State’s Unemployment Rate Holds Steady As Workforce Expands
California’s labor market continued to expand at a rapid pace in July, with total nonfarm employment in the state growing by 114,400 positions, according to an analysis released jointly by Beacon Economics and the UC Riverside School of Business Center for Economic Forecasting and Development. June’s gains were revised down to 57,200 in the latest numbers, a 17,300 decrease from the preliminary estimate of 74,500.
While California has added jobs at a healthy pace in 2021, as of July 2021, there were still 1.13 million fewer people employed in the state than in February 2020. Total nonfarm employment has contracted 6.4% since that time. California compares unfavorably to the nation, where the labor market has shrunk by 3.7% over the same period. However, with a larger portion of its workforce to be recovered, California should continue to see more rapid growth relative to the nation in the coming months.
Following impressive job gains throughout the summer, the state has reached an intriguing point in its labor market recovery. “Labor shortages have been driven in part by school closures, as parents have left the labor force to care for children,” said Taner Osman, Research Manager at Beacon Economics and the UCR Center for Forecasting. “With schools re-opening, we could see a surge of workers return to the labor market, easing labor shortages.” On a darker note, Osman said the spread of the delta variant might cause some workers to remain out of the labor force, which would act as a short-term headwind to labor supply.
California’s unemployment rate held steady at 7.6% in July, unchanged from the previous month, and the state’s labor force expanded by 50,300. California’s unemployment rate remains elevated relative to the 5.4% rate in the United States overall. Since February 2020, the state’s labor force has fallen by 505,500 workers, a 2.6% decline.
At the industry level, the largest jobs gains continue to occur in the sectors hardest hit by the pandemic. While California has made up significant ground in recent months, employment levels in many of these sectors remain far below their pre-pandemic levels.
- Leisure and Hospitality led payroll gains in July, with payrolls expanding by 56,600. Still, the sector has a long way to go to recover all of the jobs lost due to the economic downturn, with payrolls having fallen by 427,000 (-20.7%) since its previous peak in February 2020.
- Other sectors posting strong gains during the month were Government (35,900), Health Care (7,300), Other Services (6,400), Wholesale Trade (4,700), Information (4,600), and Professional, Scientific & Technical Services (4,200).
- A handful of sectors saw their payrolls decline in July. These included Manufacturing (-4,500), Retail Trade (-2,300), Transportation, Warehousing, & Utilities (-1,400), Finance & Insurance (-1,100), and Management (-700).
- Regionally, job gains were led by Southern California. Los Angeles (MD) saw the largest increase, where payrolls grew by 26,600 (0.6%) during the month. Orange County (12,400 or 0.8%), San Diego (9,700 or 0.7%), and Ventura (1,100 or 0.4%) also saw their payrolls jump during the month. The Inland Empire (74.7%) has experienced the strongest recovery in the region, measured by the percentage of jobs recovered from April 2020 to July 2021 relative to the jobs lost from February 2020 to April 2020, followed by Orange County (62.8%), Ventura (61.5%), El Centro (58.3%), San Diego (57.0%), and Los Angeles (MD) (47.9%)
- In the San Francisco Bay Area, San Francisco (MD) experienced the largest jobs increase, with payrolls expanding by 7,300 (0.7%) positions in July. San Jose (4,600 or 0.4%), Santa Rosa (2,000 or 1.0%), San Rafael (MD) (1,000 or 0.9%), Vallejo (700 or 0.5%), and Napa (400 or 0.6%) also saw payrolls expand during the month. Since April 2020, San Rafael (MD) (68.8%) has experienced the strongest recovery in the region, followed by Napa (59.4%), Vallejo (55.3%), Santa Rosa (52.34%), San Jose (50.8%), the East Bay (45.7%), and San Francisco (MD) (43.1%).
- In the Central Valley, Merced experienced the largest monthly increase, as payrolls expanded by 3,500 (5.2%) positions in July. Payrolls in Fresno (2,000 or 0.6%), Sacramento (1,900 or 0.2%), Bakersfield (1,700 or 0.7%), Stockton (1,400 or 0.6%), and Modesto (1,100 or 0.6%) increased steadily as well. Since April 2020, Merced (107.6%) has experienced the strongest recovery in the region, followed by Stockton (87.9%), Redding (80.5%), Modesto (74.4%), Sacramento (64.2%), Yuba (62.3%), and Fresno (60.7%).
- On California’s Central Coast, Salinas added the largest number of jobs, with payrolls increasing by 4,600 (3.4%) during the month. Santa Cruz (1,000 or 1.1%), San Luis Obispo (900 or 0.8%), and Santa Barbara (500 or 0.3%) also saw payrolls expand during the month. Since April 2020, and Salinas (72.5%) has experienced the strongest recovery in the region, followed by Santa Barbara (60.3%), San Luis Obispo (44.3%), and Santa Cruz (40.0%).