California’s economic recovery is among the slowest in the nation. Here’s why
California’s economic challenges are greater than every state in the nation except New York, a new study by the Community and Labor Center at UC Merced found.
“The economic problems in California are much deeper than most of the rest of the country,” Edward Orozco Flores, faculty affiliate with the UC Merced Center, told McClatchy.
A big reason for the state’s somber outlook could be that it shut down sooner than most states and has been somewhat slower to reopen, said Flores, who co-wrote the report with Ana Padilla, the center’s executive director.
Among the sectors leading the plunge, and slow to come out of the job downturn, are the arts and entertainment, construction and retail trade industries. Blacks, Asians, Latinos and non-citizen immigrants continue to be affected more by the job losses.
Whether the slow job recovery will persist is unknown, Flores said. During the Spanish flu epidemic of a century ago, research has suggested that states that were quickest to shut down were also the fastest to recover.
“It’s not a bad thing that California ordered residents to stay home during this pandemic,” he said.
The downturn has triggered sharply declining government revenue, notably a $54 billion California state budget deficit that Gov. Gavin Newsom and the Legislature are trying to address.
They want Washington to help, but as other states recover more quickly, that case is getting more difficult to make. The Senate has shown no sign of acting this month and will leave Washington July 2 and does not plan to return until July 20.
Any new legislation, Senate Majority Leader Mitch McConnell said recently, “will be narrowly crafted, designed to help us where we are a month from now, not where we were three months ago.”
The nation has shown small signs of inching back. The unemployment rate in May was 13.3%, down slightly from April but still at an historic high. Retail sales jumped 17.7% last month after falling sharply in April. California’s unemployment rate in April was 15.5%, the latest monthly data available.
The UC Merced study paints a more measured picture of where California is now.
The state lost 16.4% of its jobs between February and April, about 3 million jobs, but in May added back about 78,000 jobs, or 0.4%.
Those percentages are worse than national averages. The country lost 15.5% of its jobs between February and April, and last month recovered 2.9%
Seven states have added a smaller percentage of their jobs during the coronavirus crisis recovery. As the economy has slowly begun to recover, so have most of those states.
Only New York, which has regained 0.3% of its jobs, trails California in its ability to bounce back so far.
California’s jobs recovery has been “highly inconsistent,” the researchers found.
The areas of arts, entertainment, recreation, accommodation and food services, construction, retail trade and “other services except public administration” accounted for 29.3% of the state’s jobs in February, before the Covid-19 downturn.
Those sectors have accounted for 54.3% of the state’s job losses through April.
And while the state economy did add 78,391 jobs between April and May, jobs kept declining in some of those vulnerable areas. While some industries and trades added 278,945 jobs, the others lost 200,554.
Job gains and losses were also felt unequally among different racial and gender groups.
Women lost 18.4% of their jobs between February and May. Men lost 13.9%.
White losses were 9.9%. Black losses were 17.8%; Latinos, 22.2% and Asians, 17.2%. Non-citizens were hit particularly hard, losing 29.5% of jobs they had held.
A separate study by the California Policy Lab at UCLA, released last week, found California residents are slowly returning to work in health care, manufacturing, food services and retail trade jobs, but lower-wage workers are often at risk of earning less than they did while receiving unemployment payments.
This story was originally published June 18, 2020 at 5:00 AM with the headline "California’s economic recovery is among the slowest in the nation. Here’s why."
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