State’s Unemployment Rate Declines But Still Higher Than Nation Overall
California’s labor market recovery picked up steam in February, with total nonfarm employment in the state expanding by 141,000 positions over the month, according to an analysis released jointly by Beacon Economics and the UC Riverside School of Business Center for Economic Forecasting and Development. While the late 2020 surge in COVID-19 cases and the associated health-mandated business restrictions took a toll on the state’s labor market in December and January, the February figures represent the highest monthly job gains for the state since June of last year.
In contrast to its earlier trend, California helped to fuel national job gains in February. The state accounted for over 37% of the net jobs added in the entire nation during the month. More importantly, with the spread of the COVID-19 virus at its lowest levels since last summer, and the roll out of effective vaccines accelerating in the state, more and more businesses should be able to return to more normal operations in the coming months. This is bullish for the labor market recovery.
“After a dark winter when the California labor market recovery stalled, February has brought significant hope to the state’s displaced workers,” said Taner Osman, Research Manager at Beacon Economics and the UCR Center for Forecasting. “We still have 1.7 million fewer people employed in the state compared to pre-pandemic levels, but the significant decline in new virus cases coupled with the continued roll out of effective vaccines, are grounds for optimism that the spring and summer will bring significant job gains to the state.”
California’s unemployment rate declined to 8.5% in February, down from 9.0% in the previous month, but remains elevated relative to the 6.2% rate in the United States overall. In a positive sign, California’s labor force continued to expand in February, growing by 276,000, as workers felt encouraged and returned to the labor market. Still, the state’s labor force – a measure of both those working and those who are looking for work – has declined by 488,500 workers since its pre-pandemic peak in February 2020.
Despite the encouraging performance of the labor market in February, there were still 1.67 million fewer people employed in California compared to February 2020. Total nonfarm employment in the state has contracted 9.4% since February of last year. This pace of growth trails the nation overall, where the labor market has shrunk by 6.2% over the same period.
At the industry level, the biggest job gains in California occurred in some of the hardest hit sectors, although employment levels in these sectors remain far below their pre-pandemic levels.
- Leisure and Hospitality led payrolls gains in February, where payrolls increased by 102,200. 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 689,300 (-33.9%) over the last year.
- Other sectors posting strong gains during the month were Other Services (14,100), Health Care (13,400), Manufacturing (8,900), Transportation, Warehousing, and Utilities (8,300), Administrative Support (7,000), and Retail Trade (2,500).
- A handful of sectors saw their payrolls decline in February. These included Government (-6,000), Information (-2,800), Wholesale Trade (-2,600), Real Estate (-1,800), and Professional, Scientific, and Technical Services (-1,500).
- Within the state, job gains were led by Southern California. San Diego saw the largest increases, where payrolls grew by 28,000 during the month. The Inland Empire (20,200), Orange County (17,700), Los Angeles (MD) (15,600), and Ventura (1,000) also saw their payrolls jump during the month. Over the past year, Los Angeles (MD) (-12.1%) has experienced the steepest job losses in the region, in relative terms, followed by Orange County (-10.6%), Ventura (-9.3%), El Centro (-9.2%), San Diego (-8.6%) and the Inland Empire (-5.4%).
- In the San Francisco Bay Area, San Jose experienced the largest increase, with payrolls expanding by 7,400 positions in February. San Francisco (MD) (2,600), San Rafael (MD) (2,000), the East Bay (1,600), Napa (1,200), Santa Rosa (1,200), and Vallejo (700) also saw payrolls expand during the month. From a year-over-year perspective, San Francisco (MD) (-13.2%) has had the steepest declines in the region, followed by Santa Rosa (-12.6%), Napa (-12.2%), the East Bay (-9.7%), San Rafael (MD) (-9.1%), San Jose (-8.6%), and Vallejo (-8.5%).
- In the Central Valley, Sacramento experienced the largest monthly increase as payrolls expanded by 4,800 positions in February. Payrolls in Bakersfield (2,700), Visalia (1,200), and Modesto (1,000) increased steadily as well. Over the last year, Chico (-9.8%) had the steepest declines, followed by Yuba (-8.7%), Hanford (-8.4%), Bakersfield (-8.0%), Fresno (-7.2%), Visalia (-7.1%), Madera (-6.6%), and Sacramento (-6.4%).
- On California’s Central Coast, Santa Barbara added the largest number of jobs, with payrolls increasing by 100 during the month. From a year-over-year perspective, Santa Cruz (-12.1%) and San Luis Obispo (-12.1%) shed positions at the fastest rate, followed by Salinas (-10.6%), and Santa Barbara (-8.9%).