Teachers returned to classrooms, entertainment jobs venues reopened, and vacationers traveled despite increased COVID-19 infections last month, helping California gain employment at three times faster rate than the rest of the country.
According to state statistics, payroll jobs in the state increased by 104,300 in August to 16.63 million, accounting for 44 percent of overall job growth in the country. California’s monthly job growth was three times the national average of 0.2 percent, at 0.6 percent.
Last month’s job growth in the United States was less than projected, in part because vaccination rates in many states fell behind those in California. Two-thirds of the people in California had been vaccinated against COVID-19 as of this week. Although the coronavirus Delta variant is still spreading and vaccine resistance is still present, the state’s recovery may be unequal in nature.
“California’s economy is now coping with larger concerns about the Delta variant than in the second week of August when the jobs data was collected,” said Lynn Reaser, an economist with San Diego’s Point Loma Nazarene University. “The impact of school reopening on infection rates and a weakening in consumer confidence could weigh on the near-term economic outlook.”
Only 62% of the 2.7 million jobs in California had lost between March and April 2020, when the pandemic hit, had been restored as of last month. The state’s unemployment rate is still high, at 7.5%, a modest drop from 7.6% in July but a considerable drop from 12.3% a year earlier. In August, the unemployment rate in the United States was 5.2 percent.
In California, “another full-scale economic shutdown is highly unlikely, but future economic growth could slow as long as the new virus remains a serious concern,” said Sung Won Sohn, a Loyola Marymount University economist.
Public schools accounted for 46,900 jobs last month or nearly 45% of California’s net employment growth. “That’s likely a one-off gain that won’t be repeated,” said Scott Anderson, an economist with Bank of the West in San Francisco.
Apart from leisure and hospitality companies, which added 33,100 positions, hiring in other sectors was “quite anemic,” he said. “Supply chain bottlenecks, port backlogs, and COVID fears are increasingly weighing on the California economic outlook.”
Business travel and tourism, linchpins of California’s economy, dried up beginning in March 2020. But this year, domestic leisure travel picked up, sports venues reopened, and jobs began to return. By midyear, about half of the 30,000 members of Unite Here Local 11, one of Southern California’s largest unions, had returned to work at hotels, stadiums, airport concessions and convention centers.
We were feeling relatively positive before the Delta surge,” said Kurt Petersen, the union’s co-president. “But Delta has pulled us back due to a stubborn group of people that refuses to be vaccinated.”
Convention centers remain dark, business groups are canceling reservations, international travel is all but nonexistent, and tourism is not expected to bounce back for two years entirely, he said. “Whole swaths of workers have not worked at all since March of 2020, and two-thirds of our members who have returned to jobs are given fewer hours than before the pandemic.”
Many hotel chains have cut automatic daily room-cleaning services, so housekeepers work three days a week instead of five, Petersen said. “They can’t survive on that. And the jobs are harder because a room that hasn’t been cleaned in days is often a hovel.”
The recovery is likely to remain uneven. Professionals and technology workers who can operate from home have kept their jobs, as have workers who are classified as essential, such as grocery clerks and warehouse packers.
Although many employers report difficulties filling open jobs, California’s labor force grew by 55,300 workers in August and by 316,100 from a year earlier.
Before the program expired early this month, some 2.2 million Californians received $300 a week in a federal government supplement to state unemployment insurance. A federal program offering jobless benefits to independent contractors not covered by state employment insurance, such as Uber and DoorDash drivers, also ended.
Some employers predict that the expiration of federal unemployment benefits could soon drive more people back to the workforce despite virus fears, a lack of child care, low wages, or other factors that have kept them at home.
Servicon, a Culver City company that cleans hospitals, aerospace factories and office buildings throughout Southern California, has added 400 janitors since the beginning of the pandemic, bringing its total workforce to 2,000.
“The economy has its lurches, but we’re in demand,” Servicon Chairman Michael Mahdesian said. “After years of being told to be invisible, clients now want to see us disinfecting and cleaning. They want to give confidence to their employees that buildings are healthy.”
Mahdesian worries about the short-term effects of the Delta variant. “It is slowing down the recovery,” he said. “But California is better off than other states in getting people vaccinated. States like Texas and Florida are a mess.”
He applauds President Biden’s push for healthcare workers, government contractors and workers at large companies to be vaccinated. And he expects Congress to pass infrastructure bills that will get billions of dollars flowing to California and other states. “So, I’m optimistic for the future,” he said.
Taner Osman, research manager at Los Angeles consultancy Beacon Economics, is also bullish. Since August, “two major headwinds for the state’s economy have eased: the declining spread of COVID-19 cases and the reopening of schools,” he said. “This paves the way for strong job gains through the end of this year.”
After public schools and leisure and hospitality businesses, California’s highest August job gains came in professional and business services and “other services,” a miscellaneous group that includes auto repair companies and beauty salons. The largest losses were in healthcare and social assistance, and state government.
August’s job report reflected the usual divide between Northern California’s tech-heavy economy, the Central Valley’s farm-dependent economy and Southern California’s service-reliant economy.
Los Angeles County added 55,700 jobs in August, for a total of 4.25 million. More than two-thirds were in public education. Motion picture and sound recording jobs grew by 6,000, reflecting a return to production by movie and television studios. The county’s unemployment rate dropped to 9.7% from 10.2% in July.
Source: Los Cerritos News