Conference Presentation, Panel, Webinar
The Post-COVID Recovery: California's Lagging Employment Rate
Milken InstituteGrace Gedye, Julian Cañete, Reign Free, Manuel Pastor, Somjita Mitra, David Lesher, Matt Horton
- CalMatters plans to co-host a series with the Milken Institute focused on the future of work, while the Milken Institute's Center for Regional Economics intends to continue analyzing urban economics, housing, infrastructure, and workforce issues in Santa Monica.
- Samjita Mitra projects that California's non-farm employment will return to pre-pandemic levels over the next few years, though the recovery rate may slow as the state approaches its 4.3% record low unemployment rate, with rural pockets in southeastern California and the Central Valley potentially facing continued challenges in reducing unemployment.
- Labor force participation is expected to remain constrained by approximately 400,000 fewer workers compared to February 2020 levels, driven by older workers exiting the workforce, a lack of large spikes in rejoining the labor force after benefits ended, and a predicted increase in participation among 16-to-19-year-olds in the gig economy.
- Manuel Pastor and Samjita Mitra anticipate structural economic shifts toward a "case economy" and remote work, which will drive demand for home and health care jobs, projected to comprise about a quarter of the population by 2060, while also causing ripple effects in ancillary businesses and commercial real estate.
- Job growth is expected to persist in low-wage sectors like leisure and hospitality, yet concerns exist regarding the lasting negative impact on career trajectories and wages for young workers and millennials who faced disemployment during the 2008 recession and the pandemic.
- Manuel Pastor predicts a "Great Recalibration" of labor and capital relationships, suggesting small businesses require support to navigate this transformation, while Samjita Mitra notes that automation displacing impacts may be exaggerated but warns that qualitative leaps in AI could alter this trend.
- Housing markets are forecast to see continued price growth across all California regions, pushing middle-income earners into rental markets and into lower-cost areas like the Inland Empire from higher-cost hubs like Los Angeles.
- Rain Free outlines plans to adopt a slower, more conservative business model due to funding constraints, eventually transitioning to a cooperative shared space model and seeking building ownership as a safety net.
- Julian Kennedy anticipates structural changes in business investment and educational approaches to address inequalities, potentially through consumer-facing labels for "worker-friendly" businesses, and expects commercial real estate occupancy to shift as firms downsize.
- Manuel Pastor predicts that the federal "Build Back Better" budget plan could positively impact California through investments in the care economy, affordable housing, and climate resilience, while Julian Kennedy hopes for full business reopening in 2022 if vaccination thresholds are met.
- Samjita Mitra expects inflation to be slightly more persistent than transitory with supply chain delays, non-secured debt paydowns to boost economic spending, and potential loan discussions regarding pandemic debt, while also noting a need for growing wages in the non-automatable care sector.
- Manuel Pastor expresses concern that a potential Republican victory in the 2022 midterm elections could lead to economic contraction and reduced public spending, contrasting with optimism for 2022 as a year of full opening and business growth if health metrics improve.
- Rain Free voices concern that messaging on racial equality and diversity might become silent as routines return, though remains optimistic about "love and legacy" initiatives and a shift toward "slow living" to avoid survival mode.
- Manuel Pastor predicts a "Great Awakening" may lead to a "Great Recalibration" in labor relations, while Julian Kennedy expects structural changes in how dollars are invested in business growth due to diversity inequalities.
- Samjita Mitra foresees that as the aging population grows, the need for elderly care workers will increase in a sector that is not easily automated, necessitating wage growth to ensure sustainability.
- Manuel Pastor predicts that home and health care jobs will grow faster than high-tech jobs over the coming decades, driven by demographic shifts where about 25% of the population will be over 65 by 2060.
- Samjita Mitra notes that employment-displacing impacts of automation have been traditionally exaggerated, though a qualitative leap in AI could change this, while also anticipating opportunities for new jobs in the same arena.
- Julian Kennedy expects that if business taxes rise, the burden will be shared rather than falling solely on businesses, based on historical patterns from past recessions.
- Manuel Pastor suggests that small businesses will need assistance during a "transformational moment" as they lack the resources of large corporations like Amazon, and warns that skipping community college education now could negatively affect wage trajectories for those aged 30 to 32 in the future.
- Samjita Mitra anticipates an uptick in enrollment at four-year schools despite community college declines, which is expected to improve the economy through a higher educated workforce, though she gives California a B+ to A- rating for its pandemic response with noted shortfalls in reaching certain communities.
- Rain Free identifies significant safety risks due to long commutes for 30% of her workforce, with some lasting three to four hours, and emphasizes the need for strong business owners to support workers and families.
- Manuel Pastor expects the transition from a "just-in-time" to a "case" economy to continue as businesses and workers seek stability, and predicts significant impacts from remote work on ancillary office services.
- Samjita Mitra notes that job growth in leisure and hospitality has consistently been among the top industries to regain jobs, and anticipates that once people pay off non-secured debt, the resulting spending will benefit the broader economy.
- Manuel Pastor expresses dread regarding the 2022 midterm elections, fearing a Republican takeover could cause the economy to "tank" and lead to retrenchment in necessary spending and investments.
- Samjita Mitra expects inflation to be slightly more persistent than transitory and worries about supply chain issues taking longer to resolve, while also noting that the virus remaining under control is essential for recovery progress.
- Rain Free is optimistic about building a campaign of "22 couples in 2,022" and moving toward "slow living," while dreading the potential return to old routines without resolving issues around equality and racial messaging.