Bay Area, California job gains slow as post-COVID rebound wilts
The pace of job gains in the Bay Area and California continued to slow in April, a sign the economic rebound in the wake of the coronavirus outbreak has begun to wilt, a report released Friday shows.
The Bay Area added 11,500 jobs in April, but those numbers were a dramatic slowdown from the employment gains in both February and March, according to state Employment Development Department figures.
California's pattern was the same: The state gained 41,400 jobs during April, a considerably smaller upswing than the employment increases in February and March, this news organization's analysis of the EDD report shows.
"The Bay Area and California appear to be losing a bit of momentum," said Mark Vitner, a Wells Fargo senior economist.
Chart showing the 5-year trend in jobs in the Bay Area. The job market is still growing in April 2022, but not as quickly as it has been recently.The statewide unemployment rate in April dipped slightly to 4.6%, an improvement from 4.8% in March, according to the state labor agency. That's the lowest it's been since February 2020, before state and local government agencies imposed wide-ranging business shutdowns to combat the spread of the coronavirus.
But even with last month's improvement, California's jobless rate remains higher than the nation's 3.6% unemployment rate.
Santa Clara County added 4,300 jobs in April, while the San Francisco-San Mateo region added 4,900 positions, and the East Bay gained 2,100 jobs, the report showed. All the numbers were adjusted for seasonal variations.
Despite the disquieting trend for the California job market, Gov. Gavin Newsom, in a prepared release, pointed out that the state has delivered job gains in 14 of the past 15 months.
Plus, over the one-year period that ended in April, both California and the Bay Area have outpaced the nation in the pace of gains in total jobs. During the most recent 12 months, the job market has grown by 5.6% in California, 5.8% in the Bay Area and 4.6% in the United States.
Still, California and the Bay Area both lag the nation when it comes to recovering the jobs lost in March 2020 and April 2020 at the start of pandemic shutdowns. The United States has recouped 94.6 percent of its lost positions, while California has regained 91.3%, and the Bay Area has recovered 79.9%, this news organization's analysis of EDD statistics shows.
"More work is needed to bolster the economy and help offset higher costs that families are dealing with right now," Newsom said in his release. "California's record $97.5 billion surplus is going right back into Californians' pockets and addressing our state's most existential challenges, fostering growth and opportunity for all."
The red-hot pace of inflation could be having an effect on economic activity because rising prices have eaten into pocketbooks and eroded the spending power of the typical consumer. Bay Area prices increased at an annual pace of 5% in April, and this year's inflation is the highest in two decades.
Plus, rising wages — another contributor to the sharp surge in inflation — could prompt employers to scale back hiring due to increased labor costs.
The battered hotel and restaurant sector in the Bay Area appears to be rebounding and produced a big chunk of the region's employment gains last month, according to seasonally adjusted numbers that Beacon Economics and the UC Riverside Center for Economic Forecasting calculated using the EDD report.
Bay Area hotels and restaurants added 9,100 jobs in April, a whopping 79.1% of all the jobs the nine-county region produced last month, Beacon and UC Riverside determined.
Retailers, whose operations were also brutalized during the pandemic, added 2,300 jobs in the Bay Area, while health care employers cut 1,700 jobs.
Tech companies added 1,100 jobs in the Bay Area last month, according to the estimates from Beacon and UC Riverside. Of those, 1,000 were in the San Francisco-San Mateo region and 600 in Santa Clara County. But in the East Bay, tech firms chopped 500 jobs.
Tech companies are gradually bringing employees back to offices. However, many big companies are adopting a hybrid approach that allows employees to work remotely during part of the work week.
"The new hybrid models will reduce demand for space and associated services," said Russell Hancock, president of Joint Venture Silicon Valley. "This happens at the very same time that inflation set in, and it also coincides with some very destabilizing international events. The result is a dampening effect" on hiring.
Inflation and international disruptions could imperil the jobs recovery in the Bay Area and California, warned Michael Bernick, an employment attorney with law firm Duane Morris and a former EDD director.
"The state economy is continuing to recover but is in danger of stalling or going backward," Bernick said.