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California’s Annual Jobs Revision Shows the Pandemic Hit Employment Much Harder Than Originally Estimated; Still, Outlook for 2021 Significantly Brighter

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Latest January Numbers: More Jobs Shed and Workforce Contracts

The annual benchmark revision released today by the California EDD saw 2020’s employment figures revised downwards significantly, according to an analysis released jointly by Beacon Economics and the UC Riverside School of Business Center for Economic Forecasting and Development. Employment growth in the state from December 2019 to 2020 was revised down from -8.0% to -9.2%. This revision translates into 206,500 more jobs lost in California during the year than the EDD originally estimated.

Typically, annual revisions show greater job losses than were initially reported during recession periods, so this downward adjustment was somewhat expected. At the same time, the revised figures show the true magnitude of the hole that the pandemic and its effects left in the state’s labor market.

“As it turns out, the labor market fallout in 2020 was significantly worse in California than originally estimated,” said Taner Osman, Research Manager at Beacon Economics and the UCR Center for Forecasting. “And it hasn’t made the reading any prettier.”

Compared to December 2019, there 1.6 million fewer jobs in the state’s economy in December 2020; this compares to the EDD’s original estimate of 1.4 million fewer jobs. Likewise, the drop in the state’s labor force was revised downwards. During the year, 731,300 workers left the labor force, compared to the 523,000 contraction originally estimated. This translates into a labor force drop of -3.8% compared to the original estimate of -2.7%.

Thankfully, a modest recovery has been underway, and with new cases of the coronavirus falling in the state, accompanied by a loosening of health-mandated restrictions on business activity, the labor market should see a strong recovery in 2021. However, the extent of the labor market decline is sobering and employment growth in the state is nearly 2 million jobs behind trend. The labor market is unlikely to return to trend in 2021.

“While we expect a strong recovery in the labor market in 2021, it would take a hiring surge of unprecedented proportions to return the labor market to trend this year,” said Osman. “In fact, we’ll do well to just recover all the jobs lost in 2020 this year, never mind returning to trend.” 

At the industry level, the benchmark revision was mixed, with growth rates in some sectors revised upwards, while others were revised downwards. The biggest upward revisions to year-over-year growth rates (December 2019 to December 2020) were in Transportation, Warehousing & Utilities (from an estimate of -0.2% to a revised figure of 5.0%), Manufacturing (revised from -7.6% to -6.1%), Management (revised from -6.2% to -5.4%), Education (revised from -4.8% to -4.1%), and Government (revised from -7.6% to -7.3%).

The biggest downward revisions in year-over-year growth rates were in Mining and Logging (revised from -6.6% to -16.3%), Real Estate (revised from -2.2% to -8.0% revised), Leisure and Hospitality (revised from -29.8% to 35.4%), Other Services (revised from -20.3% to -23.9%), and Finance and Insurance (revised from 2.1% to -1.3%).

California’s annual benchmark revision was also mixed at the regional level, with growth rates revised up in some areas and down in others. The largest upward revisions in year-over-year growth rates were in Yuba (revised from -14.5% to -7.7%), Stockton (revised from -6.9% to -2.4%), Modesto (revised from -8.7% to -5.5%), Redding (revised from -6.0% to -4.1%), Madera (revised from -5.5% to -4.0%), and Fresno (revised from -6.5% to -4.9%). The largest downward revisions came in the state’s largest metro areas. Downward revisions occurred in Napa (revised from -8.0% to -11.6%), Santa Rosa (revised from -9.2% to -12.6%), San Francisco (MD) (revised from -9.9% to -12.7%), Los Angeles (MD) (revised from -9.1% to -11.6%), San Rafael (MD) (revised from -9.5% to -12.1%), and San Diego (revised from -6.9% to -8.8%).

January Numbers

Nonfarm employment in California stumbled out the gate to start 2021. The latest figures released by the California EDD reveal that the state shed 69,900 jobs in January.

Since the depths of the pandemic-driven labor market downturn in April, only 34% of the jobs lost have been recovered, and in January, there were 1.8 million fewer people employed in California than in February 2020. Total nonfarm employment in the state has contracted 10.2% since February 2020. This pace of growth trails the nation overall, where nonfarm employment has shrunk by 6.5% over the same period.

“The surge in new coronavirus cases that occurred in the fall of 2020 put the labor market recovery that had been underway on hold for four months,” said Osman. “Unfortunately, December’s and January’s job losses have returned employment levels in the state to where they were in September 2020. But even though this damage cannot be repaired overnight, the outlook for 2021 is much more positive.”

The January numbers show that California’s unemployment rate declined to 9.0%. However, this decline did not occur for all the right reasons. The state’s labor force also contracted by 36,500 in January, while household employment expanded by 31,800. From a year-over-year perspective, California’s labor force has contracted by 4.0%.

Industry Profile

  • The Retail Trade sector added more jobs in January than any other sector in the state’s economy, boosting payrolls by 25,400 positions. While this strong month helped recover some of the jobs lost during the economic downturn, the sector is still down 5.0% from a year-over-year perspective.
  • The Administrative Support sector also had a strong month, increasing payrolls by 4,900 in January. Other sectors posting strong gains in January were Government (3,600), Wholesale Trade (1,800), and Real Estate (1,000).
  • Payrolls decreased in a handful of sectors in January. Leisure and Hospitality posted the largest decline, where payrolls fell by 70,600. The month-over-month contraction also drove year-over-year declines to -38.9%.
  • Payrolls in Transportation, Warehousing, and Utilities (-13,500), Education (-10,000), Manufacturing (-4,600), Construction (-4,000), Other Services (-3,300), and Professional, Scientific, and Technical Services (-1,100) also contracted in January.

Regional Profile

  • Within the state, job declines were concentrated in Southern California. Orange County saw the steepest declines, where payrolls contracted by 22,900 during the month. San Diego (-14,600), the Inland Empire (-5,300), Los Angeles (MD) (-4,300), and Ventura (-1,100) also saw payrolls decline during the month. Over the past year, Los Angeles (MD) (-12.1%) has experienced the steepest job losses in the region, measured by percentage decrease, followed by Orange County (-11.7%), San Diego (-10.2%), El Centro (-9.9%), Ventura (-9.6%), and the Inland Empire (-6.3%).
  • In the San Francisco Bay Area, payroll growth was mixed with San Rafael (MD) leading the way, where payrolls expanded by 2,600 positions in January. Payrolls in the East Bay (2,300) also expanded during the month. In contrast, payrolls contracted in San Francisco (MD) (-4,800), Santa Rosa (-2,100), and San Jose (-1,800). From a year-over-year perspective, Santa Rosa (-13.9%) has had the steepest declines in the San Francisco Bay Area, followed by San Francisco (MD) (-13.4%), Napa (-11.9%), San Rafael (MD) (-10.5%), the East Bay (-9.7%), San Jose (-8.9%), and Vallejo (-8.5%).
  • In the Central Valley, Sacramento saw the strongest monthly gains, where payrolls increased by 3,200 positions. Redding (1,000), Visalia (700), Merced, (600), and Hanford (500) added jobs as well. Over the last year, Chico (-12.8%) had the steepest declines, followed by Yuba (-8.5%), Bakersfield (-8.0%), Visalia (-7.4%), Hanford (-6.3%), Sacramento (6.0%), Merced (-5.6%), and Modesto (-5.6%).
  • On the Central Coast, San Luis Obispo added the greatest number of jobs, with payrolls growing by 300 over the month. In Santa Cruz, 200 positions were added to local payrolls. From a year-over-year perspective, Santa Cruz (-11.8%) shed positions at the fastest rate, followed by San Luis Obispo (-10.6%), Salinas (-9.6%), and Santa Barbara (-9.5%).

Career & Workplace

The City of Rancho Cucamonga Recognized as U.S. Best-in-Class Employer by Gallagher 

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Gallagher’s Best-in-Class Benchmarking Analysis Identifies U.S. Organizations That Excel in Optimizing Employee and Organizational Wellbeing 

The City of Rancho Cucamonga participated in Gallagher’s 2023 U.S. Benefits Strategy & Benchmarking Survey and was identified as an organization that excelled in implementing successful strategies for managing people and programs. The City of Rancho Cucamonga was recognized for its comprehensive framework for strategically investing in benefits, compensation and employee communication to support the health, financial security and career growth of its employees at a sustainable cost structure. 

Designations like Gallagher’s Best-in-Class Employer help current and potential employees understand and appreciate an organization’s workplace culture and people strategy; important differentiators as employers compete for talent in today’s labor market. 

“This award is a testament to the collective dedication and unwavering commitment of our team, reflecting the high standards we uphold in fostering a workplace that thrives on innovation, belonging, and employee well-being.” Robert Neiuber, Senior Human Resources Director, City of Rancho Cucamonga. 

A U.S. Best-in-Class Employer, the City of Rancho Cucamonga was assigned points based on its relative performance in: 

  • Plan horizons for benefits and compensation strategies 
  • Extent of the wellbeing strategy 
  • Turnover rate for full-time equivalents (FTEs) 
  • Completion of a workforce engagement survey 
  • Use of an HR technology strategy and its level of sophistication 
  • Difference in healthcare costs over the prior year 
  • Use of a communication strategy 

The City of Rancho Cucamonga understands that high employee expectations haven’t budged in the changing labor market and have regularly examined their formula to attract and retain talent,” said William F. Ziebell, CEO of Gallagher’s Benefits & HR Consulting Division. “In doing so, the City of Rancho Cucamonga utilizes data, workforce feedback tools and clearly defined policies to provide competitive benefits and experiences that their employees value.” 

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Career & Workplace

California Labor Market Closes out 2023 with Modest Growth, but Expect Adjustments when Annual Revision Hits in March

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State’s Workforce Contracts Again; Unemployment Rate Ticks Up

California’s labor market grew modestly in the latest numbers, according to an analysis released today by Beacon Economics. Total nonfarm employment in the state expanded by just 23,400 positions in December, however, the sum of California’s metropolitan areas showed a more robust increase of 55,100 positions. November’s gains were revised down to 8,100 in the latest numbers, a 1,200 decrease from the preliminary estimate of 9,300.

“Although job and labor force growth has been muted, we caution against reading too much into these figures because this is the last release before the annual benchmark revisions in March,” said Justin Niakamal, Research Manager at Beacon Economics.

As of December 2023, California had recovered all of the jobs that were lost in March and April 2020, and there are now 508,100 more people employed in California compared to pre-pandemic February 2020. Total nonfarm employment in the state has grown 2.9% since that time compared to a 3.2% increase nationally. California increased payrolls by 1.7% from December 2022 to December 2023, matching the 1.7% increase nationally over the same period.

California’s unemployment rate rose to 5.1% in December 2023, up 0.2 percentage points from the previous month. The state’s unemployment rate remains elevated relative to the 3.7% rate in the United States overall. California is continuing to struggle with its labor supply, which fell by 3,600 in December. Since February 2020, the state’s labor force has fallen by 243,800 workers, a 1.2% decline. 

Industry Profile  

  • At the industry level, gains were mixed. Healthcare led payroll gains in December, with payrolls expanding by 9,100, an increase of 0.3% on a month-over-month basis. With these gains Healthcare payrolls are now 10.8% above their pre-pandemic peak.
  • Government was the next best performing sector, adding 8,100 jobs, a month-over-month increase of 0.3%. However, with these gains Government payrolls are still 0.3%, or 28,400 jobs, below their pre-pandemic peak.
  • Other sectors posting strong gains during the month were Leisure and Hospitality (7,100 or 0.3%), Education (4,100 or 1.0%), Manufacturing (2,600 or 0.2%), Other Services (1,300 or 0.2%), Wholesale Trade (1,200 or 0.2%), Retail Trade (1,100 or 0.1%), and Real Estate (1,100 or 0.4%).
  • Payrolls decreased in a handful of sectors in December. Transportation, Warehousing, and Utilities experienced the largest payroll declines, with payrolls falling by 4,400, a decline of 0.5% on a month-over-month basis. Other sectors posting declines during the month were Administrative Support (-4,100 or -0.4%), Finance and Insurance (-2,200 or -0.4%), Information (-1,900 or -0.3%), Management (-400 or -0.2%), and Mining and Logging (-200 or -1.0%).

Regional Profile

  • Regionally, job gains were led by Southern California. The Los Angeles County (MD) saw the largest increase, where payrolls grew by 17,800 (04%) during the month. Orange County (6,800 or 0.4%), the Inland Empire (6,400 or 0.4%), San Diego (5,500 or 0.3%), Ventura (500 or 0.2%), and El Centro (200 or 0.3%) also saw their payrolls jump. Over the past year, Ventura (2.6%) experienced the fastest job growth in the region, followed by Orange County (2.1%), Los Angeles (MD) (2.1%), the Inland Empire (1.9%), El Centro (1.9%), and San Diego (1.5%).
  • In the Bay Area, San Francisco (MD) (6,500 or 0.5%) had the largest increase during the month. San Jose (3,000 or 0.3%), Napa (400 or 0.5%, Santa Rosa (400 or 0.2%), and San Rafael (MD) (200 or 0.2%) also saw payrolls expand. Over the past 12 months, Santa Rosa (2.9%) has enjoyed the fastest job growth in the region, followed by San Rafael (MD) (2.4%), the East Bay (1.9%), San Francisco (MD) (1.3%), Vallejo (1.3%), San Jose (1.1%), and Napa (0.8%).
  • In the Central Valley, Sacramento experienced the largest monthly increase as payrolls expanded by 2,400 (0.2%) positions in December. Payrolls in Fresno (1,500 or 0.4%), Merced (600 or 0.9%), Modesto (600 or 0.3%), Madera (300 or 0.7%), Redding (200 or 0.3%), and Yuba (200 or 0.4%) also saw their payrolls jump during the month. Over the past year, Sacramento (2.8%) enjoyed the fastest growth, followed by Yuba (2.7%), Modesto (2.7%), Hanford (2.4%), Fresno (2.2%), Visalia (1.9%), Bakersfield (1.1%), Stockton (0.6%), Madera (0.5%), Chico (0.3%), Merced (-0.3%), and Redding (-1.6%).
  • On California’s Central Coast, Santa Barbara (900 or 0.4%) added the largest number of jobs. Santa Cruz (500 or 0.5%) and San Luis Obispo (400 or 0.3%) also saw payrolls increase during the month. From December 2022 to December 2023, Salinas (4.61%) added jobs at the fastest rate, followed by Santa Barbara (3.4%), San Luis Obispo (2.7%), and Santa Cruz (2.4%).
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Business

The Inland Empire Regional Chamber of Commerce Announces the 2024 Human Resources Conference, led by Atkinson, Andelson, Loya, Rudd & Romo (AALRR)

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Uniting Leaders, Shaping Futures: Charting the Next Course in Human Resources

The Inland Empire Regional Chamber of Commerce, in partnership with Insight HR Consulting and presented by Atkinson, Andelson, Loya, Ruud & Romo (AALRR), announces the much-anticipated 2024 Human Resources Conference. Scheduled for February 15th, 2024, at the Jessie Turner Center, this event is set to be a landmark gathering for HR and business leaders.

Event Details:

  • Date: February 15th, 2024
  • Venue: Jessie Turner Center, [Full Address]
  • Title: 2024 2nd Annual Inland Empire HR Summit: Shaping the Future of Human Resources

The conference is hosted by The Inland Empire Regional Chamber of Commerce, in partnership with Insight HR Consulting. AALRR, a leading full-service law firm, is the presenting sponsor, bringing their extensive legal expertise in employment and labor to the forefront of the event.

“We are thrilled to sponsor and present at the upcoming 2024 Human Resources Conference,” said Amber Solano, AALRR’s Private Labor and Employment Law Practice Group Chair. “With all of the recent changes in the law, we feel this is going to be a valuable event for human resource and business leaders throughout the region.”

The conference offers an invaluable platform for professionals to engage with evolving trends and innovations in HR, preparing them to lead in the changing world of work.

Special Highlights:

  • Renowned HR thought leaders as keynote speakers.
  • Networking opportunities with industry experts and peers.
  • A special focus session by AALRR on the evolving legal landscape in human resources.

“The Inland Empire Regional Chamber of Commerce is proud to collaborate with Insight HR consulting and leading speakers AALRR.  This partnership strengthens our commitment to delivering a conference that truly impacts the HR and Business community.” said Edward Ornelas, Jr., CEO.

For the event schedule, registration, and sponsorship details, please visit hr.iechamber.org

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