California continues to experience growth despite labor shortages

California employers added 60,200 jobs in March as the number of unemployed in the country’s most populous state fell below 1 million for the first time since the pandemic began.

March 2020 marked the start of unprecedented job losses in California, when Governor Gavin Newsom issued the first statewide stay-at-home order. The state lost 2,758,900 jobs in just two months. It took the state two years to recover most of them.

New figures released Friday by the U.S. Bureau of Labor Statistics and the California Employment Development Department show the state clawed back 2,463,400 of those jobs lost during the pandemic, or 89.2%. California accounted for 14% of job growth nationwide in March, with the state posting gains in 13 of the past 14 months.

“Today’s report is another piece of good news for California’s continued economic recovery, representing thousands of new opportunities for workers across the state,” Newsom said.

The huge job growth in the state has been driven by increased demand from consumers, who have more money to spend thanks to billions of dollars in state and federal government spending during the pandemic. Much of that government support has ended, which could signal a tightening labor market in the months ahead.

“Everyone will say it’s a great working relationship, and it’s solid. But I think it’s important to recognize in part what it’s based on and that this bill will come to an end,” said said Michael Bernick, a former director of the Department of Employment Development who closely monitors the California labor market as an attorney at the law firm Duane Morris.

Business owners have consistently reported difficulty hiring workers to meet demand. The shortage pushed up workers’ wages, gains that were offset by rising inflation that drove up the costs of food, gasoline and other commodities.

California’s labor force — defined as the number of people who are employed or looking for work — has increased by nearly 350,000 people over the past year, which is generally a strong sign of economic recovery. But the state’s workforce is still nearly 400,000 short of the pre-pandemic peak, Bernick said.

“Despite the good report in March, the main problem remains the labor shortage. Some workers are in no rush to get back to work,” Sung Won Sohn, an economics professor at Loyola Marymount University, wrote in an email analyzing the new employment numbers. “The pandemic has also caused a large migration from metropolitan areas to the suburbs and the countryside. In the process, the link between jobs and place of residence has weakened, contributing to the relatively low labor force participation rate.

In San Francisco, restaurants have struggled to hire managers or workers with kitchen experience, said Amy Cleary, director of public policy and media relations for the Golden Gate Restaurant Association. She said the rhythms of pandemic closings meant that restaurants were closing and opening at around the same time, putting them in competition for the same pool of workers.

Additionally, she suspects that many restaurant workers have found jobs in other industries during the pandemic and have not returned. She said diners did not return to restaurants in San Francisco in numbers comparable to other parts of the state, but experienced short periods of high demand during the NCAA tournament and potentially again this weekend with the NBA playoffs.

“It’s really hard to cope with these booms because most places have to operate with reduced staff,” she said.

While California has outpaced the rest of the country in job growth, it also continues to have an outsized number of people filing for unemployment benefits. Last week, California — which accounts for about 11% of the nation’s labor force — accounted for more than 20% of new jobless claims nationwide.

Still, California’s unemployment rate fell to 4.9% in March, as 10 of the state’s 11 industry sectors added jobs for the second month in a row. The biggest gains were again in the leisure and hospitality industry, which suffered the heaviest losses during the pandemic as state rules prevented people from congregating in places public such as restaurants and bars.

Professional and business services added the second highest number of new jobs, thanks to an increase in accounting, tax preparation and bookkeeping services as people prepared to file their 2021 tax returns before Monday’s filing deadline.

Leave a Comment