California’s Latest Job Recovery Accounts for Over 40% of All U.S. Job Gains; Headwinds Ease as Covid Cases Decline in State

State’s Unemployment Rate Edges Down As Workforce Expands

California’s labor market continued to expand at a rapid pace in August, with total nonfarm employment in the state growing by 104,300 positions, according to an analysis released jointly by Beacon Economics and the UC Riverside School of Business Center for Economic Forecasting and Development. During August, California accounted for 44% of all jobs added nationally during the month.

“Two major headwinds for the state’s economy have been eased: the declining spread of COVID-19 cases and the re-opening of schools,” said Taner Osman, Research Manager at Beacon Economics and the UCR Center for Forecasting. “This paves the way for strong job gains through the end of this year.”

Throughout 2021, California (+4.3%) has added jobs at a faster rate than the national economy (3.3%). This trend will continue as the state’s labor market has underperformed the national labor market since the onset of the pandemic. As of August 2021, there were 1.03 million fewer workers employed in California compared to February 2020; total nonfarm employment in the state contracted 5.8% over this time. Nationally, over the same period, the labor market has shrunk by 3.5%, or around 5.3 million jobs.

California’s unemployment rate edged down to 7.5% in August, compared to 7.6% in July. California’s unemployment rate still remains elevated relative to the 5.4% rate in the United States overall. The state’s labor force also expanded by 55,300 workers during the month, although there are still 450,200 fewer workers in the labor force in the state compared to pre-pandemic levels, a contraction of 2.3%. 

Industry Profile

• At the industry level, jobs gains in California were dominated by two sectors in the latest numbers: Leisure and Hospitality and Government.
  
• The Government sector led payroll gains in August, with the number of positions growing by 46,900 workers. There are currently around 5% fewer workers in this sector, or 129,000 fewer positions, compared to pre-pandemic levels.
  
• Leisure and Hospitality also saw a strong month in August, with payrolls expanding by 33,100, despite the spread of the Delta variant. This sector still has a long way to go to recover all of the jobs lost due to the economic downturn, with payrolls having fallen by 397,700 (-19.3%) since its previous peak in February 2020.
  
• Professional, Scientific & Technical Services (14,000) and Other Services (8,400) also saw strong gains during the month.
  
• Job losses in August were concentrated in Health Care and Social Services (-7,500), while small job losses occurred in Wholesale Trade (-900) and Retail (-800).

Regional Profile

• Job gains in the state were led by Southern California. Los Angeles (MD) dominated job gains in the state during the month, where payrolls grew by 78,100 (1.8%). Orange County (6,400 or 0.4%), the Inland Empire (1,800 or 0.1%) and Ventura (900 or 0.3%) also saw their payrolls increase during the month, although San Diego experienced job losses (-6,100 or -0.4%).
  
• In the San Francisco Bay Area, the East Bay experienced the largest gains, increasing payrolls by 6,900 (0.6%). San Jose (MD) followed with payrolls expanding by 5,600 (0.5%) positions over the month. San Francisco (4,300 or 0.4%), Santa Rosa (1,200 or 0.6%), San Rafael (MD) (300 or 0.3%), Vallejo (1,100 or 0.8%), and Napa (400 or 0.6%) also saw payrolls expand during the month.
  
• In the Central Valley, Sacramento experienced the largest monthly increase, as payrolls expanded by 2,700 (0.3%) positions in August. Payrolls in Fresno (1,500 or 0.4%), Merced (500 or 0.7%), Bakersfield (2,200 or 0.8%) and Stockton (900 or 0.4%) all increased, while Modesto saw job declines (-2,000 or -1.1%).
  
• On California’s Central Coast, Santa Barbara added the largest number of jobs, with payrolls increasing by 1,100 (0.6%) during the month. Santa Cruz (900 or 0.9%) and San Luis Obispo (600 or 0.5%), both added jobs while Salinas saw jobs decline by 500 positions or -0.4%.).