Merced County’s bleak unemployment shows some improvement, as COVID-19 closures lift
Following a bleak April for employment numbers, updated data by the California Employment Development Department Friday showed some relief for Merced County workers, as coronavirus-related job losses lifted slightly in May.
Local unemployment fell to 16.5% in May compared to April’s adjusted 18.7%. That means 18,800 members of Merced County’s labor force were without jobs, down from 21,800 the prior month.
The statewide unemployment rate dropped a tenth of a point, to 16.3 percent, as employers added 141,600 nonfarm jobs.
A statistical correction revised April’s unemployment rate to 16.4%, reflecting an unprecedented job loss never before seen in California’s history as a result of the COVID-19 pandemic, according to the EDD.
The numbers mean that, while the economy remains deeply troubled, the shutdown hasn’t done quite as much damage as initially feared. Gov. Gavin Newsom predicted unemployment could top 20 percent.
“Broad industry losses saw last month were offset by gains as a direct result of the reopening of California and Merced County,” said Labor Market Analyst Steven Gutierrez, who works with the EDD’s Fresno office.
Locally, the only industries that did not see job gains or no change since April were three sectors. Financial activities, as well as educational and health services, were down 100 jobs each, while government was down 1,400 jobs. Government includes state and local government, state government education, local government and special districts plus Indian tribes.
All other industries saw no change or gains. Furloughed employees will hopefully continue to reenter the workforce, Gutierrez said.
Still, the jobless more than double May 2019’s unemployment rate of 7.2% “Just about everything year over was in the red except for mining, logging and construction, which added 200 jobs,” Gutierrez said of local industries compared to last May.
May marked the third time this year that Merced County unemployment was above 2019’s numbers — a shift which is likely to continue, Gutierrez said.
Counties across the Valley also saw similar, but slight, improvements in employment:
Kings County: 9,000 unemployed, rate of 16.0% compared to 17.0% in April.
Madera County: 9,500 unemployed, rate of 15.2% compared to 16.7% in April.
Tulare County: 35,300 unemployed, rate of 18.4% compared to 19.3% in April.
Fresno County: 69,700 unemployed, rate of 15.7% compared to 16.7% in April.
Stanislaus County: 37,5000 unemployed, rate of 16.1% compared to 17.5% in April.
More than 142,000 workers across Fresno, Kings, Madera, Merced and Tulare counties were out of work in May. That’s an improvement from April, when unemployment in the region topped 155,000. In February, by contrast, the number of people out of work was estimated at fewer than 85,000.
“I do feel optimistic. We’re kind of seeing a leveling off of unemployment claims,” said David Mirrione, assistant county CEO and director of Worknet Merced County. “I would feel confident that we will see that number continue to decline into June.”
Industries gain jobs
Amid the new normal caused by the coronavirus pandemic, some jobs within different industries saw significant growth in Merced County in May — including those hit especially hard by COVID-19’s impacts.
Notably, the leisure and hospitality industry recovered 800 jobs after falling by 2,000 between February and April. The industry felt munch of the brunt of pandemic-related closures.
It includes employment at hotels and motels, dining establishments, bars and movie theaters. Many such destinations have been allowed to reopen with modifications recently.
Gutierrez said the industry under normal circumstances tends to see growth at this time of year, as hotels gear up for the summer season. It is still down 2,400 jobs compared to last May.
Farming-related employment experienced the largest increase with 2,700 added jobs, continuing an increase also seen between the months of February and April.
“The agricultural economy continues to play an important role in Merced County,” Gutierrez said.
Other industries contributed to a total of 800 additional jobs locally.
Gutierrez noted that while more people go back to work as more sectors reopen, he is concerned about reports of COVID-19 cases and related hospitalizations rising, and what this could mean for the economy’s future.
“If through the governor’s office, we were forced to revert back and re-close some of the industries we were allowed to reopen . . . that would be extremely challenging for those businesses that survived that first wave,” Mirrione said.
Uncertainties persist
Despite the slight relief in unemployment, Gutierrez cautioned that it is too early to consider the news a trend.
“If the virus case numbers fade, maybe people can resume their economic lives and spending,” he said. “But right now the virus’s path is so unpredictable.”
Even under normal circumstances, Merced County’s unemployment rate tends to about double the state’s rate. Now, the gap is much tighter. But that isn’t necessarily all good news, officials warn.
“Locally, its great news to see that folks are back to work, so I’m very happy to see the increase there,” Mirrione said. But he added “The impact statewide is very concerning to us.”
Mirrione said the county will have to wait and monitor how unprecedented California unemployment could affect the state budget and aid.
Another aspect influencing the length and breadth of the economic outlook is the federal and state protections, like the Coronavirus Aid, Relief, and Economic Security (CARES) Act, intended to prevent a long term recession.
In May 2011, the Merced County had rocketed to 17.1% unemployment — a bit higher than it is now. This was likely due to the Great Recession, Mirrione said. But the factors affecting the coronavirus-spurred recession are too different to look to the county’s recovery back then as a road map now, he said.
“At this point, we’re in a wait and see pattern,” Mirrione said. “Depending on how the state budget is finalized, there’s potential for possible CARES Act allocation.”
At the adoption of the county’s fiscal year 2020-21 budget recently, officials urged County Supervisors to think of the economy in terms of at least two years.
Aspects like the property tax receipts were determined in January, prior to the bulk of COVID-19’s economic effects, Mirrione said. This means that the next fiscal year will include those tax receipts affected by the pandemic.
