In July, California’s Jobless Rate Drops To A New Low

As companies in the nation’s most populous state continued to confound expectations by adding 84,800 new positions in July, the state’s unemployment rate fell to 3.9%, the lowest level since 1976.

Record-high inflation coupled with a cool-down in the property market has spurred predictions of an economic downturn as consumers react to high prices for items from groceries to gasoline.

The state of California has had month-over-month employment growth in 17 of the last 18 months, according to data issued by the Employment Development Department on Friday, suggesting that the state’s labor market has been relatively unaffected by the aforementioned problems.


Nationwide, unemployment rates declined in 14 states in July, climbed in three states, and kept the same in 33 states, according to the U.S. Bureau of Labor Statistics. The Democratic governor of California, Gavin Newsom, has been at odds with the Republican governors of two other states where the unemployment rate is higher than in California: Florida and Alabama.

In July, hiring increased in ten of California’s eleven major economic sectors, with the computer systems design, advertising, security services, and healthcare industries seeing the largest increases. While California makes up 11.7% of the nation’s civilian labor force, the state accounted for 16.1% of all new employment in the U.S. last month.

Despite a decrease in job postings and a slowdown in sales of single-family homes (a major contributor to California’s economy), the state added jobs in July, as reported by the California Association of Realtors (CAR). Sales of single-family homes were down 14.4% from June and 31.1% from July of last year. The dip in home sales experienced across the country in July was mirrored in California’s housing market.

The unexpected growth in California’s job market was described as “surprising” by Michael Bernick, a former director of the state’s Employment Development Department. As the saying goes, “it goes against all the other economic indications.”

California lost more than 2.7 million jobs in only two months at the start of the epidemic in 2020, when Newsom issued the nation’s first statewide stay-at-home order that caused many businesses to close.

The state of California has finally recovered most of its lost employment, but it took more than two years to do so. Since the state added jobs in the month of July, it has effectively restored 97.3 percent of the jobs lost during the pandemic.

The huge number of new jobs added in July is largely responsible for the decrease in the unemployment rate seen in that month. The decrease in the state’s labor force can also be attributed to the 23,400 people who gave up seeking for work in July. Some industries are continuing to suffer a labor shortage, notably in restaurants and hotels, according to Sung Won Sohn, an economics professor at Loyola Marymount University.

Because of the rising cost of living, he predicts that the labor force will grow in the future. “We are already seeing so-called gig employment rising since some people are holding two or three jobs. People will look for jobs because they are afraid of the next recession, assuming we aren’t already in one.

Bernick, now an attorney with the Duane Morris law firm who carefully watches California’s job market, said he feels the state is still being propped up by billions of dollars from federal stimulus spending and the state’s budget surplus. The newly enacted Inflation Reduction Act in Congress will send more money to the state, cutting certain prescription drug costs while helping millions pay their monthly health insurance premiums.

He predicted that the situation would change soon.

On Friday, Newsom boasted about California’s low unemployment rate and how the state’s budget contains $9.5 billion in refunds to almost 23 million people.

As we continue to lead the nation’s economic recovery, we have historic reserves and are putting money back in people’s pockets,” Newsom stated in a press release.

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