Grant program under scrutiny

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California’s economic recovery is trending in the wrong direction.

The Golden State’s unemployment rate grew to 9% in December, triggering the first month-to-month increase since April 2020, according to figures released Friday by the Employment Development Department. While the nation’s unemployment rate remained static in December, California’s rose 0.9% as the state shed 52,200 jobs — a staggering 37% of all U.S. jobs lost that month.

California’s economic recovery lags behind the country’s: Although the United States has regained nearly 56% of jobs lost since the pandemic hit, California has only recovered 44%.

California’s strict stay-at-home orders have exacerbated its growing divide between the haves and have-nots. The professional and business services sector gained 29,600 jobs last month, while the leisure and hospitality sector hemorrhaged 117,000 jobs and the “other services” sector, which includes hairdressers and nail salons, lost 11,000 jobs. The latter two sectors may not recover until 2025 or 2026, “if ever, given … accelerated automation and alternative sales channel development trends,” according to a report from the California Center for Jobs and the Economy.

The state is rolling out an unprecedented small business rescue plan, but owners say their survival will depend more on reopening rules and resolving unemployment chaosCalMatters’ Lauren Hepler reports. A small number of businesses, unable to obtain or survive on loans, have decided to remain open in violation of health regulations.

Meanwhile, Gov. Gavin Newsom wants lawmakers to quickly approve $575 million in small-business grants, adding on to $500 million allocated last year. But the nonpartisan office that advises the state Legislature suggested it “defer action” on Newsom’s proposal, and raised numerous concerns about the program, including:

  • A lack of data on whether the grants are targeting the most impacted businesses and nonprofits.
  • A lack of clarity on how the state chose its third party-vendor, which received $25 million to administer the program.
  • A lack of information about the factors used to determine which applicants receive the grants.
  • Whether there are adequate measures in place to prevent fraud.

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