State Unemployment Rate Jumps To Highest Point Since 2016; Labor Force Declines
As expected, the latest numbers from the California EDD show that the COVID-19 pandemic and halt in economic activity is having a significantly negative impact on employment and businesses in California, according to analysis released jointly by Beacon Economics and the UCR School of Business Center for Economic Forecasting and Development.
The state’s total nonfarm payrolls declined by 99,500 in March, the largest month-to-month decline since the depths of the ‘Great Recession’. It’s also important to note that the data are an employment count as of the 12th of the month, which preceded the stay-at-home order issued by Governor Gavin Newsom. As a result, these numbers are likely painting a rosier picture of the state’s actual economic conditions during the month of March.
“While the current report paints a bleak enough picture, unfortunately, things are likely even worse, and have very likely become much worse in April,” said Taner Osman, research manager at the UCR Center for Forecasting and Beacon Economics. “Just how quickly employment growth returns will depend on when stay-at-home orders are lifted, and when the state’s residents feel comfortable resuming their normal activities… but at this point, we can’t put a timeline on when this will happen.”
Despite the steep decline in California’s nonfarm payrolls in March, the state still increased payrolls by 150,400 jobs or 0.9% over the last year. This attests to the fact that California’s economy entered the crisis from a position of strength. However, this strength will be tested over the coming months as the economy nears recession.
The state’s unemployment rate jumped considerably in March, increasing by 1.4 percentage points to 5.3%. This marks California’s highest unemployment rate since August 2016. Moreover, this increase came in the face of a 251,800 decline in the state’s labor force. California’s labor force has now declined by 0.5% over the last year. Household employment also fell considerably, falling by 512,600 during the month and by 1.6% from March 2019 to March 2020.