Californians Are Rejoining the Workforce

As of the end of April, the U.S. labor market was still steaming hot. There were about 63% more job openings than before the pandemic, according to the JOLTS Report. And, with 4.4 million people quitting their jobs in one month, labor market churn was still high. In May, the economy added a robust 390k net new jobs, with 330k people joining the labor force, according to the Jobs Report.

Labor market conditions vary across the country, however, and this week’s State Employment and Unemployment Report and State Job Openings and Labor Turnover Survey Report show us which states are making the strongest contributions to the labor force recovery and job creation.

Here are some highlights:

  • West Virginia recorded the highest employment growth rate (1.6%) across all states thanks to strong gains in the public sector.
    • Relative to its size, West Virginia enjoyed the highest employment gain (8,800 net new jobs or 1.6% growth), thanks to solid gains in the public sector (8,500).
    • Alabama (+0.6%), South Carolina (+0.6%), and Texas (+0.6%) were a step behind West Virginia in employment growth.
    • Strong gains in leisure and hospitality (27,600), and professional and business services (15,300) fueled the employment growth in Texas, which added 74,200 net jobs in May.
  • Californians are rejoining the labor force in high numbers. 
    • California’s labor force grew 0.5% in May—the fastest rate of growth in the nation—with 104k people getting back to work.
    • Though the state’s labor force participation rate (62.1%) is still below its pre-pandemic level (62.8%), California is on track to make a full labor force recovery in less than 6 months at the current rate. About 53k Californians have entered the labor force every month on average since January.
  • Kentucky has the highest number of available jobs relative to its size across the nation right now, offering plenty of opportunities to job seekers.
    • With an 8.5% job openings rate, the state boasts plenty of job opportunities for its residents. However, hiring is yet to catch up. The gap between the state’s job openings rate (8.5%) and hiring rate (5.7%) implies that the firms are struggling to fill vacancies quickly.
    • This is not surprising since wage growth in Kentucky (5.0%) is still relatively low and doesn’t yet reflect the state’s tight job market.
    • The results of ZipRecruiter’s monthly Job Seeker Confidence Survey provide an explanation for what might be going on.
      • In a tight labor market, 48% of job seekers surveyed said that they had already secured at least one job offer.
      • Among those, almost half—49.7%—said they had rejected an offer, with 26.7% citing “not enough pay” as the main reason for doing so. In other words, when wages only grow slowly, on average, in a tight labor market, job seekers take their time to explore the range of opportunities on offer, and only accept the most attractive.