We know California’s economic restrictions were much more severe during the pandemic, so we declined more than the nation and, you know, we’ve been catching up. But I don’t think we are catching up fast enough,” said Sung Won Sohn, a professor of finance and economics at Loyola Marymount University.

The workforce consists of people who either have a job or are actively looking for one, as determined by surveys conducted by the Employment Development Department. In June, California added 35,500 people to the workforce, but it is still down from a recent high in February.

“The pandemic seems to have brought a certain shock to the system and people are reconsidering at all levels, ‘Do I want to go back to what I was doing before?’” said Mike Bernick, an attorney with Duane Morris and former director of the Employment Development Department. “That’s a very different dynamic than the five recessions and recoveries I’ve been involved with since 1980. I’ve never seen that before.”

Employment gains have mostly come from low-wage jobs in hotels and restaurants, an industry that was hardest hit by the pandemic. That industry accounted for more than 60% of all new jobs in June.

But traditionally higher-paying jobs in other sectors, including government and education and health services, posted increases of more than 7,000 jobs each.

“By late 2021, I think the unemployment rate could be almost as low as it was before the pandemic,” said David M. Smith, a professor of economics at the Pepperdine Graziadio Business School in Los Angeles.

The federal government is boosting unemployment benefits by an extra $300 a week because of the pandemic. But that additional money is set to expire in September.

Meanwhile, unemployment claims continue to outpace the rest of the country. While California workers make up 11.7% of the nation’s workforce, the state accounted for 15.2% of all unemployment claims filed last week.

About 3.1 million people are still receiving some form of unemployment assistance in California, Bernick said, he believes this is a factor for the state’s labor shortage. But Patrick Henning, a former Employment Development Department director under Newsom and former Gov. Jerry Brown, said those concerns are “a little inflated.”

“Those small benefits are drops in the buckets for what California families need. It’s not enough to sustain a family,” he said. “Clearly, the workforce is there. It’s just a matter of getting those folks back in and encouraging those businesses to continue to invest in the workers.”

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