More than two years after massive pandemic-induced job losses, unemployment in Long Beach has dipped below pre-pandemic levels, according to data released by the California Economic Development Department last week.

In May, Long Beach unemployment dropped to 4.6%, down from 4.8% the month before. The unemployment rate was 4.8% in February 2020, before the pandemic sent it skyrocketing, reaching a high of 19% by May of that year.

“The only two industries that are really lagging are arts, entertainment, recreation and accommodation, and food service,” Nick Schultz, executive director of the city’s Pacific Gateway Workforce Investment Network, told the Business Journal in an interview last week. “Other industries, like transportation and warehousing, are up 14% from pre-pandemic levels.”

The Long Beach labor force and number of employed residents, however, are actually lower than they were prior to the pandemic, the data shows. The city’s labor force was 231,900 in May, down 11,500 from February 2020. Similarly, the number of employed residents was down 10,500.

The industries that are at or above pre-pandemic levels are typically higher paying than the hospitality and tourism jobs that are lagging, Schultz said. Because of that, he said he believes the city is in a stronger economic position—in terms of jobs—than it was before COVID-19.

Several factors have likely contributed to the suppression of the labor force and number of employed residents, Schultz said.

“Women haven’t returned to the workforce in the same numbers that they were before the pandemic—child care and some other things continue to be a challenge,” he said.

“Also,” Schultz added, “a lot of people, because of the number of better paying jobs, are taking some time to do training or figuring out how to transition to a better job in one of these industries that are booming.”

Residents who are not actively looking for work are not included in the city’s labor force or employment figures.

The city’s unemployment rate is on par with Los Angeles County’s overall, which is 4.5% as of May. However, the city is trailing behind nearly 67% of all 124 other cities and areas countywide. Only 29% of the county’s cities and areas have higher unemployment rates than Long Beach.

Four cities—Hawthorne, Los Angeles, Norwalk and Pico Rivera—have the same unemployment rate as Long Beach.

Statewide, the unemployment rate fell to 4.3% in May, down from 4.6% the month before. California’s unemployment rate remains elevated compared to the national rate, which reached 3.6% last month—just shy of the 3.5% unemployment rate in February 2020, which was its lowest point since 1969.

With the highest inflation in decades and interest rates being hiked up quickly, some economists are predicting the U.S. will enter a recession soon and that unemployment rates will begin to rise. In its most recent outlook report, Beacon Economics predicts the country is inching ever closer to a “serious contraction.”

“The trillion-dollar questions are when will a recession likely begin and how bad will it be; timing wise, certainly not yet,” Beacon founding partner Christopher Thornberg said in a statement.

In Long Beach, Schultz said he would not make predictions about impacts on the local economy’s labor market. He said there is too much uncertainty that essentially boils down to consumer spending habits.

Amid the pandemic, money was spent heavily on goods, but now leisure and entertainment are making a comeback, Schultz explained. If consumers pull back from goods in favor of experience, the reduced demand could eat into profits.

“When you reduce the demand and the profit that the producers can make,” Schultz said, “that’s when we start to see job loss.”