California’s winter COVID-19 surge took a grim toll on jobs as the state’s recovery lagged compared with the nation overall, according to recalculated state data published Friday.
The Golden State economy may now be poised to turn a corner thanks to accelerating vaccinations, a loosening of restrictions on businesses and schools and massive federal aid, but steep labor losses have delayed recovery: In December and January, the state shed 145,300 payroll jobs, according to a report from the Employment Development Department.
“As it turns out, the labor market fallout in 2020 was significantly worse than original estimates suggested,” said Taner Osman, Research Manager at Beacon Economics in Los Angeles. “While we expect a strong recovery in 2021, it would take a hiring surge of unprecedented proportions to regain the lost jobs, as well as the jobs we would have added during normal times.”
The losses in December and January reversed the autumn’s upward trend when businesses had begun to reopen and bring back workers, only to be shut down again as the virus spread out of control.
By January, California had recovered just 39% of the 2.7 million jobs that evaporated when the virus took hold in March of last year — down from 46% in November.
Nationwide, a far larger share was recovered by January. With many states avoiding strict lockdowns, 56% of U.S. jobs had returned.
California payrolls have contracted 10.2% since February of last year. By contrast, U.S. employment shrunk by 6.5% over the same period.
UCLA economists, in a quarterly forecast released this week, predict California and the U.S. economy will experience near-record growth this year after a catastrophic recession. But they suggest payrolls won’t recover soon, given the severity of the downturn and the exodus of many workers from the labor force.
By the end of 2023, the nation will still be 5 million jobs short of where it would have been without the pandemic, the forecast estimated.
California’s unemployment rate dropped to 9% in January from 9.3% in December — significantly higher than November’s 8.2% level.
The U.S. unemployment rate was 6.3% in January.
“California’s labor market has seriously underperformed the nation as a whole over the past year,” said Scott Anderson, an economist at Bank of the West in San Francisco. “The new employment data paints a darker picture of the hole California fell into early in the pandemic and the anemic recovery that has ensued.”
Anderson blamed the resurgence of the virus over the winter, and the resulting stay-at-home orders and business restrictions. Even passage of a $908-billion federal stimulus bill in December was not enough to stem job losses, he said, although government checks likely led to a January uptick in California retail jobs.
Leisure and hospitality businesses lost 70,600 jobs in January, the most of any sector, reflecting the continuing trauma of restaurant and hotel closures. Over the year, the sector has shed 799,400 positions — far more than that of any other industry — as international and business travel dried up, and government scientists warned against the danger of virus spreading indoors.
The January job statistics, which are gathered mid-month, do not reflect Gov. Gavin Newsom’s lifting of many business restrictions on Jan. 25.