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More Uncertainty Ahead for California’s Unemployed

Photo of a restaurant worker handing customer takeout in masks

Last week, 432,000 Californians applied for unemployment insurance. When the supplement granted in the CARES act expired at the end of July, unemployed workers lost $600 in weekly income—the typical unemployed Californian received $930 with the supplement, or $330 without it. Congress has yet to agree on if or how to extend this supplement, and while its loss directly impacts individuals, it may signal stress ahead for the state in the form of reduced consumer spending and missed housing payments.

Who are the workers affected by the sudden decline in income? As of mid-June, about 2.8 million Californians were receiving unemployment benefits. At 52%, just over half of beneficiaries are women, who make up less than half, or 49%, of the labor force. Workers who are Latino, Asian American, or African American are a larger share of recipients at 69%, but make up a smaller share, or 61%, of the labor force.

Nearly half of California’s unemployment beneficiaries are under age 34; very young workers, age 22–24, represent 10% of beneficiaries while they make up 6% of the labor force. Though this is not terribly surprising because workers in heavily affected sectors tend to be younger, it raises concerns about the long-term effects on young workers scarred by recession early in their career.

Congress took action to expand benefits right after COVID-19 hit, which means more unemployed workers are eligible now than in typical times. Nonetheless, some workers are still not eligible; in particular, unauthorized immigrants are not eligible for benefits but comprise 9% of California’s labor force. Moreover, the top sectors of employment for unauthorized immigrants in California—accommodation and food service along with arts, entertainment, and recreation—are the two sectors hit hardest by the pandemic. For this reason, the share of unemployment claimants likely understates the full unemployment picture in California, especially for Latinos.

A higher share of the labor force tends to receive unemployment benefits in southern and central California: the southernmost counties of Imperial, San Diego, and Riverside are above 16%, as are Kern, San Joaquin, and several counties in the Sierras. Across counties, between 8 and 28% of the labor force claimed unemployment as of May (the latest county-level data available, compared to the labor force total in February before the COVID downturn).  In two-thirds of counties, between 12% and 16% of their labor force receives unemployment benefits.  However, the Bay Area counties of Santa Clara, San Mateo, and Marin, with a higher propensity for remote work, have among the lowest share of workers receiving unemployment.

The change in unemployment benefits will force many families to confront how they will make ends meet. And for the state’s economy, continued shortfalls in resources could mean residents will spend less, incur more debt, and have trouble making rent and mortgage payments, all of which may hamper the state’s recovery. As rates of COVID transmission remain high across the state, regular business activity is unlikely to resume in the near term. Supporting California’s unemployed workers during this period is therefore an urgent policy need.

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