6,500 Jobs Added
California’s labor market expanded slowly in September, with total nonfarm employment in the state growing by just 6,500 positions over the month, according to an analysis released jointly by the UCR Center for Economic Forecasting & Development and Beacon Economics. August’s gains were revised up to 36,000 in the latest numbers, a 16,100 increase from the preliminary estimate of 19,900. These modest additions highlight the fragile nature of the state’s current economic expansion, where progress is being made but at a slower pace than earlier in the year. The upward revision for August underscores how labor market data is often adjusted as more information becomes available, yet the contrast between a strong August and a weaker September shows that conditions remain uneven.
24,700 Fewer People Employed
While California added jobs at a healthy pace in 2021 and 2022, as of September 2022, the state’s economy had not yet recovered all the jobs that were lost during the onset of the pandemic. There are still 24,700 fewer people employed in California compared to pre-pandemic February 2020. Overall, total nonfarm employment in the state has contracted 0.1% since that time compared to a 0.3% increase nationally. By contrast, the nation as a whole has managed to not only recover its lost jobs but expand employment slightly above its pre-pandemic level. California’s payrolls increased by 4.2% from September 2021 to September 2022, outpacing the 3.0% increase nationally over the same period. This indicates that although the state has been behind in its overall recovery, the past year has seen relatively strong momentum, with California businesses hiring at a faster clip than those across the country.
The driving factor behind California’s slower recovery is the state’s chronic labor market shortage. California’s labor supply fell by 57,700 in September alone, and since February 2020, the state’s labor force has fallen by 246,000 workers, a 1.3% decline. This ongoing shortage makes it harder for businesses to expand and fill open positions, slowing down the overall recovery. The data illustrates a mismatch between labor demand and labor supply: while employers are looking for workers, many individuals are either leaving the labor force or not returning in the same numbers seen before the pandemic.
3.9% Unemployment Rate
“This is a weaker month than we’ve come to expect this year, with a surprising drop in the state’s labor force,” said Taner Osman, Research Manager at the Center for Economic Forecasting and Beacon Economics. “This suggests that employers will continue to struggle to find workers this year.” His remarks capture the dual challenge facing the state: even as job creation continues, the pool of available workers is shrinking, putting strain on employers and limiting growth.
California’s unemployment rate dropped to 3.9% in September, a 0.2 percentage-point decrease from the previous month. This matches the lowest level for the series on record, which dates back to 1976. However, California’s unemployment rate remains elevated relative to the 3.5% rate in the United States overall. The record-low rate indicates that many Californians who want jobs are able to find them, but the higher level compared to the national average reveals persistent structural challenges. These include regional disparities, cost-of-living pressures, and the fact that certain industries in California were disproportionately impacted by the pandemic. Taken together, the data paints a picture of an economy that is moving forward, but one where recovery is incomplete and employers continue to navigate a very tight labor market.
