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As COVID soars, so does unemployment in California

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California’s jobless rate surged in December as the coronavirus pandemic spun out of control and statewide restrictions forced more businesses to shut down, throwing tens of thousands of workers onto unemployment rolls.

Nine percent of Californians counted themselves out of work in December, up from 8.1% in November, state officials reported. The rise marked a reversal in what had been a steadily improving labor market since April’s unprecedented 16.4% jobless rate.

Much of the distress was driven by hotels and restaurants closing, as tourism and business travel failed to revive and officials restricted dining out to try to control the spread of the virus. The leisure and hospitality sector lost 117,000 payroll jobs, offsetting gains in construction and professional and business services.

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“December’s job loss capped a year of trauma,” said Lynn Reaser, an economist at Point Loma Nazarene University in San Diego. “Summer should usher in a stronger economy, but it will be critical to first subdue the virus. Only then can we spring back to life.”

COVID-19 has sickened more than 3 million Californians since the spring, killing more than 35,800, according to a Los Angeles Times tracker. So far, just 1.6 million vaccines have been administered amid shortages and a rocky rollout.

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The virus surged after Thanksgiving, as many Americans ignored warnings to avoid traveling and gathering with friends and relatives over the holiday. At the same time, businesses ran out of federal loans, unemployment benefits expired and Congress remained stalemated over a new coronavirus rescue package.

A $908-billion aid bill was signed Dec. 28, which will grant $300 a week in federal unemployment benefits in addition to regular state aid, and businesses can apply for new federal Paycheck Protection Program loans.

Many economists predict the new package will be far from adequate to address the crisis. President Biden has proposed an additional $1.9-trillion stimulus plan to combat the coronavirus emergency, but it faces a divided Congress.

California’s labor market is faring worse than the nation’s, as the state has become a virus hotspot. U.S. unemployment was 6.7% in December. Between December 2019 and last month, California payrolls were down by 1.41 million jobs, an 8% drop. During the same period, the U.S. lost 9.37 million jobs, a 6.2% decrease.

December’s unemployment data is taken from two federal surveys during the week of Dec. 12. The unemployment rate is based on a survey of 5,100 California households. The payroll job numbers come from a survey of 80,000 California businesses.

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