While California’s state government plans to introduce a new one-dollar coin, the unemployment rate has gotten higher. In recent surveys, the state’s employment rate was 5.3% for April, showing no signs of improvement. The previous months, February and March, had the same rating.
California has ranked the state with the highest unemployment rate for the second year in a row. The state ranks first on the list, followed by Nevada, then D.C., and Washington. California is also ranked at 3.9 percent on the national average scale.
Despite ranking as the state with the highest unemployment rate in 2023, things have somewhat regressed and gotten worse. Last year, despite ranking 4.5% on the unemployment index, it has increased to 5.3%, an increase of 0.8%.
The crisis started during the pandemic, which resulted in the loss of 2.7 million jobs. This was because of the stay-at-home orders issued by the state governor, Gavin Newson, to mitigate the impact of the virus. Although 3 million jobs have been created since the pandemic ended, it has not helped adequately combat the unemployment problem in the state.
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Michael Bernice, former director of the Employment Development Department, gave a couple of reasons why the rate seems ever-growing. According to his statement, he gave two reasons for the increase. Firstly, when the pandemic and post-pandemic spending ended, tech companies began announcing layoffs at higher rates. Secondly, small businesses are battling inflation and customer demand, both leading to higher unemployment rates.
In March, there was one job for every 1.4 unemployed people. This is a massive drop from 2022 when there were 2 jobs available per person. In 2023, the total number of unemployed people was capped at 164,000.
In March 2024, 18,200 non-farming jobs were created by employers in the state. However, in April 2024, that figure reduced to 5,200, a decrease of over 13,000 jobs.
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In addition to having the highest unemployment rate in the country, the state is also having difficulty paying down a debt of over $21 billion that was accrued to assist with unemployment compensation payments.
Employer payroll taxes are rising to pay for unemployment benefits, a state surcharge, a federal surtax, and the principal repayment of the debt.
This will only increase firms’ operational costs and result in lower salaries for employees. Nevertheless, the state’s failure to require enterprises to contribute a sufficient amount to the unemployment insurance fund for employees in need raises further concerns.
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However, experts argue that the state’s $43.5 billion in American Rescue Plan payments is mostly to blame for its unemployment compensation shortfall. The state chose to provide additional payments instead of using the funds to address the surge in unemployment claims.
California will owe $550 million by September 30, having already paid $650 million in interest on the loan.
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