Are state’s pandemic job losses overstated?
Let me offer a sliver of good economic news found deep inside a very dark trend: California job losses early in the pandemic may have been smaller than what was initially reported.
The U.S. Bureau of Labor Statistics’ quarterly survey of employment and wages shows California lost an almost unthinkable 10.2% of its jobs in the year ended in 2020’s second quarter. While it’s hard to say anything other than “ugh,” the monthly state data for the same period showed statewide employment was down 12.2%. That gap translates to roughly a 300,000-worker difference in the state’s 16-million job market
How does this gap occur? Well, the monthly jobs stats most folks frequently track is derived from a poll of 700,000 businesses nationwide. But the numbers from the quarterly census come from an analysis of filings made by 10 millionplus U.S. employers for unemployment insurance purposes. The result is that the quarterly census is usually a more accurate employment snapshot — with a few caveats.
For example, it takes more time to produce, which is why we’re talking about spring data when we’ve already seen October’s monthly survey.
This quarterly census is the statistical backbone to annual revisions made to monthly job figures, offering another reason census numbers are typically more accurate than the monthly reports. Those retooled figures will come out in early 2021.
It’s not just California job losses that were possibly overstated in a year when polling has been difficult. The census also shows the nation lost 9.4% of its jobs in the year ended this past spring while the monthly job reports show U.S. employment was down 11.2%.
Odd average
One of the curious paradoxes of this quarterly census is how the pandemic slashed low-paying jobs and increased weekly average wages. This California pay metric jumped at a 10.9% annual rate in the spring to $1,428 — the 12th-highest increase nationally.
Before you suggest this pay trend is implausible — “C’mon, Jon, what boss gave out 10.9% raises?” —
remember that averages can be swayed by significant activity at the extremes of any dataset. The coronavirus leveled a devastating blow to workers in low-wage industries such as tourism, entertainment and restaurants. So the workers who remained employed — and their larger paychecks — pulled up this averagewage benchmark.
By the way, this happened nationally, too, as U.S. weekly wages rose 8.6% to $1,188.
And when these pay trends are combined with hiring patterns, we get a fascinating peek at how varied the economic damage was on a regional basis
My trusty spreadsheet says California bosses cut total wages paid — salary multiplied by workers — by 0.4% in the year ended in June. No drop is good, but the state easily bested the nation’s 1.6% drop.
That’s largely the result of the state’s wellpaid, tech-savvy workforce quickly adapting to remote employment. This modest pay dip probably helps explain why a quick but mild economic recovery began in the summer: Plenty of folks were gainfully employed and were ready to spend once business limitations were partially lifted. Also, let’s not forget generous unemployment benefits.
Divergent damage
The damage to state economies varied wildly this spring, using this “total wages paid” as a yardstick. Note that California’s slight dip was the 17th best performance nationally.
Two states with giant tourism trades — Hawaii (off 10.5%) and Nevada (down 7.7%) — were at the bottom of the rankings. The business of attracting people had all but shut down.
A pair of energy-heavy economies — North Dakota (down 6.7%) and Wyoming (down 6.3%) — were the next worst performers. With oil prices crashing, drilling work slowed.
Then came New York — off 5.1%. The New York City area was slammed this spring by the coronavirus with overrun hospitals and scores of deaths.
At the brighter end of the economic spectrum, Utah had the biggest total pay gain, up 5.8%; followed by Idaho at 5.1%; Montana at 3.8%; South Dakota at 2.6%; and Arizona at 2.4%.
Perhaps that springtime success lulled fastgrowing Western states into a false sense of confidence they could avoid deep pandemic pain. All have since suffered dramatic surges in coronavirus cases, hospitalizations and deaths.