84,800 Jobs Added

California’s labor market continued to expand in July, with total nonfarm employment in the state growing by 84,800 positions, according to an analysis released jointly with Beacon Economics. This figure represents one of the stronger monthly gains seen in recent years, signaling resilience in the face of ongoing economic challenges. June’s gains were also revised upward to 37,300 in the latest numbers, which was a 17,400 increase from the preliminary estimate of 19,900. The revision underscores the importance of updated data when measuring job growth and helps paint a clearer picture of the state’s economic momentum.

California has added jobs at a healthy pace in both 2021 and 2022. These improvements illustrate that businesses have been actively reopening, rehiring, and expanding after the pandemic’s peak disruption. However, as of July 2022, there are still 2.7% fewer people employed in the state, representing 73,800 jobs, than there were prior to the pandemic. This lingering gap is a reminder that despite significant progress, California’s full recovery is not yet complete. The state continues to trail the national average, as California’s recovery lags behind due in large part to ongoing labor shortages. Employers continue to face challenges in hiring and retaining workers, which slows the pace of full recovery.

2.7% Fewer People Employed

When comparing California’s employment numbers to national figures, the difference becomes clearer. Total nonfarm employment in California has contracted 0.4% since the start of the pandemic. By contrast, the nation overall has seen a slight increase of less than 0.1%. This discrepancy highlights the structural and regional differences between California and the country as a whole. Despite this lag, the state showed notable progress over the past year. From July 2021 to July 2022, California increased payrolls by 4.4%. This growth actually outpaced the national increase of 4.2% over the same period, suggesting that California has the capacity to close the recovery gap if such growth continues.

“California is getting very close to fully recovering all the jobs it lost due to the pandemic,” said Taner Osman, Research Manager at Beacon Economics and the Center for Economic Forecasting. “In fact, if we repeat this month’s job gains next month, we will reach that milestone.” His statement reflects both optimism and caution, emphasizing that California’s labor market recovery remains on the right path but still requires sustained growth.

3.9% Unemployment Rate

Another indicator of progress came in July when California’s unemployment rate fell to 3.9%. This marked a 0.3 percentage-point decline from the previous month and represented the lowest level on record, dating back to 1976. The achievement is a historic milestone for the state’s economy. However, it is important to note that California’s unemployment rate remains elevated compared to the national unemployment rate of 3.5%. This gap indicates that while California is recovering, there are still challenges unique to the state.

One such challenge is labor supply. The state continues to face very tight labor conditions. In July, California’s labor force fell by 23,400, continuing a trend that has created difficulties for employers looking to fill open positions. Since February 2020, the state’s labor force has declined by 209,600 workers, a 1.1% decrease. This persistent decline highlights ongoing concerns about participation in the labor market, whether due to retirements, relocations, or other factors. While job creation remains strong, ensuring a sufficient labor force to sustain this growth will be critical moving forward.