California’s wages rose last year at the fastest pace in the nation, but don’t expect big paychecks to cure the state’s uneven recovery from the pandemic.
Yes, the past year was challenging for many households juggling various COVID-19 mandates, working from home and kids learning virtually. But paychecks were steady, and for some, enhanced.
This fortunate flock’s financial stability helps explain why the state has a gigantic budget surplus and the statewide homebuying binge. But let’s not forget a not-so-small group whose coronavirus hassles were painfully compounded by limited job opportunities.
California job losses were concentrated in lower-paying service industries, particularly California’s large leisure and hospitality industries.
Of course, there’s been plenty of government aid for this group including stimulus checks, improved jobless benefits and protection against evictions and foreclosures. Yet there are few good guesses as to what their finances will look like when this generosity ends.
The wealth gap to be filled is wide. To fully understand it, I filled my trusty spreadsheet with data from a federal analysis of employers’ unemployment insurance filings.
Unlike the monthly jobs reports, these quarterly reports are not from polling. Instead, they provide a detailed look at hiring and pay patterns. This data crunching takes time, so we’ve just gotten results from 2020’s fourth quarter — a period when another virus surge was throttling California workplaces.
Still, the late 2020 numbers show the pandemic’s financial imbalances have more than industry implications.
As last year ended, California had 16.4 million workers, down 1.48 million in a year or an 8.3% drop. However, because of the odd mix of the employed — and yes, extra hours and “hero” bonus pay — wages averaged $1,724 a week. That salary metric was up 18.5% in a year — the largest gain in the nation.
Now, let’s add geography to the mix as we ponder how three counties helped inflate this financial chasm.
In San Francisco, Santa Clara and San Mateo counties — the tech-savvy heart of the state — bosses cut 240,801 jobs last year. That’s an ugly 10.3% drop.
But ponder the pay: Wages of the 2.1 million who remained employed averaged $3,629 a week in the fourth quarter — that’s $189,000 annualized — after jumping 34.9% in a year. Yes, 34.9%! You can bet this stunning number can be tied to extensive layoffs of those earning smaller paychecks.
To be fair to the innovation crowd, the pandemic made lots of technology more life-changing and even more valuable. (Think: Zoom and Uber Eats.) So, tech workers were basically “essential” even if they didn’t always carry the state’s special designation.
Now, compare those employment patterns to the rest of the state.
Job losses elsewhere in California totaled 1.24 million in a year, an 8% drop. So these bosses cut at a slower pace, but maybe that’s because they could afford to.
The 14.3 million workers outside of these three aforementioned Bay Area counties had average wages of $1,444 a week — that’s $75,000 annualized or 60% lower than the tech-heavy cohort. And the rest-of-California pay was up 13.8% in a year — roughly one-third of the gains seen to the north.
This “non-tech” California looks more like a similarly divided nation.
The 141 million U.S. workers in the fourth quarter of 2020 were off 9.2 million, down 6.1% in the year. And wages averaged $1,339 a week — $70,000 annualized — after rising 13% in the year.
Wage gains varied widely, too. Look at the divide between the top — California’s leading 18.5%; New Hampshire’s 17.9%; and Massachusetts’ 17% — and the bottom — Oklahoma’s 7.3%; North Dakota’s 4.7% and Wyoming’s 4.6%.
Hmmm. Three energy-dependent states were at the bottom. Remember when gas was cheap around the holidays? This is another example of the economic intersection of industrial and regional variances.
Winners vs. losers
The consensus thinking is that a fully reopened economy will soon get life back to almost normal for the vast majority of Californians. Normalcy will hopefully cure certain other challenges — such as employment and wealth gaps — by creating more opportunities.
Don’t overlook the fact that there are winners and losers in the pandemic economy. What can be done for the shattered finances of individuals, businesses and communities — many of whom were hurt by good intentions?
Take historically low interest rates, which were used to stimulate the national economy.
This allowed homeowners with jobs, for example, to cut costs by refinancing mortgages. It also helped others become homeowners at a pace so frenetic prices hit record highs amid a pandemic.
Did the financially strong — that’s most owners and buyers — need this much help? Or is it fair that this same pandemic relief has made dreams of homeownership less likely for others?
Likewise, consider generous aid to the unemployed, again much of it federally driven. It certainly helps the jobless pay their bills and put dollars back into the economy.
But does this same largesse provide a disincentive for work — handcuffing bosses with staffing shortages? This could not only hurt various businesses, but it could also cool the emerging economic rebound.
The use of broad-brush, one-size-fits-all generosity in times of need has faults. How to properly and fairly recalibrate future aid — especially for a high-cost state like California — remains a huge challenge.
Jonathan Lansner is business columnist for the Southern California News Group. He can be reached at firstname.lastname@example.org
Source: Orange County Register