California’s economic recovery slowed sharply last month as COVID – 19 infections escalated and the state shut down its businesses.
Employers added just 140,400 wage services from mid-June to mid-July to a total workforce of nearly 15.8 million, state officials said.
Employment in July was dramatically lower than the rise of 542,500 jobs the previous month when some restaurants, gyms and other businesses opened shortly after noon in hopes of reducing the virus.
California’s unemployment rate fell to 13.3% last month, down from 14.9% in June. A year earlier, it stood at 4%.
Part of the decline in the rate last month was due to a decline in people looking for work. In June, the state’s workforce expanded by 464,000 as many working-class workers came to their jobs. But last month it shrank by 167,000 when businesses closed again.
“The July progress is welcome, but measured against historical benchmarks, the California job market remains largely in the ICU,” said Scott Anderson, chief economist at Bank of the West in San Francisco.
The economic picture of Los Angeles County was particularly dire, with a July unemployment rate of 17.5%, down from 19.4% in June. A year earlier, it was 4.4%.
Many of Southern California’s tourism-dependent sectors, including hotels, restaurants and theme parks, remain closed, while many tech companies in Northern California continued to thrive thanks to telecommuting, online shopping and digital streaming, economists say.
For the week ending August 15, California’s new unemployment rate fell to its lowest level in five months, with 201,600 applications submitted to the state Employment Development Department. Only 4.8 million Californians still collect unemployment benefits.
A federal supplement of $ 600 per week expired at the end of July. That is expected to support more Californians to look for work this month, said Michael Bernick, a former director of EDD.
“Local labor boards and employment agencies in California are reporting an increase in job applicants,” he said. “But with the economic recovery, jobs will not return in significant numbers.
‘In fact, the opposite is happening. Companies in California announce that they are closing permanently. Every economic recovery we saw in June and early July has been halted, and a listlessness has been instituted. “
The U.S. unemployment rate of 10.2% was significantly lower than California’s in July, and the nation’s pay traffic grew more than California’s: 1.3%, compared with 0.9%.
The relatively better national picture reflects the fact that many other states have managed to curb the spread of the coronavirus or have been reluctant to close businesses despite high infection rates.
In the last three months, California has lost less than a third of the 2.6 million positions again during March and April, when the pandemic took hold.
And the state’s unemployment rate remains one percentage point higher than its peak of 12.3% during the Great Recession.
As of Friday morning, California had reported more than 653,000 cases of COVID-19 and more than 11,800 deaths.
“Difficult times stay ahead,” said Lynn Reaser, an economist at San Diego’s Point Loma Nazarene University. Forty-two of California’s 58 counties are currently on the state’s COVID-19 watch list, which means a ban on a significant number of indoor activities, including gyms, restaurants, museums, indoor centers and hair salons. People also remain cautious about venturing out. ”
Small businesses are facing cash flow crises as an expansion of the federal Paycheck Protection Program lending program remains in limbo. “PPP was meant to provide a bridge for companies to get to the other side,” Reaser said. “But the distance to the other side turned out to be much longer than expected.”
Meanwhile, negotiations have stalled between the Trump administration and the Congress Democrats who are proposing a trillion-dollar incentive for state and local governments as tax revenues fall and security net spending.
The bill passed by the Democratic-led House would also extend the $ 600 weekly unemployment supplement by the end of the year, but it has been blocked by the Republican-led Senate and the White House.
This week, California applied for a stopgap $ 300 weekly unemployment payment to withdraw from federal disaster funds, under an executive order issued by President Trump on August 8.
But the supplement is expected to last only a few weeks. It only applies to workers who earn at least $ 100 in stateless unemployment benefits, so exclude many low-income part-timers who have lost jobs.
“The end of the federal stimulus will have a big impact on California,” said Sung Won Sohn, an economist at Loyola Marymount University. ‘It accounted for around 20% of personal income nationally and allowed consumers to rent and buy food. Many small businesses may not survive. ”
Statewide, nine of the 11 sectors in California received jobs last month. Trade, transportation, and utilities had the largest increase in jobs (40,900) due to wholesalers in automobiles and professional equipment, as well as auto dealers.
Construction lost 14,800 jobs, the largest decline in any sector, due to weak housing rents, despite a rise in commercial construction.
When his unemployment rate dropped slightly, Los Angeles County wage statistics dropped by 3,600 jobs to 4,093,500. County employment was down 9.4% year-on-year, with leisure-time jobs falling by 30%.
In Orange County, unemployment stood at 12.3%, down from 13.6% in June, and from 3.1% a year earlier. July payments fell by 17,700 jobs, to 1,464,500.
In the Inland Government, the unemployment rate was 13.4%, down from 14.3% in June and 4.6% a year earlier. Payrolls in the region, which includes Riverside and San Bernardino counties, shrank last month by 8,000 jobs to 1,385,400.
State employment numbers are based on a monthly federal survey of 5,100 households in California that focuses on workers. Payroll payments come from a second survey of about 80,000 companies in California.
If economists doubt that the July employment report offers much hope, they are even more pessimistic about the direction of the California economy in August.
“The July numbers probably paint a clearer picture of the California job market than what actually happened,” Anderson said, noting that Gov. Gavin Newsom ordered more business closures in mid-July, “so new releases of that are unlikely to appear in the data until the August payment report is released in September.”
California’s economic recovery will depend on whether the federal government can introduce more incentive measures, including unemployment benefits, and on limiting the COVID-19 infection rate, said David Smith, an economist at Pepperdine Graziadio Business School.
“It seems like a long way ahead where we have to punch, kick and crawl our way back to everything in the vicinity of historically normal employment,” he added.
But outside of funding for the Social Security network, any economic upheaval is linked to the behavior of individual Californians, state officials say. It “depends on Californians choosing to wear face masks, stay home as soon as possible, and follow state and local guidance” on measures for coronavirus, California California Attorney General Julie Su said in a statement on the job report.
