California’s economic recovery is expected to get another jolt as the state reopens on June 15. In April, more than 1.5 million Californians were unemployed—about half as many as were unemployed in the worst of the pandemic but still a large share (8.3%) of the workforce. Who remains unemployed and what are the prospects for their economic recovery?
So far this spring, unemployment in California has declined only slightly. Moreover, about half of unemployed residents have been unemployed for over six months; this is typically associated with much greater difficulty in regaining work. However, this recession is unique in that a large share of the unemployed (over 70%) expect to be recalled by their employer. Whether their expectations become reality should become clearer this summer as more of the economy reopens.
The last several recessions and recoveries tell us not to expect unemployment to recover as quickly as it spiked. Unfortunately, recovery is a much slower process, mediated by how long it takes businesses and workers to find each other. If businesses do recall laid-off workers this year, the matching process may be much quicker than in previous recessions. But if businesses have shuttered, need workers with different skills, or need fewer workers, reemployment will take time. And while there has been much speculation about whether more generous unemployment insurance has led to labor shortages, evidence suggests that it has not inhibited reemployment for most workers.
Encouragingly, the gender gap in unemployment that emerged last year has largely closed; both men and women have similar unemployment rates today. While women were more likely to work in jobs affected by the pandemic, unemployment has fallen faster for women remaining in the labor force than for men. Similarly, differences in unemployment across some age groups that emerged during the pandemic—which saw workers age 25–34 and those 65 and older experiencing higher unemployment—have mostly vanished.
However, lower-income workers, workers of color, and the youngest workers are still far more likely to be unemployed than the state average, even as workers in families making $100,000 or more have nearly recovered in terms of unemployment. While the unemployment rates for Black and Latino workers reflect some recovery in the past year, the gap across racial/ethnic groups is still higher than before the pandemic. Notably, long-term unemployment seems to be most common for Asians in California, though their overall likelihood of unemployment is much lower than other groups. Workers age 16–24 also have higher rates of unemployment—a trend that preceded the pandemic but was also exacerbated by it.
As the state reopens, there’s optimism for accelerating California’s economic recovery. That’s well-founded, but finding work and workers after a severe economic shock is not likely to be immediate for everyone. And reentry into the workforce will probably be more challenging for those hit hardest by the pandemic, including workers of color, younger workers, and lower-income workers. Some estimates suggest that it will be years before we return to pre-pandemic levels of employment. And material hardship is still widespread, with over 28% of California households reporting difficulty in paying for usual household expenses in early May (down from 35% last August).
State policymakers weighing budget choices now will need to carefully consider these short- and long-term challenges to an equitable economic recovery. Support for the sectors and workers most—and still—affected by COVID-19 is critical in the near term. Longer-term investments like high-quality job training and child care, and equitable access to higher education, are more costly but can build the resilience of Californians and our economy against future downturns.