Newsom puts rosy spin on job report

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California, which has been mired in a pandemic recession for the last year, enjoyed some modest economic gains in March as the state’s unemployment rate dropped to 8.3%.

Gov. Gavin Newsom, not surprisingly, immediately trumpeted the job report as showing “the steady progress that we need to bring California back.” He faces a recall election later this year and the state of the economy, particularly employment, will be one of the major factors in determining his fate.

However, the governor’s rosy interpretation of the March numbers was an exercise in cherry-picking. A deeper dive into the monthly data paints a cloudier picture.

For instance, Newsom said “California added 119,600 jobs in March,” but that’s only the number of payroll jobs in 11 major industries. A more pertinent number is that total civilian employment, which includes the self-employed, increased by a much more modest 9,900.

March’s unemployment rate, 8.3%, is a slight decline from February, but in the larger context, remains very high — the nation’s third highest, in fact, behind Hawaii (9%) and New York (8.5%). Four states were tied for the lowest jobless rate, 2.9%.

Moreover, the official unemployment rate itself is misleading because it is merely the percentage of Californians in the labor force who were jobless and doesn’t take into account those who have dropped out of the labor force and are no longer seeking employment.

California’s labor force declined by 40,000 persons between February and March and is down a half-million from February 2020, the last month before Newsom declared a pandemic emergency and began ordering businesses to shut down in an effort to slow COVID-19 infection rates.

A more accurate comparison is that in March, 1.6 million fewer Californians were employed than had been working in February 2020. In March, California had regained 44% of the nonfarm jobs lost last year while the nation as a whole regained 62%.

Within California, counties in the San Francisco Bay Area have seen their unemployment rates drop to levels approaching pre-pandemic levels, such as 4.8% in Marin County. Jobless rates, as usual, are much higher in agricultural counties such as Imperial (15.7%) and Colusa (15.4%).

The situation in Los Angeles County, which has a quarter of the state’s population, is depressing the entire state. Its jobless rate of 10.9% is one of the highest of any major metropolitan area and reflects the huge job losses from shutdowns of hotels, restaurants and other service sectors.

The governor has promised to fully reopen the economy by June 15, but that assumes there is no resurgence of the virus. Moving toward full employment also assumes that parents who had dropped out of the job market to take care of their housebound children will return to work once schools have resumed classroom instruction.

School reopenings have been very slow, however, largely due to stalemates between school administrators and unions over salaries and working conditions.

Economists, including those in Newsom’s finance department, believe that fully returning to pre-pandemic levels of employment will take several years. Therefore, by recall election day next fall, the state probably will still have a relatively large number of workers who have been unable to find work or have given up and dropped out of the labor force.

Newsom, no doubt, will continue to put a positive spin on the employment numbers as the recall election draws nearer. He has a lot — his political career — riding on whether the economy fully reopens in June and, as he hopes, Californians feel positive vibes about their personal economic futures when ballots arrive in the mail.