California's Unemployment Rate Falls, But Remains Tied With Nevada as Nation's Highest

California added a hefty 96,800 jobs in October, rebounding from the lower than average gains the state saw in the previous month, the Associated Press reported. Though the added jobs allowed California's unemployment rate to fall to 7.3 percent from the 7.5 percent in September, the state is still tied with Nevada for the highest rate in the U.S.

The October job gains in the country's most populous state made up 18.2 percent of the total jobs added throughout the nation. California has added more than 100,000 new jobs on average each month since February, though the September net gain of 47,400 reported by the Employment Development Department marked a lull for the state.

"California has again created more new jobs than any other state—averaging six-figure job growth for nine months straight—an unprecedented achievement as our economy continues to recover from the pandemic," said Governor Gavin Newsom.

California's strong job gains since February are made possible by the large numbers of jobs lost at the start of the COVID-19 pandemic, 2.7 million in March and April 2020, as the state went under a stay-at-home order, the AP reported.

The state has managed to recuperate 67.4 percent of those jobs in the 18 months since even though California's COVID restrictions remained in place longer than other states. Still, unemployment claims in California, where workers make up 11.7 percent of the civilian labor force, accounted for more than 25 percent of all claims in the U.S. last week, according to the AP.

Former Employment Development Department director Michael Bernick, who now monitors employment trends at the Duane Morris law firm, said that while California's job gains were strong, "there are other economic employment indicators that suggest a more uneven and muted recovery."

For more reporting from the Associated Press, see below.

California Unemployment Rate
California has added more than 100,000 new jobs on average each month since February, though the September net gain of 47,400, reported by the Employment Development Department, marked a lull for the state. Above, prospective employers and job seekers interact during a job fair September 22, 2021, in the West Hollywood section of Los Angeles. Marcio Jose Sanchez/AP Photo

The big question in the months ahead is how rising prices because of inflation will impact the job market in California and the nation. Inflation can lead to increased wages for workers. But higher prices can also prompt consumers to buy less, which would slow demand and convince employers to shed jobs.

Right now, price increases are driven by increased demand combined with a shortage of goods caused by disruption in the supply chain. While inflation has averaged about 2 percent for the past decade, it has exceeded 5 percent since June, according to California's Legislative Analyst's Office.

"Inflation is the biggest risk we are facing for the nation and then for the state. Unfortunately in California, as a state, we don't really have any control over it," said Sung Won Sohn, a professor of finance and economics at Loyola Marymount University.

Sohn said most of California's job gains came in Southern California, where Los Angles accounted for 42 percent of growth and San Diego made up 28 percent. That was driven by gains in hotels and restaurants as tourism picks up.

New rules in Los Angeles took effect this month requiring everyone to show proof they have received the coronavirus vaccine before entering public places, including restaurants. City officials have said they won't begin enforcing the rules until November 29.

Sohn says those rules, among the strictest in the nation, are likely to have some impact on hiring but probably won't "bend the trend."

"I would expect leisure and hospitality continuing to add jobs," he said, though he worried the industry could continue to be impacted by labor shortages.

Business owners seeking to hire for lower-wage jobs have reported difficulty in finding workers. California's workforce—people who either have a job or are looking for one—decreased by 8,400 people in October, according to survey results released Friday by the Employment Development Department.

California Employment Gains
California employers added a robust 96,800 new jobs in October. The gains lowered California's unemployment rate to 7.3 percent, tied with Nevada for the highest in the nation. Above, a hiring sign hangs in the window of a Taco Bell in Sacramento, California, July 15, 2021. Rich Pedroncelli/AP Photo