Labor Force Turnover Continues Impacting State Job Markets

California and Nevada’s respective unemployment rates stood at 4.1 and 5.2 percent in December as the Golden State’s labor force (individuals willing and able to work) remains approximately -313,000 smaller than before the COVID-19 pandemic. In contrast, the neighboring Silver State’s job market is firmly entrenched in new-record territory.

“California’s struggle to add available workers continues,” said Taner Osman, research manager at the UC Riverside Center for Economic Forecasting and Development, as well as Beacon Economics. “This lack of workers made it difficult for some employers to bring on the additional staff they typically recruit during the holiday season.”

What’s more: The pace of monthly job growth was slowing down during the final months of 2022, revised numbers reveal. “During 2022, California’s employers added jobs more quickly than the national economy,” Osman said. “But labor force shortages in California dampened job growth toward the end of the year and will continue to be a drag on job growth in 2023.”

The following are the latest year-over-year and month-over December trends published by the California Employment Development Department (EDD) and the Nevada Employment Training and Rehabilitation Department (DETR) — released on Jan. 20:

California’s December 2022 Employment Numbers
The California report shows the state’s unemployment rate remained at 4.1 percent in December 2022 (from a “readjusted” 4.1 percent in November 2022). For context, the state’s unemployment rate hit 16.1 percent at one point during the COVID-19 pandemic in 2020.

California employers added 16,200 non-farm monthly payroll jobs in December 2022:

• California’s labor force (pool of individuals willing and able to work) increased by 276,800 in December 2022 from one year before, but it declined by -26,800 workers from the month before and now sits at just over 19.2 million. This means it remains approximately -313,000 below its pre-pandemic level in February 2020 of more than 19.5 million.
• The total number of Californians holding jobs (non-farm payroll, agriculture related, independent contractor/freelancers) was more than 18.4 million, which is up 589,500 from the combined total employment level this time last year.
• Non-farm company payroll jobs now total 17.76 million. These jobs (a subset of “total” jobs) increased by 621,400 (3.6 percent) from December 2021 to December 2022 compared to a U.S. annual gain of 3 percent.
• Nine of California’s 11 industry sectors gained jobs in December, with education and health services (8,200) showing the largest month-over gains thanks to strength in home health care services, residential care facilities, and individual and family services.
• Construction (7,500) also enjoyed a strong month-over gain thanks, in part, to good gains in specialty trade contractors.
• Trade, transportation, and utilities (-11,100) suffered from losses in merchant wholesalers of both durable and non-durable goods, as well as with reductions in retail trade, including health and personal care stores and office supplies, stationary, and gift stores.
• In late 2022, California (for the first time since the COVID-19 pandemic) finally and fully regained the 2.76 million non-farm payroll jobs lost during March and April of 2020 when the COVID-19 pandemic recession transpired (gaining nearly 2.8 million jobs from April 2020 to October 2022).

Nevada’s December 2022 Employment Numbers
The Nevada report shows employment in the state was down -1,300 jobs in December 2022 (month-over change) versus being up 53,400 jobs from a year ago (a 3.8 percent annual increase).

Total non-farm employment (payroll and independent-contract jobs combined) remained near a record high of nearly 1.48 million individuals. When it comes to payroll employment specifically, June 2022 was the first month Nevada’s job market finally closed the gap inflicted since the COVID-19 recession in 2020.

Nevada’s December 2022 unemployment rate stood at 5.2 percent (from a “readjusted” 4.9 percent in November), which is up from 3.7 percent in February of 2020 (pre-pandemic economy). For context, the state’s unemployment rate hit 28.2 percent at one point during the COVID-19 pandemic in 2020.

At the local/regional level, Nevada employers added the following jobs in December 2022:

• Las Vegas-area employment decreased -0.1 percent (-1,600 jobs) in December 2022 from the month before, but it increased by 44,700 jobs (4.3 percent) since December 2021.
• Reno/Sparks-area employment increased 0.2 percent (500 jobs) in December 2022 from the month before and by 9,400 jobs (3.8 percent) since December 2021.
• Carson City-area employment increased 0.6 percent (200 jobs) in December 2022 from the month before and by 400 jobs (1.3 percent) since December 2021.
• At 5.2 percent, Nevada’s state unemployment rate is likely to remain one of the highest rates in the nation going into 2023. However, what also affects this figure is the state’s labor force participation rate (individuals willing and able to work), which is increasing and suggests workers continue to re-enter the labor force.

Ongoing Labor Market Perspective
These California and Nevada job market recoveries don’t account for lost ground and opportunity costs coming out of the COVID-19 pandemic.

Specifically in California, the state’s labor force — the pool of individuals willing and able to work — shrunk drastically due to public health restrictions and concerns, policy and employer decisions, the volatile business environment, federal and state financial relief, and worker fluidity in a tight labor market.

Essentially, both California and Nevada job markets may have been even more robust by December 2022 if COVID-19 never impacted the economy and policy decisions, assuming no other negative financial or economic events transpired.