December 8, 2020
In The 2021-22 Budget: California’s Fiscal Outlook, we describe the key economic changes since the budget passed and how these changes have impacted the state’s fiscal position. In this post, we look at one unforeseen labor market shift that has important implications for the state’s fiscal picture: compared to past recessions, a larger share of workers who have lost jobs during the pandemic do not have children. We believe this shift has contributed, along with other factors, to dampened caseload growth in Medi-Cal, which provides health coverage to 13 million low-income Californians, and CalWORKs, the state’s cash-assistance program for very low-income families.
Childless Workers Account for High Share of Job Losses. Of the 1.6 million workers who lost jobs between February and September, 1.1 million—71 percent—do not have children. This stands in stark contrast to the Great Recession, when a smaller share of workers who lost work—51 percent—did not have children. One primary reason why job losses have been concentrated among childless workers is simply that recent job losses have disproportionately affected young workers. Specifically, while workers under 25 years old represent 11 percent of the state’s overall workforce, these workers account for 24 percent of recent job losses. These younger workers are less likely to have children than older workers—6 percent of workers under 25 years old are parents, whereas almost half of workers over 25 years old are parents. Young workers have been disproportionately impacted by recent job losses in part because they are more likely to work in close-contact industries, which have been hardest hit during the pandemic. Workers under 25 years old are more than twice as likely to work in close-contact industries than older workers.
Caseload Growth to Date Below Expectations, Resulting in $3 Billion General Fund Savings. Both the administration and our office projected unprecedented Medi-Cal and CalWORKs caseload increases due to the pandemic. Recent data, however, tells a different story. As we detail in recent posts on Medi-Cal and CalWORKs, Medi-Cal and CalWORKs caseload growth has been slower than what was assumed in the budget. The Medi-Cal caseload grew by roughly 500,000 enrollees from March to July, while the budget act assumed around 2 million new enrollees during this period. In CalWORKs, actual caseloads grew by 14,000 families, whereas the budget assumed 158,000 new families would enroll. As a result of the slow caseload growth in these programs, we anticipate the state will realize savings relative to the costs assumed in the 2020-21 Budget Act. Based on updated estimates using caseload actuals, combined 2019-20 and 2020-21 savings appear to be roughly $1.2 billion General Fund in Medi-Cal and $1.9 billion General Fund in CalWORKs.
Childless Workers High Share of Job Losses Likely Contributed to Lower-Than-Expected Caseload. This unanticipated concentration of unemployment among childless workers likely contributes to recent CalWORKs and Medi-Cal trends. First, the shift affects CalWORKs caseloads because workers without children are not eligible for CalWORKs (CalWORKs is only available to families with children), meaning a smaller share of recently unemployed workers are eligible for CalWORKs than during the last recession. Second, the shift may impact Medi-Cal because a non-parent who loses their job and joins Medi-Cal may only bring one person onto the program, but a parent who enrolls in Medi-Cal following a job loss may bring themselves and their children onto the program.