California has nearly restored the millions of jobs that vanished during the COVID-19 recession, but the future of employment in the state is bleak.
When California’s monthly employment report was released last week – telling us how the situation was in October – Governor Gavin Newsom was quick to make a solemn statement.
“California has now fully recovered all of the jobs lost to the recession caused by the pandemic, but we know that’s not the finish line,” Newsom said, plugging its economic programs to counter rising consumer costs and ” helping create thousands of jobs and opportunities for Californians across the state.”
Newsom claimed that “California has recovered 101.1% of the 2,758,900 jobs lost during the recession — the state is now 30,800 jobs above pre-February 2020 pandemic total levels.”
Data from the State Employment Development Agency (EDD) tells a slightly different story. In February 2020, 18,756,900 Californians were employed for that month, according to the EDD Bulletin. The October 2022 Bulletin put employment at 18,502,900, or 254,000 fewer.
Numbers aside, California’s employment situation has definitely improved compared to more than two years ago, when the state’s unemployment rate rose from less than 4% of the labor force to over 16%. Newsom had ordered widespread business shutdowns to stem the spread of COVID-19, putting nearly 3 million Californians out of work.
The financial pain for millions of California families grew immeasurably worse when EDD experienced a bureaucratic collapse that prevented many unemployed from receiving unemployment insurance payments, sometimes for months. In addition, under pressure to clear the backlog, EDD workers went too far the other way, approving tens of billions of dollars in payments to fraudulent claimants.
Though the October report tells us nearly as many Californians were employed as they were before the COVID-19 recession, the state’s overall job picture is more complex than these simple numbers.
For one, reports for February 2020 and October 2022 show that the state’s labor force — the total number of Californians employed or looking for work — has shrunk by nearly a quarter of a million people. The figures continue a long-term decline in so-called “labor force participation” — the percentage of working-age adults who are, or want to be, in work. They also imply that as the state’s overall population ages, so does the potential labor pool.
Whatever the underlying causes, the shrinking labor force is one of the reasons California employers are having such a hard time finding enough workers and why they’re raising wages — to as much as $18 an hour for Fast -Food workers, for example – to attract more applicants.
“In the past year, and for the first time in decades, California has more job openings than job seekers,” says a new report from the Public Policy Institute of California. “While that’s good news for job seekers, it’s also constraining staffing plans and business growth – and wage increases have pushed prices up.”
In response, the PPIC report says, some employers are implementing more labor-saving technologies, such as B. Order kiosks in fast food shops and GPS-controlled machines in agriculture.
The labor shortage may have other effects. For example, the sharp decline in community college enrollments may reflect prospective students choosing higher wages in the service industry over education.
We can look back on October 2020 as a peak for California employment as economists say a recession may be on the horizon. Some employers, particularly in high-tech industries, are already laying off thousands of workers in anticipation of a downturn.
California has historically experienced one type of recession about once a decade, and another may be on the way.