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California's jobless rate improves; economy still struggling

Adam Beam

California added more than 140,000 jobs in July, lowering its historic high unemployment rate to 13.3% amid a coronavirus pandemic marked by stops and starts of the workplace that have plunged the world's fifth largest economy into chaos.

Normally, adding more than 140,000 jobs would be cause for celebration by the standards of the past few decades. But the coronavirus has upended what's normal, with Gov. Gavin Newsom's administration ordering most of the state's businesses to close in the spring, reopening them a few months later only to close them again when cases spiked.

California lost 2.4 million payroll jobs in April, more than all the jobs lost during the Great Recession a decade ago. The state added back 558,000 jobs in June, a record for one month. With July's gains, the California Employment Development Department says the state has regained nearly a third of the jobs lost at the start of the pandemic.

But the state's unemployment rate, while falling 1.6 percentage points since June, is still higher than it ever got during the Great Recession. Compared to the same period last year, the state has shredded more than 1.6 million jobs, the most of any state in the country.

“These are wild swings we've never seen before,” said Michael Bernick, a lawyer with Duane Morris and the former head of the state's Employment Development Department. “The numbers have lost a lot of their meaning.”

Nine of the state's 11 job sectors added jobs in July, but all are still reeling from the massive job losses sustained earlier this year. The leisure and hospitality sector, which includes hotels, bars and restaurants, added nearly 6,000 jobs last month. But they are still down more than 619,000 jobs from last year, the largest decrease of any sector.

Trade, transportation and utilities added the most jobs in July with nearly 41,000, largely on the strength of car dealers and motor vehicle and professional equipment wholesalers. The state added 36,000 government jobs, mostly in state government, including thousands of people to help handle the millions of people filing for unemployment benefits.

The construction industry had the biggest losses, losing 14,800 jobs because of weak hiring from homebuilders.

California has processed more than 10.7 million claims for unemployment benefits since March. The federal government had been paying people an additional $600 per week, but those benefits expired at the end of July. Local workforce development boards have reported more people looking for work as a result, Bernick said.

“It would have a sort of positive job impact, except that the jobs aren't out there with the lockdowns,” Bernick said.

July's jobs report could be understated since it is based on surveys taken in the middle of the month. Since then, California has added several more counties to its monitoring list, which after three days trigger a new round of mandated business and school closings. Sung Won Sohn, a professor of finance and economics at Loyola Marymount University, said the July jobs report reflects “old news.”

“The new story is that the economy is slowing and I think the businesses are battening down the hatch,” he said.

Nationwide, unemployment rates fell in 30 states, rose in nine states and stayed the same in 11 states and the District of Columbia, according to the U.S. Bureau of Labor Statistics. The national unemployment rate fell 10.2% in July from 11.1% in June.