California unemployment rate drops as employers create new jobs

SACRAMENTO, Calif. (AP) – California has recovered more than half of the 2.7 million jobs lost at the start of the coronavirus pandemic, officials said on Friday, a trend spurred by restaurants and hotels hiring more than people as the country’s most populous state reopens its economy.

Employers created 104,500 new jobs in May, with California’s unemployment rate edging down to 7.9% from 8% in April. It is still one of the highest unemployment rates in the country, but it is the fourth consecutive month that the state has created at least 100,000 new jobs.

California has now reclaimed 1.4 million jobs from the depths of April 2020, when a stay-at-home order forced many businesses to close.

A third of these gains come from the leisure and hospitality industry. Since May 2020, restaurants and hotels have created 420,400 jobs, the most of any industry. But the industry still has around 450,000 jobs below its pre-pandemic peak.

Despite the gains, companies reported difficulty finding enough people to work. About 2 million people are still receiving unemployment benefits in California, which includes an additional $ 300 per week due to the pandemic. This additional benefit does not expire until September.

“If it hadn’t been for the labor shortage we are experiencing, the gain in jobs in California would have been much higher,” said Sung Won Sohn, professor of finance and economics at Loyola Marymount University.

Nationally, California has accounted for 23% of all job growth since February, according to Dee Dee Myers, director of the governor’s office for business and economic development. Democratic Gov. Gavin Newsom, who will likely face a recall election this fall, has proposed billions of dollars in additional aid for businesses and tax cuts for residents as part of the new operating budget of the State which is due to enter into force in July.

“We have recovered more than half of the jobs lost in the past year. But there is still a long way to go, ”Newsom said.

The monthly employment figures are somewhat jarring given the state’s history of employment growth. Before the pandemic, it would have been exceptional to add 20,000 new jobs in one month. Now California is steadily adding more than 100,000 jobs as coronavirus restrictions end.

” This is unheard of. We haven’t had these kinds of fluctuations in the past 50 years, ”said Michael Bernick, former director of the California Employment Development Department and lawyer at the Duane Morris law firm.

These gains are possible because of the state’s unprecedented job losses during the pandemic. While the bulk of those losses occurred over two months, it could take another year or two before the state eclipses its pre-pandemic employment levels.

California’s labor force – the number of people who have or are looking for jobs – increased by about 12,400 people in May, to 18.9 million. It’s still below the pre-pandemic peak of 19.5 million people.

State officials announced on Thursday that they will no longer pay unemployment benefits to people who are not actively looking for work, starting July 11. California had suspended this requirement during the pandemic.

The May Jobs Report is based on a survey for the week of May 12. At the time, California still imposed capacity limits on companies based on the extent of the virus in their region. Newsom ended those rules on Tuesday, allowing businesses to open at their maximum capacity.

It could take a few months before the impact of this decision appears in the state’s employment report.

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