Two years into a pandemic: California’s labor market in the times of COVID-19

Enrique Lopezlira

Two years ago, the COVID-19 pandemic upended California’s labor market. Unemployment surged and wages plummeted, as establishments throughout the state shut down in order to slow the spread of the disease. Today, the state’s labor market is much improved and it continues to recover. However, not all workers have shared equally in this improvement and recovery. In particular, those groups of workers who were most affected at the outset of the pandemic continue to struggle.

Since soon after the onset of the pandemic, the UC Berkeley Labor Center has been compiling a chartbook of the most recent and comprehensive data concerning the effects of the COVID-19 pandemic on California’s labor market. This blog post highlights some of the findings from our just-released update, which explores labor market trends in California over the past two historic years.

California had extraordinary job loss, and hasn’t yet fully recovered

The state suffered significant job losses from the pandemic, and over the past two years recovery of these jobs has been swift. The state has recovered about 98% of jobs lost, but employment is still below its pre-pandemic level and pre-pandemic trend.

Throughout the pandemic, some sectors of the economy were affected significantly more than others. Low-wage industries were hardest hit, and many continue to struggle to regain lost jobs. Food services and drinking establishments have only recovered 87% of lost jobs, and the accommodation industry has only recovered about half of the jobs lost.

Industries where social distancing was not possible were also impacted especially severely. These establishments have not yet fully recovered–unsurprisingly given the ongoing threat of COVID. One quarter of the jobs lost in the arts, entertainment and recreation industry have not been recovered; as have a third of those in government, including schools.

Job losses affected the full gamut of workers, but some groups were affected more than others

Job losses from the pandemic were widespread, but workers with less formal education and workers of color were more severely impacted. Today, these same workers still struggle to regain jobs.

Educational attainment contributed to large differences in the severity of the pandemic’s impact across the workforce. Workers with a high school diploma or less experienced a much higher increase in unemployment at the peak of the pandemic. While unemployment has decreased at all education levels, recovery has been slower for workers with the least education.

Black and Latino workers already faced higher unemployment rates prior to COVID-19, and this gap widened significantly at the peak of the pandemic. Today, the unemployment rate for Black workers is still more than 1.5 times that of non-Latino White workers, while the unemployment rate for Latino workers is back to its pre-pandemic level.

As the pandemic began, large numbers of Californians left the workforce, and the share of the population either working or looking for work (i.e., the labor force participation rate) in California decreased substantially compared to the US as a whole. But workers returned throughout 2021, and today this rate is higher for California than for the US overall.

However, some groups of workers have still not fully returned to the workforce. There are about 2% fewer young workers (16-24 years old) in the workforce today than before the pandemic. This is not an insignificant number, and it is probably contributing to some of the current challenges for employers looking to fill jobs.

Unemployment is not the only story

A swift economic recovery does not mean everyone is doing well. Many workers, especially workers of color and low-wage workers, continue to experience a high level of economic insecurity. The pandemic has exposed, as well as exacerbated, deep economic and racial inequalities that have long existed.

Over half of households earning less than $50,000 per year, and two out of five Black and Latino households, report difficulty paying usual household expenses as a result of the pandemic. Similarly, one in five Black households, and one in ten Latino households, report not getting enough to eat in the past week. And, nearly one in five Black and Latino households, and one in ten Asian households, report that they are behind on rent payments.

Two years after the onset of the pandemic, the state’s labor market is strong. There are more job openings per worker, and real median wages are higher, than before the pandemic.
Given these positive developments, we have many reasons to be optimistic moving forward. As we continue to rebuild and reimagine the economy following the pandemic, we must ensure that the most vulnerable and marginalized workers also benefit from the economic recovery.

View the full chartbook.