19,900 Jobs Added
California’s labor market expanded modestly in the latest numbers, with total nonfarm employment in the state growing by 19,900 positions in August, according to an analysis released jointly by the UCR Center for Economic Forecasting & Development and Beacon Economics. July’s gains were also revised up to 91,400, a 6,600 increase from the preliminary estimate of 84,800. These adjustments highlight the continued momentum in California’s economy, even as growth moderates compared to the rapid rebound seen in 2021 and 2022.
California added jobs at a healthy pace in 2021 and 2022, benefiting from the gradual reopening of businesses and strong consumer demand. As of August 2022, the state has recovered 98.3% of the jobs lost in March and April 2020, the outset of the pandemic. This is a significant milestone that underscores the resilience of the labor market. Despite this progress, there are now 47,300 fewer people employed in the state compared to February 2020. Total nonfarm employment in California remains 0.3% below pre-pandemic levels, while nationally the figure shows a 0.2% increase. In terms of year-over-year growth, the state increased payrolls by 4.0% from August 2021 to August 2022, which matches the national gain of 4.0% over the same period. This suggests that while California is lagging slightly in returning to its pre-pandemic employment level, its pace of job growth remains consistent with the broader national trend.
47,300 Fewer People Employed
“Just as the state was on the verge of recovering all the jobs lost at the outset of the pandemic, August represented a small bump in the road, with particular weakness seen in Los Angeles and San Francisco, two places that have struggled to recover their pre-pandemic footing.” said Taner Osman, Research Manager at the Center for Economic Forecasting and Beacon Economics. “While macro headwinds are swirling, there is still enough momentum in the state’s labor market to see a full recovery of the jobs lost within the next month or two.”
The remarks highlight that regional differences continue to shape the recovery. Large metropolitan areas like Los Angeles and San Francisco were hit particularly hard during the pandemic due to their dependence on sectors such as tourism, entertainment, and professional services, which experienced significant disruption. While other regions in California have seen faster rebounds, these urban centers remain critical to the state’s overall labor market health. The comments also point to broader economic challenges such as inflation, rising interest rates, and global uncertainty, all of which create headwinds for continued growth. Nevertheless, the expectation of a full jobs recovery in the near term underscores the strength of the underlying fundamentals in California’s economy.
4.1% Unemployment Rate
California’s unemployment rate grew to 4.1% in August, a 0.2 percentage-point increase over the previous month. However, it is important to note that July’s unemployment rate was the lowest level ever recorded for the series. Even with the increase, the state’s unemployment rate is still near historic lows, reflecting relatively strong conditions in the labor market. At the same time, California’s rate remains higher than the national average of 3.7%. This gap suggests that while California is recovering, it continues to face structural challenges that differ from those of the nation as a whole.
A key issue remains the state’s labor supply. California’s labor force grew by 32,400 in August, indicating that more people are either entering or re-entering the workforce. Despite this improvement, compared to February 2020 there are still 280,900 fewer workers in the labor force, representing a decline of 0.9%. This shortage has been one of the most significant constraints on the state’s recovery. Without a stronger return of workers, employers may continue to face difficulties in filling positions, which could slow hiring momentum. The labor force shortfall has been influenced by factors such as early retirements, relocation out of the state, and reduced labor force participation due to caregiving responsibilities or ongoing concerns about health and safety.
The report from the UCR Center for Economic Forecasting and Beacon Economics emphasizes that California’s labor market is balancing between resilience and ongoing challenges. Job gains continue, unemployment remains relatively low, and year-over-year growth is strong, but the state is still not fully back to pre-pandemic employment levels. The modest slowdown in August illustrates the fragility of the recovery, yet the overall direction remains positive. If labor supply improves and momentum continues, California is positioned to reach and surpass its pre-pandemic employment base in the near future.
