Is California’s ‘Lowest Monthly Unemployment Rate since 1970’s’ Legitimate?

Employment statistics for July of 2022 were released over the weekend by the EDD, showing new statewide record unemployment lows while also noting several worrying trends.

According to the new statistics, California’s unemployment rate went from 4.2% in June to 3.9% in July, hitting a new monthly low that hasn’t been seen since statistics began began recorded in 1976. For the seventh month in a row, the number of employed Californians rose, with 84,800 nonfarm jobs began added in July. In comparison to national monthly rates, California accounted for 16.1% of all new jobs in the country in July, with the state bringing in  477,600, or 14.5%, of the country’s 3.296 million new jobs all year to the end of July.

In addition, the number of unemployed Californians hit its lowest level since 1979, with all private sector jobs lost during the COVID-19 pandemic now being fully recovered.

“Californians are getting back to work with record low unemployment,” said Governor Gavin Newsom over the weekend. “We have historic reserves and we’re putting money back in peoples’ pockets as we continue to lead the nation’s economic recovery.”

However, despite unemployment figures looking better, an expanded look at the improving rate notes many worrying trends. In particular, the overall loss of blue collar jobs in California, the quality of jobs gained, a drop in average income, and the labor force participation rate have led many experts to believe that California’s COVID-19 jobs recovery may be more of a façade, as experts in previous months have warned as well.

“You need to look at the questions they aren’t answering,” explained Raymond Fletcher, a Los Angeles-based economist who specializes in underemployment, to the Globe on Monday. “Sure, more people have jobs now, which is good on paper. But these jobs are not replacing the higher payed jobs that came with benefits. These jobs are generally lower paying and come with fewer, if any, benefits. Or, because of the effects of the great resignation and employers needing people, the pay may now be just above minimum wage and also come with kind of insulting benefits. Food service jobs have been a significant part of this new job generation, so we’re seeing slightly higher than minimum wage positions to stay competitive for people. But these people looking for jobs who lost on health insurance or 401ks during the pandemic now are looking at benefits like “you get to bring food home with you at night”. It’s actually a big step down for many.”

Unemployment statistics and underemployment in California

“And blue collar jobs in California have it worse because they, by and large, are not being replaced. Factories and distribution centers across the state have been closing down,” Fletcher continued. “And either they aren’t replacing them in the areas affected, or they are being replaced by warehouse and distribution jobs that pay less for more physical work involved.”

“Even growth areas, like trucking or nursing, have been hit hard by strikes or new laws that makes these jobs much harder to do. Plus the state is bleeding higher-paying jobs by them going out of state. Altogether, this is the perfect storm brewing behind these “good” figures. The unemployment rate is low, but it’s being propped up by many menial and low=paying jobs rather than the higher paying ones Californians need to keep up with pricier expenses.”

“The state, as well as many localities, have been responding to all this by raising the minimum wage or offering tax incentives for certain industries to stay. But that has only worked so much, and it ignores a lot of other factories that lead to better jobs that pay better. The state needs to be better about keeping remote workers for Californian companies in-state for one, but they also need to take a hard look at taxes and why many businesses with these higher paying jobs are leaving. Not to mention affordable housing issues and the fact that, despite low unemployment, homelessness is still a huge issue. Think about the juxtaposition here. We have an all-time low in unemployment, yet tens of thousands are still homeless in LA alone.”

“These were supposed to be really good-feeling statistics, but all they are really doing is hiding the numerous employment and job problems in California that can crash those ‘good figures’ down at any time.”

August 2022 unemployment statistics are expected in mid-September.