Despite Severe Labor Shortages, California Very Close to Recovering all Jobs Lost During Pandemic

Unemployment In State Falls To Lowest Level On Record

California’s labor market continued to expand in July, with total nonfarm employment in the state growing by 84,800 positions, according to an analysis released jointly by Beacon Economics and the UCR School of Business Center for Economic Forecasting and Development. June’s gains were revised up to 37,300 in the latest numbers, a 17,400 increase from the preliminary estimate of 19,900.

California has added jobs at a healthy pace in 2021 and 2022, but as of July 2022, there are still 2.7% fewer people employed in the state (representing 73,800 jobs) than there were prior to the pandemic. California’s recovery lags the national recovery due to labor shortages in the state.

Total nonfarm employment in California has contracted 0.4% since the start of the pandemic compared to a less than 0.1% increase nationally. With a larger portion of its workforce to be recovered, the state increased payrolls by 4.4% from July 2021 to July 2022, outpacing the 4.2% increase nationally over the same period.

“California is getting very close to fully recovering all the jobs it lost due to the pandemic,” said Taner Osman, Research Manager at Beacon Economics and the Center for Economic Forecasting. “In fact, if we repeat this month’s job gains next month, we will reach that milestone.”

California’s unemployment rate fell to 3.9% in July, a 0.3 percentage-point decline from the previous month. This is the lowest level on record, which dates back to 1976. Still, California’s unemployment rate remains elevated relative to the 3.5% rate in the United States overall. the state continues to struggle with very tight labor supply, which fell by 23,400 in July. Since February 2020, the state’s labor force has declined by 209,600 workers, a 1.1% decrease.

Industry Profile  

• At the industry level, the largest jobs gains continue to occur in the sectors hardest hit by the pandemic. While a handful of sectors in California are now exceeding their pre-pandemic peaks, employment levels in the hardest hit sectors remain below their pre-pandemic levels. However, those sectors should continue to steadily gain back jobs over the coming months.
• The Health Care sector led gains in July, with payrolls expanding by 16,900 positions. Payrolls in Health Care now surpass pre-pandemic highs, with payrolls up 2.2% since February 2020.
• Other sectors posting strong gains during the month were Leisure and Hospitality (14,900), Construction (11,400), Professional, Scientific, and Technical Services (11,200), Administrative Support (9,300), Other Services (4,900), Government (4,500), and Information (4,400).
• Job gains were broad based in July with Finance and Insurance (-1,800) and Other Services (-100) being the only sectors to post significant losses during the month.

Regional Profile

• Regionally, job gains were led by Southern California. Orange County saw the largest increase, where payrolls grew by 22,300 (1.3%) during the month. Los Angeles (MD) (21,900 or 0.5%), the Inland Empire (9,100 or 0.5%), San Diego (4,400 or 0.3%), and Ventura (700 or 0.2%) also saw their payrolls jump during the month. The Inland Empire (132.1%) has experienced the strongest recovery in the region, measured by the percentage of jobs recovered from April 2020 to July 2022, relative to the jobs lost from February 2020 to April 2020. The IE is followed by El Centro (113.6%), San Diego (98.8%), Orange County (96.0%), Los Angeles (MD) (88%), and Ventura (83.2%).
• In the San Francisco Bay Area, the San Jose (MD) experienced the largest increase, with payrolls expanding by 7,000 (0.6%) positions in July. San Francisco (MD) (6,700 or 0.6%), the East Bay (4,500 or 0.4%), Santa Rosa (1,100 or 0.5%), and Vallejo (500 or 0.4%) also saw payrolls expand during the month. Since April 2020, San Jose (97%) has experienced the strongest recovery in the region, followed by the East Bay (89.6%), San Francisco (MD) (85.8%), Santa Rosa (81.9%), Napa (76.1%), Vallejo (74.8%), and San Rafael (MD) (63.4%).
• In the Central Valley, Sacramento experienced the largest monthly increase, as payrolls expanded by 4,900 (0.5%) positions in July. Payrolls in Merced (2,000 or 2.8%), Fresno (1,900 or 0.5%), Bakersfield (1,600 or 0.6%), Madera (700 or 1.7%), Visalia (500 or 0.4%), and Yuba (300 or 0.6%) increased steadily as well. Since April 2020, Merced (147.5%) has experienced the strongest recovery in the region, followed by Stockton (132.8%), Visalia (129.3%), Yuba (124%), Madera (120%), Sacramento (112.9%), Fresno (111.5%), Modesto (101.3%), and Redding (101.3%).
• On California’s Central Coast, Santa Cruz added the largest number of jobs, with payrolls increasing by 1,500 (1.5%) during the month. San Luis Obispo (900 or 0.8%) also saw payrolls expand in July. Since April 2020, San Luis Obispo (98.7%) has experienced the strongest recovery in the region, followed by Santa Barbara (89.3%), Santa Cruz (86%), and Salinas (81.9%).