Web Version [link removed] | Update Preferences [link removed] [link removed] California Employment Report

for June 2021

The Center for Jobs and the Economy has released our initial analysis of the May Employment Report from the California Employment Development Department. For additional information and data about the California economy visit [[link removed]].

The May data in general shows a continued rise in jobs while employment continues to show much slower improvement. In the seasonally adjusted data, employment gains—the number of workers returning to jobs—have averaged only 28,400 over the past three months. While jobs continue to reopen and—for those higher wage industries not as affected by the state’s restrictions—to expand, this recovery is not causing those who left the labor force to go back to work.

Reflecting its slower reopening rate, California recovery remains below the rest of the states, with the largest gap still being in the number of recovered nonfarm jobs.

Again, from the adjusted data since January, California has regained 495,000 nonfarm jobs, or an average of 123,700 a month. A large share of these, however, were regaining recovery ground lost from the second round of shutdowns ordered by the state towards the end of last year. Compared to the previous near-term high in November 2020, nonfarm jobs are ahead 339,600.

As discussed in prior months, however, the seasonally adjusted data is an attempt to overlay seasonal smoothing on top of data that is overwhelming driven by pandemic factors and a changing set of government restrictions. In the unadjusted data, California nonfarm jobs are up 197,700 from last November, representing the actual net gain over the past 6 months.

CA Unemployment Rate 7.9% CA Unemployment Rate

Following a larger-than-usual adjustment to the unemployment numbers, California's reported unemployment rate (seasonally adjusted) in May improved to 7.9% from a revised 8.0% in April.

The unemployment rate improvement, however, stems largely from a dip in the labor force participation rate to 60.8% in May compared to 61.0% in April. The number of unemployed was down by 27,100, and employment up by only 39,500. Total labor force rose by only 12,400.

Overall, the May labor force was only 3,000 persons higher than the level in October 2020, just prior to the state’s orders leading to yet another round of business and job closings. EDD’s recent decision to reinstitute the work search requirement [[link removed]] for unemployment benefit recipients is likely to produce improvements to workers counted as returning to the labor force going forward. The requirement, however, will not go into effect for a month, and even then will add further administrative burdens on an agency already facing challenges in meeting its current workload. The results from this shift will not be reflected in the data until the results scheduled for release in September.

US Unemployment Rate 5.8% US Unemployment Rate

The reported national numbers show US unemployment rate (seasonally adjusted) improving 0.3 point to 5.8%. Employment was up 444,000, while unemployment dropped 496,000. The labor force consequently was essentially unchanged, edging down 53,000.

Nonfarm Jobs 104.5k Nonfarm Jobs Change

Nonfarm wage and salary jobs rose 104,500 (seasonally adjusted) in May, while the gains in April were revised upwards by only 200.

Nonfarm jobs nationally were up 559,000. These numbers, however, come from the seasonally adjusted estimates. The unadjusted numbers show a higher gain at 973,000. US Bureau of Labor Statistics so far has revised their adjustment formula three times in an effort to overlay seasonal factors to data that is overwhelmingly driven instead by the pandemic, and the differences have been compounding in recent months. The seasonally adjusted numbers more generally reported show US nonfarm jobs growing only 2.158 million since January, with California growing 495,000 (22.9%) in this period. The unadjusted numbers instead show US growth at 4.405 million and California at 639,000, a somewhat stronger level in absolute terms but lower as a share of the US total at 14.5%. While these discrepancies will be ironed out through the seasonal adjustments in subsequent months, the more dominant pandemic factors are leading to some distortion when relying solely on the adjusted numbers.

As of the May numbers, California has regained 52% of the Nonfarm jobs lost to the state shutdowns. The US in total has regained 66%.

California job growth was led by Accommodation & Food Services (46,600), Arts, Entertainment & Recreation (15,700), and Information (11,200). Losses were in 4 industries led by Transportation, Warehousing & Utilities (-1,900), Construction (-1,600), Retail Trade (-1,300).

Counties with Double-Digit Unemployment 5 Counties with Unemployment Above 10%

The number of counties with an unemployment rate at 10% or above eased to 5. The unadjusted rates ranged from 4.3% in Marin to 15.9% in Imperial.

Visit the Center [[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]