Facing major disruptions across nearly all economic sectors because of the coronavirus, California officials on Friday sent the public a postcard from the state’s rosier past: The January jobs report.
The report shows a roaring California economy that added 21,400 new jobs, building on the state’s remarkable 10-year run of continuous economic expansion.
But context from the past two days — including Gov. Gavin Newsom’s executive order that has closed schools, conferences and Disney Land — demands a different interpretation.
“California’s monthly job numbers this morning are from a California economy that now seems like the distant past — January 2020,” wrote Michael Bernick, a former director of the California Employment Development Department who is now special counsel with the Philadelphia-based law firm Duane Morris.
The report showed that California maintained its record-low unemployment rate of 3.9%, continuing an employment surge that began in February 2010. Since then, California has gained more than 3.3 million jobs, accounting for 15% of the nation’s job gains over that period, according to the California Employment Development Department.
The biggest gains came in the education and health services and leisure and hospitality sectors. But the widespread recent closures because of the coronavirus, plus directives from the big tech companies for employees to work from home, are already taking a toll on the state’s hospitality industry.
“This week, really for the first time, we’re beginning to see significant layoffs,” Bernick said. “Previous public health emergencies in California have brought shifts, but nothing at all like what we’re seeing just in the past two weeks.”
California’s economy was already slowing in recent months. The state was still adding new jobs each month, but the total number of new jobs was shrinking because of labor shortages, said Sung Won Sohn, professor of economics at Loyola Marymount University.
Just five months ago, Sohn and other economists were marveling at how California’s unemployment rate dipped below 2% in San Francisco and some of its neighboring counties, a feat many did not think was possible.
“We are either in a recession now or will be in one shortly,” Sohn said.
California’s January job numbers are usually not announced until March because that’s when state officials start using a larger sample of employers to test the accuracy of the numbers. The February numbers should be released later this month.
Bernick says he doesn’t expect the coronavirus impact to show up in the monthly job reports until at least April.
Not all sectors will be hurt. Some, including health care, might need more workers.
Larry Mendonca, Newsom’s chief economic and business adviser, and California Labor Secretary Julie A. Su said in a joint statement they are monitoring the economic impacts of the coronavirus very closely, “as are all Californians, the nation, and the world.”
Newsom, a Democrat, on Thursday said the state was prepared for an economic slowdown, noting officials collected more taxes in December and January than they had expected.
“That said, the economic disruption is profound and it is real and clearly it is going to have an impact on our state treasury,” Newsom said.