Web Version [link removed] | Update Preferences [link removed] [link removed] WARN ACT + Unemployment Data Update: While EDD “On Pause,” A Deep Dive Into COVID’s Economic Impact on Minority Communities Unemployment Insurance Claims
Due to the current pause by EDD in the processing of new unemployment claims, no new unemployment insurance filing data is available for the state. Instead, the numbers being reported for California are shown as an estimate pegged at the last count for the week of September 19. Because of the effect of California on the US numbers—15% of national PUA claims and 29% of initial claims in the regular program—the reported national numbers have to be viewed in this context as well.
Netting out the California estimates from the more relevant not seasonally adjusted numbers, initial claims for the rest of the country dropped 7% in the week of September 26. Initial claims for the PUA program for self-employed were up 7% again primarily as a result of elevated numbers in Arizona. Combined claims were down 1%.
As of September 23, EDD reported an initial claims backlog affecting 612,242 workers. The backlog in processing continuing claims stood at another 1,082,860 workers.
COVID Effects on California’s Minority Communities
Continuing uncertainty in the reopening process appears to be causing many employers to put off bringing back laid off workers or finally being forced into making the decision to turn temporary layoffs into permanent. Disney just announced [[link removed]] the layoff of 28,000 workers. In the most recent Small Business Pulse Survey [[link removed]], 10.0% of California small businesses reported decreasing the number of paid employees, 46.2% reported they had not rehired any employees compared to only 6.4% who had, and 55.8% expect it will take 6 months or more to never for their business to return to its normal level of operations.
The most recent shift by the state to a multi-tier opening process is producing an easing of restrictions in some counties. But even after announcing this reopening structure, the state continues to change the rules, with the most recent being the addition of an equity metric that measures progress on infection rates not only for each county but also for the most disadvantaged neighborhoods within each county, a change that could delay school and business reopenings [[link removed]] in some of the largest counties that have also experienced some of the heaviest unemployment impacts and concerns over educational progress due to prolonged disputes on their schools.
While the state continues to promote the concept of equity in both its current public health efforts and as a guiding principle for the eventual proposals on jobs recovery, the biggest blow to improving equality to date came from the shutdowns ordered as the primary means to respond to the pandemic. In the period just before the shutdowns, sustained jobs and wage growth saw record low unemployment rates. In the latest data for 2019 from the American Community Survey, median household income grew at accelerated rates compared to the annual average in the prior 8 years. In the rest of the country, Latinos, Asians, and African-Americans saw the highest increases. In California, Latinos and Asians saw comparable but somewhat lower gains, and African-Americans saw increases in line with the prior trend.
While gaps remain, the recent 2019 Survey of Consumer Finances [[link removed]] indicates median wealth for African-American and Latino families grew the fastest at 33% and 65% respectively in the period 2016-2019, compared to White families at 3%.
This progress, however, came to an abrupt halt under the closures beginning in March. Using a 4-month average from the Current Population Survey shown below, the unemployment rate more than tripled, with significantly higher rates for Latinos, Asians, and African-Americans. African-Americans and Latinos in particular show an elevated share of the unemployed relative to their population shares. Note, however, that the number of unemployed covers only those designated as such for statistical purposes and does not account for persons who have left the labor force. As detailed in the Center’s monthly jobs reports, the California labor force participation rate has sunk to new lows and has continued dropping while the rate in the rest of the country has begun to recover.
These outcomes in large part reflect the cumulative effect of state policies prior to the current crisis. Lower paying jobs in the population serving and tourism service industries have been the hardest hit from the closures. The two-tier jobs structure that dominated jobs growth following the Great Recession saw many parts of the state relying on these lower pay industries in the expansion, while higher paying jobs especially within the tech industries were concentrated to a high degree in the Bay Area. Weekly receipts from state income tax withholding [[link removed]] continue to exceed the 2019 results from the same period, reflecting the situation that much of the state’s higher paying jobs continue in place in large part because of extensive telecommuting. In fact, withholding surged 40% the week of September 25 as the result of 7 successful IPOs worth $50 billion, another indication the state’s higher wage jobs tier is continuing to operate closer to pre-COVID levels, while the brunt of the current economic impacts are being felt more heavily in the lower wage tier.
The economic view coming from the Bay Area is not the same as is being experienced by the rest of the state. The most recent Household Pulse Survey [[link removed]] results for the week of September 23 show wide difference in the jobs that have been maintained through telecommuting. San Francisco-Oakland-Berkeley MSA reports 52.3% of households with at least one adult telecommuting, while Riverside-San Bernardino-Ontario MSA reports only 27.5%. Los Angeles-Long Beach-Anaheim MSA is closer to the statewide average (39.7%) at 40.9%.
While the Los Angeles area has a larger number of households with telecommuting, the region also has a larger percentage of jobs which have been more vulnerable to the closures. The effect of the closures consequently has been far more severe, with Bureau of Labor Statistics just reporting that Los Angeles MSA slipped from the 9th worst to the 6th worst unemployment rate in the nation in August.
Failure to address the state’s housing supply crisis has contributed further to the disparate impacts of the current shutdown. As the challenge of finding suitable housing they can afford has soared, an increasing share of households instead has been forced into crowded conditions. In the most recent 2019 American Community Survey results, the share of California households in overcrowded housing (defined as more than one person per room) stood at 8.2% compared to the rest of the country at only 2.7%. White non-Latino households were at 2.4%, African-American at 5.3%, Asian-Pacific Islander at 8.4%, and Latinos far exceeding all groups at 17.9%. Under these circumstances, crisis response options remain limited to many minority households, including more challenges for shelter-in-place, quiet conditions for telecommuting even when it is otherwise possible, and for students far greater difficulty in maintaining spaces suitable for the remote learning essential for them to keep educational pace with their peers.
These conditions are not going to change on their own under current state policies, and in fact the continued flow of regulations being issued by the state agencies even under the current unprecedented crisis conditions threatens to raise the barriers to jobs recovery even more. UCLA Anderson Forecast [[link removed]] just revised its projections and now expects full jobs recovery to take at least another two years. The higher paying industries that are now weathering the current crisis will likely to continue to do so during this period. The lower wage workers now bearing the brunt of the crisis will be the ones facing the greatest ongoing effects, currently as even their access to unemployment assistance has been put on hold, in the intervening years as they search for employment, and in subsequent years for those now facing long-term unemployment and its consequent effects on their life-time earning potential.
WARN Act
Under the revised WARN Act procedures, companies with significant layoffs still are required to submit the notices, but any nonfiling penalties are waived. These notices do not cover all current layoffs, but provide a current indicator of the geographic dispersion. The data also indicates that the number of permanent rather than temporary closures and layoffs have continued to rise as economic restrictions remain in place, with permanent closures and layoffs now comprising a fifth of all employees covered in notices effective since the beginning of the crisis in March.
Visit The Center For Jobs » [[link removed]] The California Center for Jobs and the Economy provides an objective and definitive source of information pertaining to job creation and economic trends in California. [[link removed]] Contact 1301 I Street Sacramento, CA 95814 916.553.4093 If you no longer wish to receive these emails, select here to unsubscribe. [link removed]
