More Californians stop seeking work as virus surges

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More than 327,000 people stopped looking for work in California last month, a worrisome trend that has clouded the state’s economic picture during its worst outbreak of the coronavirus.

California’s unemployment rate dropped to 8.2% in November, falling for the sixth month in a row since reaching an all-time high of 16.4% in April and May. But the state only added 57,100 jobs in November, down from 145,500 gained in October.

Experts said the falling unemployment rate is mostly because so many people have stopped looking for work. Since November of last year, nearly 600,000 people have ended their search — more than half of them in November, according to data released Friday by the state Employment Development Department.

RELATED: US jobless claims rise to 885,000 amid resurgence of coronavirus

The numbers likely represent parents staying home to care for children, people going back to school to learn new skills, and others frustrated with the lack of available jobs, said Sung Won Sohn, a professor of finance and economics at Loyola Marymount University.

"I would rather see an unemployment rate rising with an increase in labor force, because that tells you people have hopes of getting jobs," he said.

Sohn said the latest jobs report is likely the "calm before the storm" because it does not include impacts from Gov. Gavin Newsom’s recent coronavirus decisions, including imposing a curfew and ordering businesses in most of the state to either close or drastically reduce the number of customers they allow inside at one time. Newsom announced those decisions in mid-November, after the state surveyed workers for the jobs report.

While the state accounts for 11% of the nation’s workforce, California had more than 21% of all unemployment benefits filed nationally last week. Job postings have fallen 23.4% since January, and small business revenue is down 28.3%, according to data compiled by Opportunity Insights at Harvard University.

The pain has not been evenly distributed. The unemployment rate for people in California who earn more than $60,000 a year has fallen 0.5% since January, while the rate for people earning less than $27,000 a year has fallen 26.8%, according to Opportunity Insights. That divide is reflected in the state’s tax collections, which rely heavily on wealthy earners.

Through the end of November, California collected $13.7 billion more in taxes than it had predicted — largely because higher-income earners still have their jobs and are paying taxes. The unexpected growth means state lawmakers could have as much as $26 billion in one-time money to spend next year, according to the nonpartisan Legislative Analyst’s Office, money that could reverse some previous budget cuts or help businesses and workers recover.

"The main divide of the pandemic now is not by occupations or sectors, as much as by those largely new class workers who can work remotely," said Michael Bernick, an attorney with the Duane Morris law firm and a former director of the California Employment Development Department. "That’s the sharp divide, and that has only increased."

Nationally, unemployment rates fell in 25 states and the District of Columbia while rising in seven states and staying flat in 18, according to data released Friday by the U.S. Bureau of Labor Statistics. California added the second-most jobs of any state in November, trailing only Texas and its 61,000 new jobs.

But since November 2019, California has lost more than 1.3 million jobs — the most of any state.

All but two California industry sectors added jobs in November, led by 27,800 new jobs in leisure and hospitality, which includes restaurants and hotels. Those numbers are expected to decline in December following the recent stay-at-home order, which bans indoor and outdoor dining at restaurants and prevents hotels from booking out-of-state guests.

Businesses have pinned their recovery hopes on a COVID-19 vaccine, and Congress is debating a $900 billion relief package that would include $300 billion for small businesses. The bill would also extend an extra $300-per-week supplement to unemployment benefits, which is set to expire next week.

"We call on the federal government to do its part to help us recover," California Labor Secretary Julie Su and Governor’s Office of Business and Economic Development director Dee Dee Myers said in a joint statement.

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