California Unemployment Spikes

California saw applications for unemployment benefits rise for the week ending March 30, according to the Department of Labor—a signal that the jobs market may become more challenging amid a rise in the state's jobless rate.

In the Golden State, the number of jobless claims increased by 2,147, the largest rise in the nation. Pennsylvania followed with 1,913 new claims, and Iowa with 1,383. Overall, for the week ending April 6, claims declined by 11,000 to 211,000, below what economist expected.

The labor market in California has experienced bumps compared to the rest of the country. In February, its 5.3 percent unemployment rate was the highest in the country, the Bureau of Labor Statistics reported—increasing from January's 5.2 percent. At the national level, the jobless rate was at 3.9 percent during the month.

Job losses were particularly noticeable in the construction sector, which shed 9,600 jobs, the state's employment department reported. It said the sector was affected by disruptions from multiple storms that hit the area throughout the month. Total nonfarm jobs hit almost 18 million in February, but they experienced a net loss of 3,400 roles from the previous month.

Over the next few weeks, the state could see layoffs, particularly in the fast-food sector, where a $20 minimum wage went into effect on April 1. Some pizzerias have indicated that they may reduce their staff or pause recruiting to cut costs following the salary increase, The Wall Street Journal reported.

In September, when the wage increase was announced, the state's Democratic Gov. Gavin Newsom said: "California is home to more than 500,000 fast-food workers who—for decades—have been fighting for higher wages and better working conditions. Today, we take one step closer to fairer wages, safer and healthier working conditions, and better training by giving hardworking fast-food workers a stronger voice and seat at the table."

A spokesperson in Newsom's office told Newsweek on Thursday that improved wages are a win-win for businesses and employees.

"Higher wages and better workplaces benefit both workers and employers. In recent years, corporate profits in the fast-food industry have soared while wages have stayed the same," the spokesperson said. "This new law will ensure that over 500,000 California workers get access to the fairer wages and safer, healthier working conditions that they deserve."

While California's unemployment rate sits at 5.3 percent, the state has recovered substantially from pandemic-induced highs in its jobless rate, which soared to more than 16 percent in April 2020. The labor market has not returned to pre-pandemic levels. In February 2020, the unemployment rate was 4.4 percent.

In March 2020, California introduced stay-at-home orders, the first state in the country to do so after the first recorded COVID-19-related death was confirmed in the United States the previous month.

Update 4/11/24, 4:30 p.m. ET: This article has been updated with comment from a spokesperson from Governor Gavin Newsom's office.