Why Los Angeles Unemployment Remains High - Borowitz & Clark

Job Growth Slows with Los Angeles Unemployment High

As a headline without context, “US economy added 245,000 jobs in November” sounds promising. But, it was the slowest month for job growth since the country began to rebound from the initial impact of the coronavirus pandemic.

President-elect Joe Biden called the jobs report “grim” and pointed to slowing improvement as a reason to move quickly on a second pandemic relief package. 

Nationwide, the unemployment rate dropped slightly, from 6.9% to 6.7%. But, in Los Angeles County and statewide, the unemployment rate remains higher.

Why is Los Angeles seeing higher unemployment than the national average?

California Jobs and Unemployment

November data isn’t yet available for California, but the state saw significant gains in October.

The statewide unemployment rate dropped 1.8%, to 9.3%. That brings the state below 10% unemployment for the first time since March. Still, the year-over-year contrast is striking.

In October of 2019, the California unemployment rate was 3.9%. The total number of jobs in the state is down nearly 1.4 million compared with last fall.

In Los Angeles County, the news is worse. Locally, we’re facing 12.3% unemployment, with more than 620,000 people unemployed. Like the statewide numbers, this represents a significant improvement over the peak of 21.1% in May, but dramatically higher than one year ago.

One reason the Los Angeles area has been harder hit is likely the local industry mix. Areas like film, television, live music, hospitality and restaurants are heavily represented locally, and have been harder hit than many industries. A Yelp study released earlier this fall ranked Los Angeles # 1 for pandemic-related business closures. About 15,000 Los Angeles businesses were reported closed, about half of them permanently. That’s significantly higher than New York City, which held the # 2 slot with about 11,000 closures. 

At the state level, California had the second-highest rate of business closures, at 9.3 in 1,000 permanent closures and 9.7 in 1,000 temporary.

Many California Residents Will Soon Lose Unemployment Benefits

Early in the pandemic, the federal CARES Act supplemented state unemployment benefits in three ways. First, a short-term boost of $600/week was added to unemployment benefits around the country. Second, a 13-week federal extension was added. And third, an unemployment benefit program was created for some who would not otherwise have qualified, such as independent contractors who aren’t eligible for regular unemployment benefits but lost income due to the pandemic. 

The $600/week benefits enhancement ended on July 31, to be followed by a short-lived $300/week supplement. Now, the 13-week extension is set to expire as well. That means many Californians may run out of unemployment benefits abruptly on December 26, unless another pandemic relief package provides additional assistance.

Some whose regular benefits have been exhausted may qualify for FED-ED extended benefits. In California, that analysis is automatic–there’s no need to reapply when regular benefits run out. This extension is based on the California unemployment rate, and is currently available for 20 weeks. However, when CARES Act funding expires the day after Christmas, the extension will be rolled back to 13 weeks

In short, the future is a bit uncertain for those relying on unemployment benefits. With the CARES Act expiring and the only additional extension available tied to the state unemployment rate, it’s difficult to determine just how long an individual’s benefits might hold out. This uncertainty comes at the worst possible time, as many other protections are slated to expire at about the same time. 

The CDC’s order significantly curtailing evictions for non-payment of rent during the pandemic will expire on December 31. Federal student loan payments have been suspended for months and collection efforts on hold, but those orders will expire at the end of January. It’s the wrong time to suffer income loss or be unsure how long benefits will hold out.

Protecting Yourself Financially

It’s never been more important to be aware of what’s coming and prioritize. For example, if you’ve been running behind on your rent and putting limited income toward other expenses, it’s important to be aware that protection from eviction is set to expire, and that there’s no provision in the order requiring landlords to allow time to catch up when it does. The protections could be extended or replaced, but there’s no guarantee. Watch for developments, but also start crunching the numbers and setting aside what you can in case you’re required to catch up quickly. It wouldn’t hurt to try to keep an eye out for job openings through services like Jooble, or making sure that your LinkedIn profile is up to date for recruiters to see.

If your financial stresses extend beyond covering your living expenses with reduced income to mushrooming debt, collection accounts, mounting interest and fees, and even debt collection lawsuits, perhaps the time is right to educate yourself about your options. Depending on your circumstances, Chapter 7 bankruptcy might offer a way to free up funds to focus on what matters most. Or, Chapter 13 might stop collection action and allow you to make manageable payments over time.

At Borowitz & Clark, we’ve devoted decades to helping people in the Los Angeles area resolve their debt and open the door to greater financial stability. You can schedule a free, no-obligation consultation right now by calling 877-439-9717 or filling out the contact form on this page.