County sees improved June unemployment rate but July losses threaten gains

California’s June unemployment rate improved from previous months amid the Covid-19 pandemic, but it remains to be seen how recent statewide closures due to spiking cases and hospitalizations affect jobs across the state.

In June, the state’s unemployment rate improved to 14.9 percent, with the state adding a record 558,200 jobs, according to figures released Friday by the Employment Development Department. This surpassed record gains in May, of 134,200 jobs, and historic losses before that with data dating back to 1990. May’s unemployment rate was 16.3 percent.

The state has now regained more than a quarter of the 2.6 million California jobs lost in March and April as a direct result of the pandemic. However, June’s unemployment still stood at more than 2.8 million people statewide. Despite gains, California’s current unemployment rate is still higher than joblessness during the Great Recession, when the unemployment rate stood at 12.3 percent in 2010. And only a year ago, statewide unemployment was at just four percent.

In Santa Clara County, the unemployment rate in June stood at 10.7 percent – a slight decline from 11 percent in May – out of a total workforce of more than 1 million people. Santa Clara and San Mateo counties represented 6 percent of California’s jobless claims between March and May.

An analysis by Joint Venture Silicon Valley’s Institute for Regional Studies found pandemic unemployment numbers surpassed even the post-dot com bust in the early 2000s and the Great Recession’s local highs of 2009.

Russell Hancock, president and CEO of Joint Venture Silicon Valley, said in a statement:

“Silicon Valley’s tech workers, for the most part, had a smooth transition to remote work and have kept their jobs. At the same time, those working in retail and restaurants and other face-to-face jobs remain largely unemployed.”

Hancock added:

“The unemployment rate came down slightly in June – that’s a good thing – but what happens next will be almost entirely dependent on how quickly those establishments are able to reopen.”

It remains to be seen how recent spikes in Covid-19 cases in California will affect job numbers, especially given another set of closures announced this month by Gov. Gavin Newsom for many industries, including dine-in eating, bars, hair and nail salons. Tech workers, by contrast, have been spared as many companies have turned to remote work, as San Jose Spotlight reported.

The institute’s research director, Rachel Massaro, noted the unemployment rate amid the pandemic provides “a relatively outdated and retrospective snapshot.”

Massaro said in as statement:

“The frequency at which the economic reopening and the health crisis are changing is just too high to be captured in a mid-month, survey-based estimate.”

On Monday, Newsom said the closures affect more than 80 percent of the state’s population, including the South Bay, which opened personal care services, gyms, fitness centers and hotels and motels for hours before having to close again by Wednesday under state orders.

Jesus Flores, who heads of the Alum Rock Santa Clara Street Business Association and Latino Business Foundation, said many of the business owners he represents worked hard before the second round of closures to enact social distancing protocols, installing barriers and other safety measures to meet county standards. But soon after, they had to close again.

Still, nine of California’s 11 major industry sectors gained jobs in June. Hospitality, for example, had the largest gain of 292,500 jobs due to growth in accommodation and food services, which benefited from statewide reopening of bars and dine-in restaurants, according to the EDD. By percent, construction has had the largest recovery following 68 percent of job losses.

But governments saw the largest number of job losses, at 36,300 statewide, which may be due to cuts following historic budget deficits.

Flores, who collectively represents at least 450 small businesses in San Jose, said federal and state unemployment benefits and programs to help small businesses have likely bolstered employment gains.

While no businesses Flores represents received the first round of loans from the federal Paycheck Protection Program to rehire employees in April, he said many have now received loans in the second round. There has been criticism nationally of PPP loans, as many black and Latino-owned small business owners were initially left out of the assistance program compared to larger, white-owned companies.

Flores estimates at least 30 percent of businesses he represents have now received loans, which average around $17,000 per business.

But uncertainty looms as the extra weekly $600 in unemployment benefits runs out at the end of July and Santa Clara County’s eviction moratorium for residential and commercial tenants ends in August. And now, South Bay businesses closed again this week as a result of the county landing on the state watchlist for its number of hospitalizations.

Flores said:

“I’m kind of hesitant to think that this is something that will be stable for a while. There are now closures ordered – I think that will also be very detrimental to small businesses again and the creation of jobs.”

State numbers for July are expected to be released on Aug. 21.

Contact Eduardo Cuevas at [email protected] or follow @eduardomcuevas on Twitter.

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