Hiring pace has slowed in California

While California now has more jobs than in its pre-pandemic days, the statewide hiring pace has slowed dramatically.

My trusty spreadsheet analyzed recently revised state job counts from the Bureau of Labor Statistics, comparing job creation in the pandemic era (three years ending in December 2022) versus the hiring boom of the pre-coronavirus times (the three years that ended in December 2019).

Yes, California has more than replaced the jobs it lost in the early days of the pandemic.

The state had 300,600 more workers at year-end 2022 versus three years earlier. That was the third-largest job gain among the states in the period.

But that’s a sharp cooling of hiring from the previous three years, when California was No. 1 with 938,700 added workers.

So the 638,100 drop in hiring pace — one could call it a loss of job potential — was the biggest nationwide.

Details

Consider the huge switch in the hiring pace — and not just in California.

The pandemic upended the economy in many ways, nationally and statewide. But there’s a wide difference between employment winners and losers on the state level.

Texas was the top state for adding jobs in the pandemic era, up 815,900 since 2019. Then came Florida at 573,300. After No. 3 California was North Carolina at 249,300 and Georgia at 190,000.

By the way, there are 21 states that were job losers in the pandemic era, topped by New York’s 149,000 decline and then Michigan, off 69,100; Maryland, off 52,000; Louisiana, down 51,100; and Ohio, down 50,200.

But in many places, this hiring isn’t like 2016-19, when California was the top job creator.

No. 2 was Texas at 824,900, Florida at 557,600, New York at 317,800 and Arizona at 247,600. Just two states were 2016-19 job losers: Alaska and Connecticut, both off 2,700.

But by projecting what would have occurred if 2016-19’s hiring pace continued over the past three years, you see California is 638,100 workers short of its jobpotential benchmark.

Next came New York, short 466,800 jobs; then Pennsylvania, off 195,500; Michigan, off 177,400; and Ohio, off 155,000.

Only seven states created more jobs in the pandemic era versus 2016-19’s hiring pace: North Carolina at 23,000; then Florida at 15,700; Mississippi at 15,200; Montana at 11,600; Arkansas at 9,600; Tennessee at 7,300; and South Dakota at 6,500.

Caveat

Yes, California is the nation’s

largest job market, so it often is at the extremes of many employment rankings — good or bad.

And using percentage change to see the relative scale of employment growth, California still fared poorly on the job-potential yardstick.

The spreadsheet says California employment ended 2022 at 96.6% of what it could have been, assuming 2016-19 hiring patterns. That was the 15th-worst performance for job potential among the states.

It could be worse. You could be looking for work in Hawaii with only 93.8% of its job potential. Next came D.C. at 94.2%, then New York at 95.4%, New Mexico at 95.4% and Oregon at 95.6%.

The best job markets, by this measurement, were No. 1 Montana at 102.3% of its potential employment, South Dakota at 101.4%, Mississippi at 101.3%, Arkansas at 100.7% and North Carolina at 100.5%.

Bottom line

Let’s forget all the debate about lockdowns/reopenings/ whatever and focus on the state’s job potential.

Now assuming that California could have continued to add workers as it did in red-hot 2016-19 might be a slightly unfair benchmark. That’s because one of the current challenges for California employers is a shortage of workers to hire — a likely workplace hindrance, pandemic or not.

Basically, the state has run out of job candidates. Remember the state’s population growth, one key to the supply of workers, was dwindling even before we were introduced to the coronavirus.

California’s cooler hiring pace — or lower job potential — reflects the increased competition for workers it faces from other states.