Coronavirus pandemic wreaks havoc on Merced County jobs — 21,800 unemployed
The coronavirus pandemic hit Merced County’s workforce hard in April. The number of unemployed climbed to 21,800 due to state-mandated business closures, the California Employment Development Department reported Friday.
U.S. Census Bureau estimates from 2019 put the county’s population at 277,680.
The county hasn’t seen unemployment rates as high as the current 18.8% since the Great Recession of 2007 to 2009. Even then, unemployment was just over 15% in September 2010.
“The question is whether its much more temporary,” said UC Merced Assistant Professor of Economics Greg Wright.
Merced County was recently approved by the state to open more sectors of its economy. But local business owners say the economic toll is far from over. Following pleas from the business community and residents in need, the City of Merced is working on a $2 million initiative to invest in its local economy.
In February, before the first coronavirus case was confirmed in the central San Joaquin Valley, 12,000 people were unemployed in Merced County and the unemployment was 10.4%. In two months, both the number of unemployed and the rate have nearly doubled.
The county’s unemployment rate in March was 13.2%, totaling 15,300 unemployed.
In late 2019, Merced County was on an upswing with more people employed than in nearly 30 years. In September, the county’s unemployment rate was 5.5%. The statewide unemployment rate was 3.5% at the time.
“We went from record low unemployment to the highest monthly figure in years,” said Labor Market Analyst Steven Gutierrez, who works with the EDD’s Fresno office. The March to April spike is the largest on record, he said.
Merced County historically experiences unemployment rates higher than California overall. Statewide unemployment is now estimated at 15.5%.
The county’s already higher rate of unemployed people living on the edge of their means and its job demographics make it especially vulnerable to economic downturns, Wright said.
“The reality is, the things that are going on at the national level are even more heightened at the Merced County level,” he said. “One of the outcomes of this will almost certainly be a rise in inequality,” he added.
Neighboring counties around the Valley saw similar unemployment growth in April:
Kings County: 9,800 people unemployed, rate of 16.8%.
Madera County: 10,500 people unemployed, rate of 16.6%.
Fresno County: 76,000 people unemployed, rate of 16.7%.
Tulare County: 38,100 people unemployed, rate of 19%.
Impacted industries
Nearly every sector experienced recent job loss nationally, statewide and in Merced County.
“This is something that has affected all the industries across the board,” Gutierrez said.
The leisure and hospitality industry was largely affected in Merced County, falling by 2,000 jobs between February and April.
This includes employment at hotels and motels, dining establishments, bars and movie theaters. Some of these have stayed open at limited capacity or recently began to open with state approval, but others have been closed for months with no reopening date in sight.
“Basically, anything having to do with social distancing we saw a major decrease,” Gutierrez said.
The trade, transportation and utility industry was down 1,800 jobs in Merced County during the same period. Half of these are attributed to lost retail jobs. Some of these jobs are expected to return as the county begins to reopen retail destinations with state approval.
Local government, including education, also suffered major losses in the way of 700 fewer jobs between February and April. Gutierrez estimates that many of these can be attributed to the upset in the education system during coronavirus.
“The one good thing is we had the normal increase in regards to farm employment,” Gutierrez said, noting the county’s increase of 700 farm-related jobs between February and April. “It’s a reminder of how important the agricultural community is to the local economy.”
Moving toward recovery
The unprecedented level of uncertainty makes the path of economic recovery difficult to predict, experts say.
“Everyone obviously wants to get the economy going, but the time length of the virus is unclear,” Wright said.
Some places, like doctor offices, may continue to function remotely as a precautionary measure, decreasing the need for staff who serve individuals in person, Gutierrez said.
“I think we’re going to see the unemployment rate continue to go up as some of these industries continue have to have to lay off workers,” he said.
Merced County having a less diverse sampling of industries compared to urban areas could exacerbate this.
As businesses reopen, less discretionary income for patrons to spend on luxuries like dinner and a movie could be an issue, Gutierrez said.
Individuals who have lived through economic downturns are less risk-tolerant, tending to save more and spend less, Wright noted.
“Some of that may be true here as well,” he said. Less money spent locally could mean less revenue for local governments.
But retail might bounce back relatively quickly as shops are permitted to open, Wright said. He noted that a large percentage of those surveyed by the EDD said their unemployment is only temporary in such industries.
Recovery could also hinge upon how comfortable people are patronizing businesses under the new normal, Gutierrez and Wright said.
“I think there’s a lot of things that are gonna come into play in terms of how quickly we see the job recover,” Gutierrez said. “I think a lot has to do with social distancing. This is something brand new for a lot of individuals.”
This story was originally published May 22, 2020 at 11:44 AM.
