California jobless rate falls with help of temporary jobs

A raft of temporary government jobs for the U.S. Census boosted California’s economy in August as the state added 101,900 jobs as the unemployment rate fell below the high-water mark of the Great Recession for the first time since March.

But experts warned that other indicators — including new unemployment claims, feeble consumer spending and paltry job postings — still show the world’s fifth-largest economy has stalled with no quick recovery in sight.

California lost more than 2.6 million jobs in March and April as the government ordered businesses to close and people to stay home to slow the spread of the coronavirus, which has killed more than 14,700 Californians.

California, home to nearly 40 million people and the world’s fifth largest economy, has now regained nearly a third of those jobs lost, according to statistics released Friday by the Employment Development Department.

But the unemployment rate, now at 11.4%, fell in part because the labor force has declined by nearly 800,000 people since February as parents were forced to stay home with children and others decided to return to school to learn new skills in a challenging job market, said Sung Won Sohn, professor of finance and economics at Loyola Marymount University.

“The thing about this pandemic, we tend to talk about the averages and the jobless rate and how many jobs we have created,” he said. “It’s kind of like saying the average depth of the Mississippi River is 3 feet deep. But if you try to walk across, you could drown. And many small businesses are drowning.”

California has paid more than $86 billion in unemployment benefits since March. The 13 million claims the state has processed over the past six months are more than triple the amount of claims filed in 2010, the worst full year of the Great Recession.

But that money has attracted scammers who have fooled the state’s computer system to get benefits when they were not eligible.

Investigators announced Thursday they had arrested 44 people in Beverly Hills this month for fraud, recovering 129 debit cards with a value of $2.5 million. The Employment Development Department said it has taken steps to correct the problem.

Of the 101,900 jobs added in March, more than 64% were government jobs. Most of those were temporary jobs for the U.S. Census while others can be attributed to local government hires as school reopened, at least virtually. Not counting the government jobs, California’s private sector added 35,800 jobs.

California outperformed the nation as a whole, with its unemployment rate in August falling 2.1 percentage points compared to July while the national rate fell 1.8 percentage points to 8.4%. Six of the state’s 11 industry sectors gained jobs last month. But compared to August of 2019, California has lost nearly 1.6 million nonfarm jobs.

“In some ways, it is difficult to know what to make of this morning’s numbers,” said Michael Bernick, former director of the state Employment Development Department and an attorney with Duane Morris. “They are not consistent with the numbers we’ve seen over the past month on new unemployment claims in California which have been running very high.”

The biggest job losses in California continue to come from restaurants and hotels and other hospitality businesses, which lost another 14,600 jobs in August.

Of California’s 58 counties, state officials say the coronavirus is “widespread” in 30 of them, a designation that imposes automatic bans on indoor dining and other business restrictions.

The numbers have been improving statewide, but outbreaks continue to pop up, most notably in San Diego County, the fifth-most populous county in the country. It is in danger of being moved back to the “widespread” category, which could trigger another round of business closings.

In Los Angeles County, the nation’s most populous with more than 10 million residents, the economic downturn continues to have an outsized impact because of its service and entertainment-heavy economy and its large number of minority-owned small businesses.

The county’s unemployment rate is 16.6%, more than 5 percentage points higher than the statewide average.

California’s highest county jobless rate — 22.9% — is in Imperial County in the southeastern part of the state, bordering Arizona. (AP | ADAM BEAM)