Nance Parry says she鈥檚 sent out more than 1,000 resumes since she got laid off in September 2019. She鈥檚 gotten one interview.
Just five weeks into what Parry thought would be a six-month contract, she was laid off from a job as a document specialist for an engineering firm. She says she鈥檚 sent out two to three resumes per weekday since but that鈥檚 netted a grand total of one interview, leaving her to live off of a monthly $1,200 Social Security check, $1,030 of which is used to pay rent for her apartment in Duarte.
鈥淚鈥檝e tried to survive, you know, paid bills and food and everything on $200 a month after the rent is paid,鈥� Parry said. 鈥淚 need to work.鈥� She needs new glasses and electrical work done on her car, but won鈥檛 be able to pay for either of those things until she gets a new job. Her landlord has tried to evict her three times, she says, and she鈥檚 worried about what will happen when LA county鈥檚 in January 2022.
鈥淚 don鈥檛 know if I鈥檓 going to end up living in my car or what because without a job you can鈥檛 get an apartment,鈥� she said.
Parry is one of roughly 1.4 million Californians who are out of work and looking for jobs. In October, according to the U.S. Bureau of Labor Statistics, the state recorded a ,, the highest in the country, a distinction California shares with Nevada. October鈥檚 national unemployment rate is several points lower, at 4.6%.
One contributor to the state鈥檚 lagging employment situation is that California鈥檚 large leisure and hospitality sector 鈥� made up of hotels, restaurants and more 鈥� hasn鈥檛 rebounded as quickly as the rest of the country鈥檚. But other data suggest the news isn鈥檛 all bad: There are lots of job openings and workers are , which is often a sign that people are optimistic they can find a better job.
Why is California鈥檚 jobless rate bouncing back more slowly?
Even pre-pandemic, California鈥檚 overall unemployment rate was usually slightly above the national rate. But the fact that so many Californians work in the leisure and hospitality industries 鈥� which saw massive layoffs in the beginning of the pandemic 鈥� contributes to the state鈥檚 lagging employment recovery now. Leila Bengali, an economist at UCLA鈥檚 Anderson School of Management, pointed out California鈥檚 leisure and hospitality sectors employed almost 18% fewer people in September 2021 than pre-pandemic, according to data from the Bureau of Labor Statistics. Nationwide, the industry was just 9% smaller in September than it was pre-pandemic.
One explanation for the gap between the rate at which California鈥檚 leisure and hospitality industry has recovered jobs and the rate at which the industry has recovered jobs nationally, Bengali said, is that international tourism, a large part of the state鈥檚 economy, was particularly hard hit during the pandemic. Visitors buy lunches at cafes and stay in hotels; when travel dried up, those businesses bore the brunt.
鈥淚t鈥檚 not a coincidence that two states (California and Nevada) that are heavily reliant on tourism and entertainment have not done as well, given the demise of tourism and entertainment under COVID,鈥� said Manuel Pastor, a professor of sociology and American Studies and Ethnicity at the University of Southern California.
New York, which also has a large tourism industry, has an overall unemployment rate of 6.9%. Florida, another high-tourism state, stands apart among high-tourism states with a 4.6% unemployment rate overall. The leisure and hospitality sectors in California, Nevada, New York and Florida have all added jobs back more slowly than the sectors have nationally.
Another potential explanation comes from research by Harvard economics professor Raj Chetty and several other economists, who found that low-wage workers who worked at small businesses in high-rent zip codes 鈥� of which California has many 鈥� early in the pandemic than low-wage workers who worked in small businesses in lower-rent areas.
鈥淚f you lived in East LA, but you got on your bike and a bus to get over to Beverly Hills to work in a restaurant, or to clean a house or to take care of kids, a lot of that demand disappeared,鈥� said Pastor.
But aren鈥檛 employers struggling to fill jobs?
Yes. Walk down any commercial strip in a California city and there鈥檚 a decent chance you鈥檒l see a 鈥楴ow Hiring鈥� sign in a restaurant or shop window. Employers have been offering to fill empty positions.
California鈥檚 unemployment situation 鈥渃ertainly isn鈥檛 a question of a lack of job opportunity; that鈥檚 not what鈥檚 going on,鈥� said Chris Thornberg, founding partner of Beacon Economics, an economic research and consulting firm. 鈥淭here are an insane number of job opportunities in our state and in the nation overall.鈥� People may just be taking their time to find a good job, he said.
There are also some indications that lower-income families aren鈥檛 experiencing economic stress, said Thornberg. For example, the share of Californian consumers with new bankruptcies is .
A lot of the job openings also require in-person, physical work with unpredictable hours 鈥� like serving in a restaurant, or packing goods in a warehouse. Some people aren鈥檛 willing or able to do that work.
Parry is worried about working in person while the pandemic is ongoing. 鈥淚 keep seeing signs in restaurants and stuff like that, it really makes me feel bad because I need work,鈥� she said. She worked at Cost Plus over the holidays once in the past, and it made her legs hurt. 鈥淚 am 71 years old,鈥� she said. 鈥淚 mean, the last thing I want is a job where I stand all day because it kills the legs and the back.鈥�
鈥淚 think right now we鈥檙e seeing a lot of people move out of retail, leisure and hospitality and start looking for other employment,鈥� said Somjita Mitra, chief economist at the California Department of Finance. Unpredictable schedules make it hard for workers in those industries to find child care and use public transit to get to work. 鈥淭here鈥檚 going to be some structural changes in those industries long term,鈥� she said.
It鈥檚 not all bad
Compared to California鈥檚 jobs recovery after the Great Recession 鈥� when unemployment peaked around 12.6% and took more than four years to get down to the state鈥檚 current 7.3% unemployment rate 鈥� the state鈥檚 post-pandemic recovery has been a roaring success. During the pandemic, unemployment in the state crested at 16%, but just a year-and-a-half later, that number had fallen by more than half.
If workers are holding out for jobs that better match their needs and goals, that can prompt employers to increase wages for the lowest wage workers, for example, or offer them more stable schedules 鈥� concessions that are good for the economy, said Irena Asmundson, managing director of the California Policy Research Initiative at Stanford Institute for Economic Policy Research and former chief economist for California Department of Finance.
鈥淥ur economy really does work better when we have more of a balance of power between employers and employees,鈥� Asmundson said.
When will the unemployment rate come down?
A from the Department of Finance projected that California鈥檚 unemployment rate would return to pre-pandemic levels in 2024.
A new from UCLA Anderson Forecast predicts that California鈥檚 unemployment rate will fall to an average of 5.6% in 2022, and will drop further to an average of 4.4% in 2023. Authors Jerry Nickelsburg and Leila Bengali also expect job growth to slow in industries with a lot of personal contact, and in sectors that cater to tourists.
It鈥檚 unclear if California鈥檚 pre-pandemic jobless rate of about 4% was sustainable, said Asmundson. There鈥檚 a sweet spot, she said, and while economists disagree on exactly what that sweet spot is, she puts it at 5% for California. She predicts we will get to that rate in mid 2022.
Other economists think we shouldn鈥檛 worry about the unemployment rate.
鈥淲ho cares?鈥� asked Chris Thornberg. 鈥淧eople shouldn鈥檛 care,鈥� he said. The more important question, he said, is whether there are job opportunities for people. 鈥淭he answer is yeah, more than ever before.鈥�
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