California’s labor market is showing signs of stabilization, with job numbers at the mid-year point matching those from January 2024. This “hold-steady” pattern is a notable improvement from the previous year, when the state experienced significant job losses and a rising unemployment rate. At present, California’s unemployment rate stands at 5.4%, roughly the same as at the beginning of the year. However, with over one million unemployed residents—one of the highest figures in the country—the need for job growth remains critical.
The state’s labor force has seen an increase of 137,000 people since January, outperforming all other states except Texas in growth. This influx largely comprises recent graduates and discouraged workers re-entering the job market, although it may temporarily inflate the unemployment rate. While some states have successfully grown their labor forces alongside a reduction in unemployment, California has not yet followed suit, largely due to stagnant nonfarm payrolls.
The sectors experiencing job losses include accommodation and food service, manufacturing, and notably the professional and technical services sector, which lost 47,000 jobs this year. In contrast, healthcare, social assistance, and government sectors have added jobs, although growth has significantly narrowed, with only healthcare and social assistance continuing to expand into 2025.
The decline in transportation and warehousing jobs, down about 19,000 since January, presents additional concerns. This sector, once a pillar of job growth during the pandemic, is now facing uncertainties that may hinder its recovery. Job performance in this area mirrors patterns from the previous year, raising questions about labor market stability in key regions like the Inland Empire and Central Valley, which have seen some of the steepest declines.
While the growth in healthcare and government jobs is encouraging, their dependency on policy and government funding presents vulnerabilities. Future cuts, such as those proposed in the One Big Beautiful Bill Act, could severely impact workforce requirements in healthcare, underscoring the fragility of job growth in sectors reliant on external funding.
In summary, while some positive trends are evident in California’s labor market, the lack of widespread job growth and continued high unemployment highlight the challenges the state faces. Addressing barriers to employment and connecting new entrants to job opportunities will be essential for fostering a more robust economic environment moving forward.
via www.ppic.org