Wacky CA & NV Labor Markets Could Last Until 2023 to 2025

Worker at home

Recent financial and economic trends exhibited by households, workers, and consumers across California and Nevada point to the possibility of today’s historically unusual labor market not reaching some sense of normalcy in either state until sometime between 2023 – 2025.

This is according to the most recent synopsis of 11 regional credit union trends across California and Nevada, as analyzed by the California and Nevada Credit Union Leagues. Combined with monthly state-level jobs data, the picture becomes clearer.

Slow growth in each state’s labor force — combined with a hefty financial cushion across worker households — continues to be one of several reasons rearing its head out of a confluence of worker and employee trends transpiring over the past 12 months, something not expected to change near-term. The pool of individuals who are “willing and able” to work, as well as job-jumpers from one occupation to another, is making for one of the most difficult job market situations in modern history as many large employers and small businesses trudge forward.

The Latest Financial Trend
Going into first-quarter 2022, workers in local labor markets across both states were reaping the benefits of a major historical financial cushion coming out of late 2021. Local household “savings” in checking and all other combined deposit accounts hit their highest levels ever experienced at 283 credit unions headquartered across 36 counties in California and 15 credit unions headquartered in eight counties throughout Nevada.

Most localities’ total-deposit figures skyrocketed between 25 – 45 percent (depending on the local region) from pre-pandemic third quarter of 2019 to third-quarter 2021. (Fourth-quarter 2021 data is just now being released and is showing a slight plateauing trend in deposits — which is expected to plateau even more, or diminish, going into first-quarter 2022.)

This impressive deposit trend represents an unprecedented two-year increase.

Why? A Few Reasons…
“Just one reason deposits may have risen is because some current and former workers have been concerned with labor market prospects where they live — a situation that’s more tenuous today than 12 months ago,” said Dr. Robert Eyler, economist for the California and Nevada Credit Union Leagues. “Some people want flexible financial options due to uncertainty and unknowns in their income, even during what is perceived to be a somewhat healthy and growing jobs market.”

Eyler said businesses and policymakers throughout California and Nevada can expect the excess demand for workers by employers to continue possibly into the next few years, which is part of the “shadow effect” of the COVID-19 pandemic and resulting public health policies. Additional underlying reasons for today’s wacky labor force phenomenon also includes:

  • Some workers retiring throughout the pandemic and not considering rejoining the labor force either part-time or full-time until there is a possible “correction” in the financial/stock market or housing market prices (thus negatively impacting their wealth).
  • Some available workers in today’s labor force not having the immediate skills to fill high-demand job positions across a variety of industries.
  • Some individuals deciding not to job search or be hired as they face the marginal choice of working versus using childcare or dependent care, as well as concerns over safety at work.
  • Specifically just for California, a noticeable number of households migrating out of state.

“Each of these issues generally takes years to solve or reverse, and we can most likely assume these themes will continue for the next couple of years at a minimum,” Eyler said. “When it comes to worker and household deposits and savings, these volatilities should eventually diminish if the labor market’s continued job growth starts to increasingly resemble pre-pandemic hiring patterns. Hopefully it will also gradually get easier for employers to find workers as urban and suburban migration trends settle down.”

Deposit & Loan Data
Collectively, deposits made by California credit union members rose from $174 billion to $239 billion during the September 2019 to September 2021 period, and from $4.6 billion to $6.6 billion in Nevada — a statistically significant barometer of local financial and banking activity.

No other two-year period in recent history has experienced such a boost in credit union deposits by members and households to the tune of a net-positive $65 billion in California (37 percent growth) and $2 billion in Nevada (43 percent growth).

Altogether, credit union members, total loans, and total deposits either remained-at or reached record highs by Sept. 30, 2021 compared to the year-ago period, with 13.2 million members and $150 billion in outstanding loans in California, and 379,000 members and $3.5 billion in outstanding loans in Nevada.

For California’s statewide trends broken out by 10 local regions, click here: Bay Area, California, Central Coast, Central Valley, Greater Napa Valley, Northern California, Sacramento County, San Diego Region, Southern California, and Ventura County.

For Nevada’s statewide trends broken out by three local regions, click here: Nevada, Northern Nevada, and Southern Nevada.

These localized snapshot reports include details on first mortgages, HELOCs/home equity loans, new auto loans, used auto loans, credit card lending, and business loans, as well as checking accounts, savings accounts, money market accounts, certificates of deposit, and IRA/Keogh accounts.

Pin It