California Sees Huge Spike in People Losing Their Jobs

California saw more than 47,360 individuals filing for jobless benefits last week, an uptick of 6,150 over the previous week, reinforcing a growing concern in the state’s labor market.

As businesses nationwide grapple with rising borrowing costs and tighter credit, leading to strain in sectors like technology and retail, California stands out as one of only two states with an increasing unemployment rate over the past year, according to economic data issued by the U.S. Bureau of Labor Statistics (BLS). The data suggests a weakening labor market compared to the rest of the country, where jobless rates remained flat or decreased.

Amid the state’s struggle with an unemployment rate of 5.1 percent, (second only to Nevada’s 5.3 percent) according to the BLS, the recent surge in jobless claims reflects a broader trend of layoffs across the state. The uptick is particularly significant considering the broader context of the national jobless claims that came in at 217,000, positioning California’s labor market trends within a national discussion on employment stability.

California’s Imperial County, which borders Baja California, has an unemployment rate of 18.7 percent, the state’s highest, according to the California Employment Development Department. Colusa County, located in the northern part of the state, has an unemployment rate of 11.4 percent. Los Angeles County’s rate is 5 percent, while the lowest unemployment rate in the state is 3.3 percent in the western county of San Mateo.

However, the figures may change in the coming months.

Massive Layoffs Coming

A deeper analysis of sector-specific layoffs reveals that key industries are bracing for impact. According to Warn Tracker, a website that monitors mass layoffs and plant closures though WARN notices, California has already seen notifications for 22,280 workers about upcoming layoffs. Importantly, a large portion of the layoffs are not immediate and are scheduled to begin from this month through May, meaning the number could rise as the year progresses.

In recent months, major players in the tech, retail and health care sectors have announced layoffs, signaling a broad-based shift in the state’s employment landscape. Companies like Sony Interactive Entertainment, Levi Strauss & Co. and Google have issued WARN notices, collectively impacting thousands of workers.

“The labor market appears increasingly likely to see both slower gross hiring and increased layoffs, for the first time in this cycle, pushing down job growth in the spring,” Pantheon Macroeconomics chief economist Ian Shepherdson shared with Newsweek.

The reasons behind the layoffs, as outlined by Shepherdson, range from a dip in economic activity to strategic shifts within companies adapting to a new economic landscape marked by technological advancements and altered consumer behaviors. For instance, the tech sector, once seen as a stable source of employment in California, is facing layoffs due to over-hiring during the COVID-19 pandemic and adjustments to the new economic reality of tighter credit conditions.

As California grapples with its changes, the state’s workers are caught in the crossfire, facing uncertainty about their job security and future employment prospects. The broad range of sectors affected by the layoffs points to a redress in the state’s labor market.

While Shepherdson doesn’t believe the layoffs signal a recession, he said that they represent a “downshift in job growth.”