State Unemployment Rate Jumps To Highest On Record As Labor Force Shrinks; Silver Lining: Three-Quarters Say They Are ‘Temporarily’ Unemployed
-May 23,2020-
from Beacon Economics
The public health mandates implemented in response to the COVID-19 pandemic are having a devastating effect on the labor market in California. Total nonfarm employment in the state declined by 2,344,700 positions in April, the largest month-to-month decline on record, according to an analysis released jointly by Beacon Economics and the UCR School of Business Center for Economic Forecasting and Development.
The This enormous decline in payrolls pushed California’s year-over-year employment growth to -13.4%, the largest annual decline on record. The state performed slightly worse than the national economy, where nonfarm employment declined by 12.9% over the same period.
Even in the midst of a pandemic, however, every cloud may have a silver lining: Around 75% of workers who have been laid off in the state report that they are temporarily unemployed, and the hope is that many will return to their prior jobs as communities across the state begin to re-open. That said, the road back to the unemployment rate the state was enjoying in February (3.9%), is long. The pain of worker dislocation has been eased by Federal and state assistance, but much like the search for a vaccine for the Novel Coronavirus (COVID-19), the cure for the disruption caused to the lives of hundreds of thousands of workers in the state will not be found quickly.
In April, the number of unemployed workers in California increased to 2,885,300, over two and half times the level seen one month earlier. From March to April, 1.8 million workers were added to the state’s unemployment ranks, with the unemployment rate swelling from 5.5% in March to 15.5% in April (the highest on record).
“As extraordinary as these numbers are, they will likely get worse before they get better,” said Taner Osman, Research Manger at Beacon Economics and the UCR Center for Forecasting. “Despite the gradual re-opening of the economy, numbers from the Federal government suggest the ranks of the unemployed have continued to swell throughout May.”
Moreover, the alarming figures understate the true extent of worker dislocation. Over the month, 600,000 workers have left the labor force in California, or in other words, have become discouraged and stopped their search for employment. As such, these residents are not officially counted among the unemployed. In fact, since February 2020, nearly one million workers (947,800) have left the labor force in the state. If these workers were included among the unemployed, and after all, they were either employed or were looking for work just two months ago, the state’s unemployment rate would have been around 21% in April. Since February, the state’s labor force has contracted by 5%.
The disruption has been felt more severely in some industries than others.