Is Southern California’s job rebound ‘too much good stuff’?

Two years ago, the initial lockdowns of the pandemic era crushed Southern California’s job market.

But a stunning rebound from those antsy, dark days now raises questions about an economy challenged with “too much good stuff.”

Two springs ago, bosses in Los Angeles, Orange, Riverside and San Bernardino counties cast aside 1.27 million workers as government officials and business leaders struggled to figure out how to slow the spread of the coronavirus.

That staff-slashing spree pushed the four-county unemployment rate to a pandemic high of 17.6%, up from 3.9%.

Layoffs and firings soon morphed into renewed hiring. Trillions in economic stimulus were thrown at the national economy to stabilize businesses, then reignite them. Consumers received enormous aid to keep bills paid and food on the table.

And do not forget the business boost from the medical miracle of coronavirus vaccines. These breakthroughs dramatically trimmed the risks of hospitalization or death for COVID-19 patients. Still, 1 million Americans have died.

So two years after record-shattering job losses, April’s employment report from the state’s Employment Development Department details a remarkable recovery.

Southern California’s worker count is just 108,000 short of pre-pandemic employment. Joblessness in the region has fallen to 4.1%.

What’s the beef?

The unprecedented help given to consumers and corporations restored employment and boosted savings accounts and investment values.

Consumers were in a spending mood — and businesses were happy to oblige. All the shopping amid supply chain challenges pushed inflation rates to 40-year highs.

At the latest count, the cost of living soared 10% in a year in the Inland Empire and 8.5% in L.A.-O.C.

Worker shortage

Consider the number of Southern Californians who are officially out of work.

When the virus struck, roughly 1 in 6 local workers lost a job. The official number of the unemployed swiftly grew four-fold.

The rehiring spree has left just 363,000 unemployed as of April 2022 — that’s roughly one-third less than the average number of out-of-work Southern California since 1990.

And you wonder why the average weekly wage for the region is up 15% in the two years ended in September 2021?

Shopping spree

Coronavirus changed how we shopped for the goods we need.

A huge winner was the transportation and warehouse industries as online retail grew even faster.

Local logistics shops cut 28,000 jobs when the virus hit, but since that low point, 111,000 such jobs have been added — or roughly four times the virus-linked layoffs.

Early in the pandemic, there were fears shopping centers might become extinct. Southern California’s store owners cut 150,000 jobs as clicking for goods at home became too easy.

But the “death of the mall” thesis was proven wrong. Folks wanted the in-person shopping experience, and brick-and-mortar merchants have now replaced all their pandemic job cuts.

Of course, this leads to a new question — do we now have too many people handling the shopping needs of Southern Californians?

Real worries

Another huge early winner in the pandemic was the property business.

Cheap mortgages and a thirst for larger living spaces drove demand for home purchases, rental units and mortgages.

Starting this year, though, mortgage rates that fell below 3% mid-pandemic have jumped above 5%.

That’s quickly chilled the real estate business.

Bosses in real estate, finance and construction initially cut 76,000 jobs but have refilled 63,000 as the property game heated up. But the sudden real estate chill has cost 4,000 workers their jobs in recent months.

Less fun?

All this spare cash floating in the economy has helped the restaurant business get back to a level near normal.

Owners of eateries in Southern California cut 300,000 jobs as pandemic business limitations made operations difficult or impossible. But loosening restrictions and the populace’s urge to get out allowed eateries to replace all but 22,000 of those lost jobs.

The same cannot be said for others peddling the “fun” — the hotel business and the recreation and entertainment industries.

Collectively they cut 160,000 jobs as tourism and gatherings were shuttered. Their reopenings replaced only 120,000 of those positions.

These businesses are still hurt by a lingering reluctance to be in large crowds, especially a slow return to business travel.

Mixed markets

Rehiring is by no means universal as seen through a geographic prism.

The Inland Empire’s job market is the hot spot.

Bosses in Riverside and San Bernardino counties first slashed 220,500 workers, then added 277,000 back — 25% more than the cuts. Unemployment went from 3.9% in February 2020 to a mid-pandemic peak of 15.6% and back to 3.8% in April.

In Orange County, bosses shaved 272,000 workers shortly after the virus struck. Since the bottom, 233,200 jobs have been recovered — or 86% of OC losses. Unemployment went from 2.8% to 15.5% to 2.7%.

L.A. County had 785,000 cuts to start the pandemic era then refilled 659,000 jobs — or 84% of losses. LA unemployment went from 4.3% to 19.20% to 4.7%.

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com

Source: Orange County Register