With trade policy and tariffs, funding for federal programs, and the federal government workforce under the microscope, questions abound over the impact these issues will have on California businesses, households, and communities. That’s on top of concerns about slowing job growth in the state and layoffs in key California sectors like tech and Hollywood. As of the latest data for March, California’s job trends have not changed markedly from prior months but do indicate overall worsening conditions, despite some bright spots.
Since January, California has lost 33,000 jobs. Hiring by California’s employers has been slowing for some time. Although job growth coming out of the pandemic in 2021 and early 2022 far exceeded typical rates, by mid- 2022, California employers were adding fewer jobs by percentage than US employers. That pattern has held for over two years, with slower job growth in California and even some months of job loss for the state.
The unemployment rate in California has also ticked up since the middle of 2022, moreso than in the US. Today, about one million Californians are unemployed and looking for work. As a percentage of the labor force (5.3%), that rate is relatively low by historical standards—but it does mark a substantial increase since the best point in the pandemic recovery (3.8%) and since the pre-pandemic low (4.0%).
Since September 2022, California employers have added 194,000 jobs. However, some sectors have struggled. Businesses in the information sector and the professional and scientific services sector—home to many tech firms and the movie/video industry—have shed jobs: they are 15% and 4% smaller today than they were in September 2022. The administrative service sector has also shrunk, as has manufacturing. In our recent posts, we followed these sector trends as California job growth diverged from the country and as sectors appeared to steady.
Several large sectors have added jobs to the California economy amid the overall slowdown since September 2022.
- The health care and social assistance sector is now 15% larger, having added over 385,000 jobs. Half of those jobs have been in social assistance, largely comprising personal and home care workers. The other half have been health care jobs in hospitals, doctor’s offices, and nursing care facilities.
- Government is now 6% larger, having added 163,000 jobs. These are almost entirely local government jobs, which comprise the bulk (70%) of government jobs in California to start with—and are primarily local education jobs. Federal government employment has grown by 5,300 and state government employment by 24,000 over this period.
- The much smaller other services sector, as well as the arts & entertainment and private educational services sectors have all grown consistently since September 2022. Together these three sectors added 110,000 jobs. Within the other services sector—which includes businesses like auto repair, dry cleaning, and religious organizations—jobs in civic and social organizations have grown the most.
California’s labor market is doing well in a historical context, but growth is slowing and lags behind the rest of the US. Additional headwinds include how new tariffs will affect California’s $750 billion trade economy and how cuts to federal funding and/or government employment will affect Californians.
The March jobs data—the latest available—do not include much of the effects of these policies. For instance, even employees already laid off due to federal cuts may be counted as employed if they are receiving paid leave or severance pay. Without the 29,000 jobs in health care, social assistance, and local government added since January, California would have seen almost double the job losses. These are important bright spots, but spurring growth across all of California’s sectors will be necessary to avert recession and promote broader prosperity.
