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Brief # 120 – Economic Policy

The Unemployment Disconnect in California

By Patrick Dwire

June 16, 2021

 

Policy Summary 

It’s not so much about unemployment benefits. It’s about women, health care, child care and home schooling.

As restaurants, hotels and entertainment venues begin to open up in California as the state officially re-opens with virtually no Covid restrictions, many of these employers are having trouble finding workers. Low-income workers are getting blamed for not jumping at these job openings, which seems to lead  many Republican policy makers immediately to the conclusion that unemployment benefits must be too generous. This quickly reached conclusion is both an insult to these workers, who are mostly women, as well as narrow-minded and misinformed as to what these workers may need before they are ready to go back to work full-time.   

The lack of enthusiasm by former waitresses and waiters, hotel room cleaners and hospitality workers to jump back into their previous, relatively insecure minimum wage jobs begs the question as to what many of these workers may have been doing over the last year in terms of re-training, on-line education, and re-networking other job opportunities. 

California’s economy-wide “stay-at-home” shut-down order came on March 16, 2020. The total number of jobs lost to Californians beginning in March and April of last year has been estimated at 2.7 million jobs.  The California state agency for unemployment insurance, the Employment Development Department (EDD) recently reported that as of May 22, 2021, the state regained 1.3 million of those jobs, or 48 per cent of the total number of jobs lost since last March.   

Here’s the disconnect. How is it there’s only about half of the total number of jobs currently back at work in California than there were at the beginning of May, 2020, but the “official” unemployment rate is only 8.4 per cent? Why wouldn’t the unemployment rate be closer to 50 percent, considering that’s roughly the number of jobs that continue to be “lost” to the pandemic?

Analysis 

The answer is, of course, the way “official” unemployment is measured- counting only those who certify they are, in fact, unemployed and looking for work. Considering only about half the number of jobs have been “restored” since the pandemic shutdown last March, and in light of 8.4 percent of the workforce actively applying for or receiving unemployment benefits, where did the remainder of those working a year ago, roughly 42 per cent or so of the 2019 workforce,  go?  

Did they find work, maybe part-time or off-the-books or otherwise get busy with some “independent contractor gig”? Or did they become part-time, unpaid substitute teachers and in-home health care providers for their children, partners or parents? Or did they simply stop looking for work entirely, becoming a member of a large and growing but difficult to define cohort referred to as “the discouraged workforce.”

With most day care centers still shuttered and many schools closed for the summer, it remains the case (and is slowly getting documented) that women took the brunt of child care and home schooling responsibilities at the expense of their own jobs and careers throughout the pandemic. It’s becoming increasingly clear that many women had to leave the workforce to provide the critically needed “bridges” across the wide gaps in social services that were ripped open by the pandemic – gaps that stretched across health care, child care and education systems. If not for this unpaid service, done  mostly by women who left their regular jobs to provide it to their own and often their extended families, the toll of the pandemic would have been so much worse.    

Shortage of child care and many kids still learning at home is acknowledged by the Biden administration as a primary reason millions of women left the workforce, and this will continue to be a major obstacle to economic recovery. This has been emphasized by Labor Secretary Marty Walsh, who stresses the importance of the president’s proposed American Families Plan that includes $225 billion for child care.  “We need to make sure if we’re going to have a strong recovery — a strong, equitable recovery — we need to get women back into the workforce,” Walsh said.

This blurring of the lines between work and home, along with spikes in business-to-business e-commerce and on-line shopping are likely to continue as the economy rebuilds. While this work-from-your home-based computer economy seems to be working out okay for relatively well educated, highly skilled workers in essentially information/ computer-based analytic work, it only seems to be working out for about half the workforce.  And it seems to favor men. 

According to the Report on the Status of Women and Girls in California recently released by Mount Saint Mary University’, a solid majority of men, 57%, reported working from home had a positive impact on their career, compared to less than a third, 29%, of women. Just over a third of male parents, 34%, said they received a promotion over the course of the pandemic, compared to 9% of female parents. 

As minimum-wage customer service jobs begin opening up again, perhaps a key lesson of the pandemic for many women is not to settle for the insecurity, the lack of benefits and the lack of career opportunity that characterized the jobs they were laid off from at the beginning of the pandemic.  And as long as child care remains prohibitively expensive or aging adults continue to need care, or until they can finish some on-line educational training or certification- it may well be that it just doesn’t pay to go back to work.  Rather than simply cut unemployment benefits, more enlightened employers and state policy makers will do well to find out what workers want and need before they return to work.

Engagement Resources 

American Families Plan: NPR: https://www.npr.org/2021/04/28/991357190/white-house-proposes-massive-spending-on-children-and-families

National Women’s Law Center: https://nwlc.org/wp-content/uploads/2021/01/December-Jobs-Day.pdf

NPR: https://www.npr.org/2020/10/28/928253674/stuck-at-home-moms-the-pandemics-devastating-toll-on-women

Women in the Workplace Report/ Lean In and McKinsey & Company: https://womenintheworkplace.com/

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