Despite California’s high unemployment rate, many positions at restaurants, bars and retail stores are going unfilled — causing some business owners to fear they won’t be able to fully reopen even when the state gives the green light on June 15.
The Golden State’s unemployment rate remained unchanged between March and April, holding steady at 8.3% even as employers added nearly 102,000 jobs, according to figures released Friday by the Employment Development Department. That accounts for 38% of all U.S. jobs gained last month — a bright spot that dims when one takes into account that California still has the nation’s second-highest unemployment rate and has regained only 48% of jobs lost amid the pandemic. In some areas, the share of jobless residents is actually increasing: Los Angeles’ unemployment rate shot from 11.4% in March to 11.7% in April.
Nevertheless, Gov. Gavin Newsom touted the April unemployment figures as California “continuing to lead the nation’s economic recovery,” noting that his $100 billion stimulus plan would help small businesses recover. Not all business owners were convinced.
Marvin Maldonado, co-owner of the Federalist Public House in Sacramento: “If he could wave a magic wand and find folks to come back to work … I’m hard pressed to find anybody willing or able to work a Saturday night.”
Experts say the staffing shortage is likely due to a multitude of factors: People — especially women — dropping out of the labor force as schools and child care centers closed, fear of contracting the virus in the workplace, some families finding that it makes more financial sense to stay on unemployment than to return to work, low-wage workers gravitating to other parts of the state and other careers, and low wages in general.
Heidi Shierholz of the Economic Policy Institute: “I often suggest that whenever anyone says, ‘I can’t find the workers I need,’ she should really add, ‘at the wages I want to pay.’”
Yoshika Hedberg, owner of the Fish & Bird izakaya in Berkeley: “I think people need to make a little more money, but in order to do so, restaurant prices are going to go up. Are people willing to pay for better-quality food, better-quality service? That’s a big question mark, and that’s scary.”
Bay Area, job growth slows dramatically in April
Meanwhile, job growth in the Bay Area slowed in April, marking a second straight month of weaker employment gains and raising questions about how quickly the region can shake off its coronavirus-linked economic ailments.
The Bay Area gained 16,300 jobs in April, but that was considerably below the increase in March and less than half of February’s huge upswing in employment, state labor statistics show. The region’s lackluster performance was caused in part by a decline in jobs in the tech sector, which is normally the economic engine for the Bay Area.
In February, the Bay Area gained 33,200 jobs followed by an increase of 23,900 in March.
“Hiring has slowed down, but the economy has not,” said Jeffrey Michael, director of the Stockton-based Center for Business and Policy Research at the University of the Pacific. “It takes longer to rehire and to restart than it does to shut things down.”
During April, Santa Clara County added 4,900 jobs, the San Francisco-San Mateo region gained 9,800 positions, and the East Bay added 800 jobs, the state Employment Development Department reported Friday.
California added 101,800 jobs in April, but that also was far below the increases in both February and March. The state gained 156,100 jobs in February and 132,400 positions in March.
The statewide unemployment rate in April was unchanged at 8.3%, the EDD reported.
Despite that, state government officials noted that California’s April jobs increase accounted for a whopping 38% of the 266,000 jobs added in the entire United States last month. Gov. Gavin Newsom praised the state’s performance.
“Over the past three months, California has created 390,300 jobs,” Newsom said. “But we’re not letting up. The California Comeback Plan is the biggest economic recovery package in the state’s history and will provide historic investments in small businesses and workers.”
The governor’s budget revision for May proposes that the state government inject $100 billion into the California economy through an array of measures.
The stimulus won’t all happen right away, noted Michael Bernick, an employment attorney with Duane Morris and a former director of the state EDD.
“Whether this massive spending will result in widespread employment gains, especially in middle-income jobs, and rebuilding of the small business economy remains to be seen and will depend on how the spending is targeted and controlled,” Bernick said.
California and all of its regions, including the Bay Area, have a long way to go to recover the jobs they lost during the pandemic.
Experts hope that as businesses reopen, they can begin to hire workers in significantly greater numbers.
For now, however, the slower gain of jobs in the Bay Area during April was “somewhat disappointing,” said Stephen Levy, director of the Palo Alto-based Center for Continuing Study of the California Economy.
Case in point: Over the three most recent months, job gains in California have outpaced what’s going on in the nine-county region. Bay Area totals have risen 2% during the three months — well behind the 2.5% increase in the number of non-farm payroll jobs in California over the same stretch.
An uneven performance by the tech sector is among the reasons that the Bay Area market slowed significantly in April.
Last month, tech companies chopped 2,100 jobs in Santa Clara County and 1,900 positions in the San Francisco-San Mateo region, according to seasonally adjusted numbers provided by Beacon Economics and the UC Riverside Center for Economic Forecasting. The East Bay added 900 tech jobs in April.
The Bay Area’s three major metro centers all benefitted from gains in leisure and hospitality jobs during April, according to data provided by Beacon and UC Riverside.
The San Francisco-San Mateo region would have lost jobs last month — except for the sturdy performance of the leisure and hospitality industry, which added 9,300 jobs while arts and entertainment gained 1,200 positions.
The South Bay added 3,800 hotel and restaurant jobs and gained 700 arts and entertainment positions. And the East Bay gained 1,900 hotel and restaurant positions and 1,500 arts and entertainment jobs.
Among the other notable changes: The South Bay gained 1,100 health care jobs, the East Bay lost 1,600 construction jobs and 1,300 manufacturing positions, while the San Francisco-San Mateo region gained 900 construction jobs.
Despite the slowing employment growth, Levy believes the Bay Area is poised to rebound.
“The Bay Area jobs comeback continues with support from our stellar COVID response,” Levy said. “I expect the April numbers to be revised upward and the May numbers to show stronger growth as more counties” ease COVID-19 restrictions.
Still, multiple challenges pose obstacles to the Bay Area job market, according to Michael.
“The combination of childcare issues, enhanced unemployment benefits, and other government safety net support, and lingering COVID safety concerns will slow the pace of hiring compared to the pace of consumer demand,” Michael said.
“The challenges should get incrementally better with each passing month and I think we are still on track for very robust economic and employment growth for the rest of 2021,” Michael said.
Mark your calendars for June 15
It’s really happening — California is really reopening. After more than a year of wearing masks and waiting in extra-long grocery lines due to six-foot rules, almost everything will snap back to normal on June 15, state health officials said Friday. Business capacity limits? Gone. Physical distancing requirements? Gone. Mask mandates? Gone for fully vaccinated people in most situations, though restrictions will remain for unvaccinated people and workplace guidelines still have to be finalized.
Dr. Mark Ghaly, the state’s health and human services secretary, also said California will not create a vaccine passport, though the state is working on privacy and equity guidelines for businesses who decide to use such a system. Californians who attend indoor events with more than 5,000 guests will be required to show proof of vaccination or of a negative COVID test — a precaution also recommended for outdoor events with more than 10,000 guests.
One area that may not return to normal as quickly: schools. The union United Teachers Los Angeles, for example, wants Los Angeles Unified to keep mask requirements and physical distancing mandates in place when schools reopen full-time in the fall.
