Job losses jolt Bay Area, state in January

Workforce decline in 2020 worse than first projected, labor agency report finds

“The recovery completely stalled in November, December and January as the virus surged. I wouldn’t classify it as a double-dip recession, but it is close.”

— Jeffrey Michael, director of the Stockton-based Center for Business and Policy Research at the University of the Pacific

Job losses continued to jolt the Bay Area and California during January, according to a new report Friday that also revealed that the coronavirus dealt a harsher economic blow to the region and state than first estimated.

The Bay Area lost 4,800 jobs during January, with the South Bay and the San Francisco-San Mateo region suffering the biggest declines. The East Bay and Marin County were bright spots with sturdy job gains, according to the report from the state Employment

Development Department. Overall, California lost 69,900 jobs.

“The recovery completely stalled in November, December and January as the virus surged,” said Jeffrey Michael, director of the Stockton-based Center for Business and Policy Research at the University of the Pacific. “I wouldn’t classify it as a double-dip recession, but it is close.”

In addition, total job losses in 2020 turned out to be worse than the EDD originally estimated, which suggests an employment rebound remains elusive.

“This is pretty dire,” said Patrick Kallerman, research director with the Bay Area Council’s Economic Institute. “This is pretty serious stuff. The Bay Area is down. The state is down.”

The state labor agency initially had projected that California lost 1.41 million jobs during 2020. But in its annual revision released Friday, the EDD said the state shed 1.62 million jobs, 9.2%

of the positions the state had in February 2020, back when California set a record of 17.6 million nonfarm payroll jobs.

“The latest job report is a sobering read even for the Bay Area and shows how much labor market repair the region still needs to see to get back to any semblance of normal,” said Scott Anderson, chief economist with San Franciscobased Bank of the West.

The revised picture for the Bay Area job market is similarly grim. The EDD’s first estimate placed 2020

losses in the Bay Area at 360,800. The new number: 427,500 positions.

“I still think we have turned the corner, just a bigger hill to climb back,” said Steve Levy, director of the Palo Alto-based Center for Continuing Study of the California Economy.

However, putting a damper on the optimism, 2021 is off to a dismal start for the Bay Area.

In January, the South Bay lost 1,800 jobs while the San Francisco-San Mateo region shed 4,800 positions. Sonoma County suffered a loss of 2,100 jobs in January.

But the East Bay posted a gain of 2,300 jobs in January, while Marin County added 2,600 positions. All

of the numbers were adjusted for seasonal volatility.

The hotel and restaurant sector remained weak throughout the Bay Area at the start of the year, shedding 15,000 jobs, according to seasonally adjusted figures provided to this news organization by Beacon Economics and UC Riverside’s Center for Economic Forecasting. That included 6,700 jobs in the San Francisco-San Mateo region, 2,700 in the South Bay, 2,300 in the East Bay and 2,600 in Sonoma County.

Tech companies in January chopped 1,800 jobs in the San Francisco-San Mateo area but added 1,200 in the South Bay and 500 in

the East Bay.

The construction industry also offered a mixed picture in the region, adding 2,600 jobs in the East Bay but dropping 1,300 jobs in the South Bay.

“How quickly we recover jobs will depend on the pace of (business) reopenings, vaccinations and school openings,” said Michael Bernick, an employment attorney with law firm Duane Morris and a former EDD director.

Some economists hold out hope that the job market could rebound significantly this year as more businesses reopen.

“Things are already picking up,” said University of the Pacific’s Michael. “The

second half of 2021 should see very strong growth.”

In the only encouraging part of the jobs report, the California unemployment rate improved in January to 9%, down from 9.3% in December. In stark contrast, however, the California jobless rate was a record-low 3.9% in February 2020.

“It would take a hiring surge of unprecedented proportions” to restore the California labor market to its typical growth trends, said Taner Osman, research manager at Beacon Economics and the UC Riverside center. “In fact, we’ll do well to just recover all the jobs lost in 2020 this year.”

The three major urban centers in the Bay Area, the

South Bay, the East Bay and the San Francisco-San Mateo region, all must climb economic mountains simply to return to the record heights of February 2020, economists said.

During 2020, the South Bay lost 101,100 jobs, the East Bay shed 115,600 jobs, while the San FranciscoSan Mateo region was the worst off, with a loss of 151,800 positions, this news organization’s analysis of the EDD figures shows.

“These are severe losses for the Bay Area,” Kallerman said. “We are in a much worse place than we thought we were.”