Unemployment Falls Again But Remains Elevated Relative To Nation

 California’s labor market continued to expand at a steady pace in March, with total nonfarm employment in the state growing by 60,200 positions over the month, according to an analysis released jointly by Beacon Economics and the UCR School of Business Center for Economic Forecasting and Development. February’s gains were revised down to 135,400 in the latest numbers, a 2,700 decrease from the preliminary estimate of 138,100.

While California has added jobs at a healthy pace in 2021 and 2022, as of March 2022, the state has recovered just 89.3% of the jobs that were lost in March and April 2020, and there are now 395,500 fewer people employed in California compared to pre-pandemic February 2020. Total nonfarm employment in the state has contracted 1.7% since this time, compared to a 1.0% decline nationally. With a larger portion of its workforce to be recovered, California increased payrolls by 6.4% from March 2021 to March 2022, well above the 4.5% increase nationally during the same period.

“The strong job gains relative to the nation will continue, since California has more ground to recover compared to the rest of the country,” said Taner Osman, Research Manager at Beacon Economics and the Center for Economic Forecasting. “While macro headwinds, most notably rising interest rates and inflation, gather momentum, it’s not expected to slow employment growth in the coming months as the re-opening tailwinds remain strong.”

California’s unemployment rate fell to 4.9% in March, a 0.4 percentage-point decline from the previous month, which was driven by an increase in household employment (+141,100). California’s unemployment rate remains elevated relative to the 3.6% rate in the United States overall. While growing by 63,100 in March, the state continues to struggle with its labor supply. Since February 2020, the state’s labor force has fallen by 405,100 workers, a 2.1% decline.

Industry Profile  

• At the industry level, the largest jobs gains continue to occur in sectors hit hardest by the pandemic. While California has gained significant ground in recent months, employment levels in many of these sectors remain below their pre-pandemic levels and should continue to steadily add jobs back over the coming months.
• Leisure and Hospitality led job gains in March, with payrolls expanding by 14,800. Leisure and Hospitality still has a long way to go to recover all of the jobs lost due to the pandemic as payrolls are still down 9.9% since February 2020.
• Other sectors posting strong gains during the month were Construction (8,900), Professional, Scientific, and Technical Services (8,700), Health Care (7,000), Other Services (4,900), Wholesale Trade (3,300), Manufacturing (2,900), Education (2,000), Retail Trade (1,900), Finance and Insurance (1,800), and Real Estate (1,800).
• Job gains were broad based in March with no sector posting losses during the month. The Transportation, Warehousing, and Utilities sector lagged other sectors increasing payrolls by just 100 positions during the month. However, the sector has been a driver of growth in the state during the recovery, with payrolls up 14.6% since February 2020.

Regional Profile

• Regionally, job gains were led by Southern California. Los Angeles (MD) experienced the largest increase, where payrolls grew by 5,700 (0.1%) during the month. San Diego (5,600 or 0.4%), Orange County (5,000 or 0.3%), the Inland Empire (4,900 or 0.3%), and Ventura (2,000 or 0.7%) also saw their payrolls jump during the month. The Inland Empire (118.6%) has experienced the strongest recovery in the region, measured by the percentage of jobs recovered from April 2020 to March 2022 relative to the jobs lost from February 2020 to April 2020. The Inland Empire is followed by El Centro (105.1%), San Diego (93.1%), Los Angeles (MD) (82.3%), Orange County (80.8%), and Ventura (76.7%).
• In the Bay Area, San Francisco (MD) experienced the largest increase, with payrolls expanding by 4,800 (0.4%) positions in March. San Jose (3,900 or 0.3%), the East Bay (3,300 or 0.3%), Santa Rosa (400 or 0.2%), and Vallejo (300 or 0.2%) also saw payrolls expand during the month. Since April 2020, San Jose (82.4%) has experienced the strongest recovery in the region, followed by the East Bay (81.1%), Napa (77.2%), Santa Rosa (76.5%), San Francisco (MD) (73.8%), Vallejo (67.9%), and San Rafael (MD) (62.6%).
• In the Central Valley, Sacramento experienced the largest monthly increase, as payrolls expanded by 6,300 (0.6%) positions in March. Payrolls in Fresno (2,000 or 0.5%), Bakersfield (1,400 or 0.5%), Stockton (800 or 0.3%), Merced (500 or 0.7%), Chico (400 or 0.5%), Modesto (400 or 0.2%), Redding (400 or 0.6%), and Visalia (400 or 0.3%) increased steadily as well. Since April 2020, Stockton (126.7%) has experienced the strongest recovery in the region, followed by Yuba (124%), Visalia (122.1%), Madera (114%), Merced (110.2%), Redding (107.6%), Sacramento (106.4%), and Fresno (103.0%).
• On California’s Central Coast, Santa Barbara added the largest number of jobs, with payrolls increasing by 1,000 (0.5%) during the month. Salinas (600 or 0.4%), Santa Cruz (600 or 0.6%), and San Luis Obispo (400 or 0.3%) also saw payrolls expand during the month. Since April 2020, and San Luis Obispo (91.8%) has experienced the strongest recovery in the region, followed by Santa Barbara (86.0%), Santa Cruz (82.3%), and Salinas (81.5%).