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The Center for Jobs and the Economy has released our initial analysis of the July Employment Report from the California Employment Development Department. For additional information and data about the California economy visit www.centerforjobs.org/ca.
California’s seasonally adjusted unemployment rate again eased, going from 14.9% in June to 13.3% in July. The unadjusted rate—the more relevant measure given the extent to which seasonal factors have been overwhelmed by the economic closures—went from 15.1% to 13.7%. Both numbers still exceed the comparable highs in the pre-COVID period extending back to 1976 under the current data series.
As with previous months during the current crisis, the July numbers are primarily a snapshot of the conditions during the week of July 12th when the surveys behind the numbers were completed. Technical issues also remain. The household survey used to estimate the labor force numbers continued to have a low but still statistically acceptable response rate. The response rate for the establishment survey used to estimate the job numbers, however, was higher than the 2019 average. Misclassification of the unemployed also continues, but at a diminishing rate, with the potential effect on the published unadjusted numbers being an increase of up to an additional 0.8 point.
More importantly, the more current unemployment insurance initial claims data (regular program and PUA claims by the self-employed) showed more erratic movement in the period after the week of the 12th, rising in the following two weeks, dropping the following two, and then edging up in the latest data for the week of August 15. Unemployment as measured by continuing claims rose by about an additional 18% between the week of July 12 and the first week of August as smaller businesses continue to close, as temporary layoffs shift to permanent, and as employers of all sizes have been forced to adjust their post-COVID jobs planning.
Telecommuting, however, still appears to be a key element keeping unemployment and the condition of state revenues from getting worse. The latest weekly data now shows weekly state tax withholding since March 0.9% above the comparable period in 2019. While not incorporating the all-critical capital gains components, this indicator continues to illustrate that the higher wage workers subject to the state’s income tax have remained employed to a higher degree during this crisis. Overall, state tax collections for April to July were $4.3 billion above the May Revise projections, suggesting telecommuting has instilled a high degree of resiliency in the state economy and fiscal conditions.
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