Jobs are up in Merced County, latest numbers show. But what about wages for workers?

Exciting news to celebrate this Labor Day: Merced, Fresno and Stanislaus counties have enjoyed some of the most robust job growth in the nation.

Now, the not-so-celebratory news: Those same places have seen some of the nation’s stingiest pay increases.

Merced County ranked 20th in job growth over the year ending in March, the federal Bureau of Labor Statistics found in a new report.

But it ranked 333rd in average weekly wage increase percentage for the first three months of the year compared with the same period last year.

A big reason for the gap in the Central Valley is that jobs in the service and hospitality industry are growing quickly, in many cases more quickly than higher-paying jobs in technology and professional services.

“The high paying tech sector, which used to be the workhorse of the state’s economy, has been slowing or decreasing employment, while low-paying service sectors, including bars, restaurants and lodging have been increasing employment,” said Sung Won Sohn, president of SS Economics in Los Angeles.

He noted that the biggest job growth vs. wage growth gaps occurred in the Bay Area. Employment was up 10.1% in San Francisco, but pay fell 9.1%. In San Mateo County, there were 7% more jobs but average weekly pay fell 9%.

Where the jobs are

Trade, transportation and utilities was the biggest employer category in the state in July, followed by education and health services, business and professional services and government. Leisure and hospitality was next, but had the biggest year to year growth in the number of jobs.

The state’s unemployment rate last month was 3.9%, matching the rate reported in February, 2020, just before the Covid pandemic sent job losses soaring.

As of last month, “California’s private sector has fully recovered from pandemic losses,” the state’s Economic Development Department said.

But not the leisure and hospitality sector. It had 2.05 million jobs in February, 2020, the month before the Covid pandemic. Jobs became scarce during the Covid pandemic as tourism declined and independent restaurant owners often had a difficult time surviving.

They often had a tough time finding workers. At the peak of the Covid pandemic, a qualified unemployed worker could receive as much as $1,050 a week. The extra Covid-related money ended last year, and the current maximum benefit is $450 a week. The federal government also provided three economic stimulus payments to those who qualified in 2020 and 2021.

The leisure and hospitality sector is still trying to recover. In July 2022, it still had not returned to its pre-Covid level in California.

The sector employed 1.9 million people in the state in July, even though its job growth easily topped other employment categories over the past year. A total of 172,000 jobs were added in leisure and hospitality, well above runner-up professional and business services with 138,700.

Pay and jobs

The federal bureau collected data from 355 of the nation’s largest counties. Job growth figures measure March 2021 to March 2022. Wage growth data compares the first three months of 2021 to the same period this year. The figures:

▪ Fresno County, 24th in job growth, 263rd in wage growth.

▪ Stanislaus County, 65th in job growth, 292nd in wage growth.

▪ Sacramento County, 67th in job growth, 225th in wage growth.

▪ Placer County, 32nd in job growth, 297th in wage growth.

▪ San Luis Obispo County: 82nd in job growth, 308th in wage growth.

The future for wage growth — as it struggles to keep up with inflation — may not be bright, experts noted.

“The most positive aspect of the worker shortage in California throughout 2020 and 2021 was the wage gains, and the highest gains were in the lower wage jobs.” said Michael Bernick, .a former California Employment Development Department director and now an employment attorney at Duane Morris LLP. “These gains have slowed this year, and with inflation far from under control, many workers in this state are finding themselves going backward.”