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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

California Continues to Struggle with Labor Supply as Employment Expands Modestly

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State’s Unemployment Rate Remains Highest In Nation

California’s labor market expanded modestly in April, with total nonfarm employment in the state growing by 5,200 positions over the month, according to an analysis released today by Beacon Economics. March’s gains were revised down to 18,200 in the latest numbers, a 10,100 decline from the preliminary estimate of 28,300.

As of April 2024, California has recovered all of the jobs that were lost in March and April 2020, and there are now 314,300 more people employed in the state compared to February 2020. Total nonfarm employment has grown 1.8% over this time compared to a 3.9% increase in the United States overall. California increased payrolls by 1.2% from April 2023 to April 2024, trailing the 1.8% increase nationally over the same period.

The state’s unemployment rate held steady at 5.3% in April 2024, unchanged from the previous month. California’s unemployment rate is the highest in the nation and remains elevated relative to the 3.9% rate in the United States as a whole. The state continues to struggle with its labor supply, which remained essentially unchanged in April (declining by a negligible 100). Since February 2020, California’s labor force has fallen by -246,200 workers, a -1.3% decline. In comparison, over the past twelve months the nation’s labor force has increased by 0.8%. 

Industry Profile  

  • At the industry level, job gains were mixed in April. Health Care led the way with payrolls expanding by 10,100, an increase of 0.4% on a month-over-month basis. With these gains Health Care payrolls are now 13.6% above their pre-pandemic peak.
  • Other sectors posting strong gains during the month were Transportation, Warehousing, and Utilities (3,700 or 0.4%), Leisure and Hospitality (3,100 or 0.2%), Government (2,600 or 0.1%), Education (1,800 or 0.4%), Retail Trade (1,000 or 0.1%), and Wholesale Trade (400 or 0.1%).
  • Payrolls decreased a handful of sectors in April. Construction experienced the largest declines, with payrolls falling by -6,000, a contraction of -0.6% on a month-over-month basis. Note that this decline was largely due to late season storms affecting construction projects across the state.
  • Other sectors posting significant declines during the month were Manufacturing (-5,300 or -0.4%), Professional, Scientific, and Technical Services (-3,600 or -0.3%), Real Estate (-700 or -0.2%), Finance and Insurance (-700 or -0.1%), Administrative Support (-600 or -0.1%), and Information (-600 or -0.1%).

Regional Profile

  • Regionally, job gains were led by Southern California. Los Angeles (MD) saw the largest increase, where payrolls grew by 5,700 (0.2%) during the month. The Inland Empire (2,600 or 0.2%) and San Diego (1,200 or 0.1%) also saw their payrolls jump during the month. However, payrolls fell in Orange County (-2,700 or -0.2%), Ventura (-500 or -0.2%), and El Centro (-2,200 or -0.3%). Over the past year, El Centro (1.9%) has had the fastest job growth in the region, followed by the Inland Empire (1.5%), Ventura (1.4%), Orange County (1.1%), San Diego (0.8%), and Los Angeles (MD) (0.6%).
  • In the Bay Area, the East Bay experienced the largest increase, with payrolls expanding by 2,600 (0.2%) positions in April. San Rafael (MD) (200 or 0.2%) and Napa (100 or 0.1%) also saw payrolls increase during the month. However, San Francisco (MD) (-1,700 or -0.1%), Santa Rosa (-600 or -0.3%), and Vallejo (-600 or -0.2%) experienced payroll declines during the month. Over the past 12 months, Vallejo (3.0%) enjoyed the fastest job growth in the region, followed by Santa Rosa (2.3%), Napa (2.2%), San Rafael (MD) (1.6%), the East Bay (0.9%), San Jose (0.2%), and San Francisco (MD) (-0.8%).
  • In the Central Valley, Sacramento experienced the largest monthly increase as payrolls expanded by 900 (0.1%) positions in April. Payrolls in Yuba (400 or 0.8%), Bakersfield (300 or 0.1%), Fresno (300 or 0.1%), and Visalia (100 or 0.1%) increased as well. However, payrolls fell in Stockton (-500 or -0.2%), Modesto (-200 or -0.1%), Merced (-200 or -0.3%), Redding (-100 or -0.1%), and Hanford (-100 or -0.2%). Over the past year, Madera (5.7%) had the fastest growth, followed by Yuba (4.2%), Merced (3.7%), Modesto (3.6%), Sacramento (2.5%), Hanford (2.4%), Redding (2.3%), Fresno (2.2%), Visalia (2.1%), Stockton (2.0%), Chico (1.5%), and Bakersfield (1.1%).
  • On California’s Central Coast, Salinas (200 or 0.1%) and Santa Cruz (200 or 0.2%) added the largest number of jobs during the month. Santa Barbara (-100 or -0.1%) saw payrolls decline. From April 2023 to April 2024, Salinas (1.9%) has added jobs at the fastest rate, followed by Santa Cruz (1.6%), Santa Barbara (0.8%), and San Luis Obispo (0.5%).
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Career & Workplace

Inland Economic Growth & Opportunity (IEGO) Announces 2024 Priorities

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Strategic Vision: Prioritizing Sustainable Growth and Enhanced Opportunities in the Inland Region

The Inland Economic Growth & Opportunity (IEGO), a collaborative organization dedicated to fostering economic growth, has announced its 2024 strategic priorities designed to create a vibrant, inclusive, and sustainable economy for Southern California’s Inland Empire. Among its immediate priorities include its role in Governor Newsom’s California Jobs First regional jobs strategy.

“As one of the California Jobs First statewide collaboratives, IEGO is committed to engaging a wide ranging and diverse group of stakeholders in our economic development focus so that we can improve the quality of life for all residents across the region,” said IEGO Executive Director Matthew Mena.

IEGO’s strategy is critical. While Inland Southern California remains one of California’s top job growth markets, it also ranks as having the lowest average weekly wages according to employment data for the nation’s 50 largest county job markets as reported by the US Bureau of Labor Statistics.

The IEGO 2024 priorities are designed to counter that trend and encourage greater business investment, including:

California Jobs First: IEGO will develop Inland Southern California’s regional jobs strategy to create quality jobs and a more accessible economy as part of Governor Newsom’s very intentional, inclusive approach to economic and workforce development to maximize state resources and investments by empowering communities to chart their own futures. Much of the funding will support career development projects from capacity building to industry-specific programs, and new job training.

Center of Excellence: As one of the state’s designated Center of Excellence, IEGO will support the region’s community colleges and their partners by providing research on the local labor market, including information on job growth, wages, demographics, top employers, education, and skill requirements, as well as education outcomes for industries and occupations critical to the Inland Empire’s economy. This data will help inform the development of new community college programs, curriculum, and partnerships that the colleges pursue in their efforts to prepare residents for high-paying, fast-growing jobs that Inland Empire businesses need today and in the future. 

Regional Marketing: IEGO will work to ensure that the region is well positioned to benefit from public and private investment and is fully recognized for its economic strength and opportunity. In this way, IEGO can enhance the delivery of public and private resources to the two-county region.

“There’s real opportunity for the IEGO Center of Excellence to lead deeper economic and workforce research. One of the immediate areas is our Top 50 Jobs report. We want to better identify the best job opportunities and pathways for workers in struggling families to make ends meet and build wealth,” said Andy Hall, who is leading report development for the Center of Excellence.

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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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