A mounting shortage of workers is the main culprit behind the painstakingly slow job recovery playing out in California’s five major metropolitan regions, according to a recent analysis released by Los Angeles-based Beacon Economics.

It is noteworthy that — unlike metro areas — California’s inland regions now boast more jobs than before the COVID-19 recession (the number of locals employed at any given moment). For context, most inland regions’ economies were driving job growth before the COVID-19 pandemic crisis upended 2020.

However, none of California’s five large coastal metros have even reached their pre-pandemic levels of employment.

“But they are close,” the analysis states. “Each (urban area) is struggling with a tight labor supply, limiting the ability of local employers to hire the workers they need. Demand for workers is high, but these regions don’t have sufficient labor supply, and that’s going to continue constraining near-term job growth.”

From best performing to worst: San Diego County has recovered 99.5 percent of all jobs lost during the COVID-19 pandemic recession in spring of 2020. The Silicon Valley/Bay Area region has recovered 98.1 percent; Los Angeles and the East Bay/Oakland areas have both recovered 97.3 percent of jobs; and San Francisco trails with a recovery rate of 96.6 percent.

With the exception of San Diego, all of the state's metro regions are trailing California as a whole and the nation too.

Going forward, Beacon Economics forecasts each metro region to reach or surpass pre-pandemic job levels in the first-half of 2023 (and San Diego by the end of 2022).

“Unemployment rates are so low in nearly all of California’s largest metro areas, they can’t fall much further,” the analysis states. “These conditions are reflected in the inability to hire enough workers.”

From mid-2020 to mid-2022, the state’s labor force — the pool of individuals willing and able to work — has shrunk due to public health restrictions and concerns, policy and employer decisions, the volatile business environment, federal and state financial relief, and worker fluidity in a tight labor market. State job markets may have been even more robust by 2022 if COVID-19 never impacted the economy and policy decisions, assuming no other negative financial or economic events transpired.

Some of these labor market issues were discussed during the online Your Economy—Your Credit Union Conference this week (recording is available), hosted each year by the California and Nevada Credit Union Leagues.

The following are the latest year-over-year and monthly May figures recently released by the California Employment Development Department (EDD) and the Nevada Employment Training and Rehabilitation Department (DETR):

California’s May 2022 Employment Numbers
The California report shows the state’s unemployment rate fell to 4.3 percent in May 2022 (from a “readjusted” 4.6 percent in April 2022). After 25 months, this unemployment rate is down from its 16.1 percent peak in May 2020 when the COVID-19 pandemic recession hit the economy.

California employers added 42,900 non-farm monthly payroll jobs in May:

• California’s labor force (pool of individuals willing and able to work) shot up by 390,800 in May 2022 from a year ago and now sits at more than 19.3 million. However, it still remains approximately -90,000 below its pre-pandemic level in February 2020 of nearly 19.4 million.
• California has now regained more than 93 percent (2.56 million jobs) of the approximate 2.76 million non-farm payroll jobs lost during March and April of 2020 when the COVID-19 pandemic recession transpired.
• The total number of Californians holding jobs (non-farm payroll, agriculture related, independent contractor/freelancers) was nearly 18.47 million, which is up nearly 1.05 million from the combined total employment this time last year.
• Non-farm company payroll jobs now total nearly 17.5 million. These jobs (a subset of “total” jobs) increased by 869,300 (5.2 percent) from May 2021 to May 2022 compared to a U.S. annual gain of 4.5 percent. While the state’s year-over-year pace of job growth has more than caught up to the nation’s, California’s outstanding total number of jobs/employment is still playing catch-up in relative comparison to the United States.
• Eight of California’s 11 industry sectors gained jobs, with information (+8,800) posting the largest increase. The sector’s growth was due in part to increases in the motion picture and sound recording industries.
• Leisure and hospitality (+8,800) showed strong growth yet again and has now gained 816,900 jobs since April 2020 after losing nearly 1 million jobs due to the COVID-19 pandemic.
• Trade, transportation, and utilities suffered the largest month-over job losses (-3,700) due to reductions in retail trade (specifically general merchandise stores).
  
  

Nevada’s May 2022 Employment Numbers
The Nevada report shows employment in the state is up 2,600 jobs in May 2022 and 96,300 jobs from a year ago (a 7.1 percent annual increase).

Nevada’s labor market gap since the COVID-19 recession more two years ago has almost nearly closed, now down only about -2,200 jobs. It’s an increasingly positive trend that slowly continues as individuals re-enter (and also leave) the labor force (pool of people saying they are willing and able to work).

Nevada’s May 2022 unemployment rate stands at 4.9 percent, unchanged from a “readjusted” 5 percent in April — but still up from 3.7 percent in February of 2020 (pre-pandemic economy). At one point during the COVID-19 pandemic in 2020, the state’s unemployment rate hit 28.2 percent.

Total non-farm employment (payroll and independent jobs combined) currently stands at 1.45 million individuals employed/jobs filled — approximately 99.8 percent recovered from the COVID-19 pandemic employment fallout of 2020.

Overall, Nevada employers added jobs for the 25th consecutive month in May 2022:

• Las Vegas-area employment increased by 0.5 percent from April to May 2022 (month before) and by 86,100 jobs (8.9 percent) since May 2021.
• Reno/Sparks-area employment increased by 0.3 percent from April to May 2022 (month before) and by 10,300 jobs (4.2 percent) since May 2021.
• Carson City-area employment decreased by -0.6 percent from April to May 2022 (month before), but increased by 1,100 jobs (3.6 percent) since May 2021.