Sacramento, December 8th — A new report from the nonpartisan California Policy Lab (CPL) quantifies the extent to which previously unemployed workers have been transitioning to jobs in new industries, and how recall and re-employment rates vary by demographic groups. The report also provides an update on unemployment claims in California, including how many workers who were laid off during the pandemic have now found new work.
The report measures re-employment, recall, and industry transitions in California using administrative data on the universe of UI recipients in California, including employment outcomes for each recipient every quarter. The unique longitudinal data allows tracking the longer-term employment and industry outcomes of Californians who lost their jobs and filed for UI benefits in the first quarter of 2020, the peak of the COVID-19 crisis. In addition to analyzing reemployment rates of the initial cohort of UI claimants one year after the crisis, the new report also assesses how many employed Californians returned to their pre-pandemic employer or transitioned to a different industry. Both measures help gauge the extent to which the labor market is undergoing reallocation between firms and sectors, which can slow down the rate at which workers find jobs.
“There’s been a lot of questions about if people are transitioning to new industries, but we found that 68% of Californians who were laid off in the second quarter of 2020 and who returned to work went back to jobs in the same industry, a rate that’s higher than the 62% we saw before the pandemic,” explains Till von Wachter, a co-author of the analysis, UCLA economics professor, and faculty director at the California Policy Lab. “Not surprisingly, when people did switch industries, it was most often to an industry that required similar skill sets, for example, the Accommodations & Food Services sector was the largest “receiver” of workers from the Retail Trade industry. The fact that many of the receiving industries of low-wage job switchers are still recovering from the pandemic may help explain part of the lower reemployment rates for these workers.”
According to the new report, among workers who were fully separated from their employers in the second quarter of 2020, 57% were employed again in the second quarter of 2021. Among the 57% of workers who were re-employed in Q2, 2021, 59% had been recalled to a previous employer. In comparison, during a similar time frame prior to the pandemic (Q4 2018 to Q4 2019), only 43% of workers who went back to work had been recalled to their previous employers. The report also highlights the particular difficulties that less-educated Californians have faced finding re-employment during the pandemic.
The number of Californians filing initial claims for UI benefits and the number of claimants receiving UI benefits is at the lowest point since the start of the pandemic in March 2020. However, unemployment claims are still elevated compared to before the pandemic, partly due to additional claims of UI claimants that had found a job and lost it again. Federal unemployment benefit programs expired on September 4th and 11th, and there was a dramatic drop in the number of Californians claiming unemployment benefits, from 2.69 million claimants during the week before Sept. 4th, down to 406,000 claimants the week after Sept. 15th. However, an estimated 400,000 Californians benefited from the Employment Development Department automatically transitioning them from the PEUC program (which ended Sept 4th) to the EB program, which ended on September 11th, providing those eligible with an extra week of UI benefits, totaling about $120 million.
Key research findings
● Re-employment rates in the four quarters since the start of the pandemic in March 2020 have steadily increased, but remain lower than the pre-pandemic expansion time period, especially for lower-educated workers. 57% of workers who were fully separated from their employer in Q2 2020 were employed one year later, in Q2, 2021. In comparison, 71% of people who claimed UI before the pandemic (in Q4 2018) were re-employed within a year, though these periods are in different parts of the business cycle.
● Pandemic recall rates among re-employed UI claimants are higher than before the pandemic. Out of only those pandemic-period claimants who were re-employed anywhere a year after separation (in Q1, 2020), 59% have returned to work for their previous employer (in Q1 2021), compared to 43% prior to the pandemic.
● Re-employment and recall among those reemployed in Q2 2021 was unevenly distributed among UI claimants. Black workers, younger workers, lower-educated workers, men, and workers in the Administrative & Support and Food Service industries were less likely to be re-employed and less likely to be recalled to their previous employer.
● The rate of industry transitions has been lower during the pandemic. During the pandemic, 68% of people who were employed a year after being separated were employed in the same industry, compared to 62% before the pandemic. Similar to elevated rates of recall, this finding could reflect the temporary nature of the layoffs during the lockdowns at the beginning of the pandemic.
● Older workers had lower rates of industry transitions possibly reflecting specialization in industry-specific skills that make it difficult to change industries. Similarly, less educated workers have lower transition rates across industries, possibly reflecting the importance of education in adapting to new fields.
● Industry transitions are sometimes characterized by moves across industries with similar skills. The top destination for claimants from Food & Accommodation was Retail Trade and the top destination for Professional, Science, and Technology claimants was Information. The fact that workers from the hardest hit sectors in the pandemic typically find jobs in those same sectors may be hindering the path to recovery, especially for low-wage workers.
The California Policy Lab creates data-driven insights for the public good. Our mission is to partner with California’s state and local governments to generate scientific evidence that solves California’s most urgent problems, including homelessness, poverty, crime, and education inequality. We facilitate close working partnerships between policymakers and researchers at the University of California to help evaluate and improve public programs through empirical research and technical assistance.
The Labor Market Information Division (LMID) is the official source for California Labor Market Information. The LMID promotes California’s economic health by providing information to help people understand California’s economy and make informed labor market choices. We collect, analyze, and publish statistical data and reports on California’s labor force, industries, occupations, employment projections, wages and other important labor market and economic data.