Over the past two years, California’s job market has weakened for workers in private sector industries, while the number of government jobs has increased, according to a July 1 report from the nonpartisan Legislative Analyst’s Office.
“A closer look at this period unveils a more worrisome trend: large and mounting private-sector job losses that have been offset by continued hiring in public sector... fields,” analysts wrote in the report.
After reaching a post-pandemic peak in September 2022, non-government jobs have declined by about 154,000—a 1.2 percent drop—while the public sector has grown by approximately 361,000 positions—representing a 7 percent increase, analysts said.
Technology, finance, and business services industries experienced the largest declines, percentagewise, dropping by 16 percent, 8 percent, and 3 percent respectively since peaking after the pandemic, according to the report.
The report found that labor forces in accommodations and food services, personal services, and private education industries are growing.
Nationwide, private sector employment is expanding, with professional services—including accounting, consulting, and advertising, among others—and real estate and leasing jobs growing by 7 percent.
Also, the nation’s 4.1 percent unemployment rate in June was better than the Golden State’s 5.2 percent, according to the state’s Employment Development Department data.
Labor markets vary across the state, with Imperial County’s 16.4 percent unemployment rate the worst, Colusa’s 11.6 percent ranking second highest, and Tulare’s 10 percent placing third.
On the other end of the scale, San Mateo County’s 3.5 percent is the lowest statewide, with San Francisco and Marin counties’ 3.6 percent tied for second best.
State employment estimates are published monthly—derived from current employment surveys by the U.S. Bureau of Labor Statistics—and are revised annually by the labor bureau by matching data to California’s unemployment insurance program totals.
The Federal Reserve Bank of Philadelphia provides early revisions with quarterly reports, and its data covering the fourth quarter of 2023 showed “essentially no net job growth” for the year, according to the state analyst’s office.
While government jobs are offsetting losses in private industry, according to analysts, growth in the public sector could be stymied by spending restraints in the recently passed state budget.
To balance a $73 billion deficit, the state has frozen unfilled positions in government agencies, and all departments are ordered to reduce spending by 8 percent.
How this will affect the job market remains to be seen, as the state’s Department of Finance is currently working with administrators to identify how best to comply with the new regulations. More details are expected this fall, Joe Stephenshaw, the finance director, said in a July 10 webinar hosted by the California Endowment—a nonprofit headquartered in Los Angeles.
California Gov. Gavin Newsom, however, recently celebrated what he said are positive trends in the job market for 2024—with more than 107,000 jobs created in the first six months of the year—but his analysis did not distinguish between private and public sector positions.
“California continues to lead the nation’s economy and create good jobs throughout the state,” Mr. Newsom said in a July 20 press release. “Just this year, the state more than [doubled] what we accomplished in the same time period last year.”
The governor said seven of the state’s 11 industry sectors grew in June, thus contributing to an additional 22,500 jobs statewide.
He anticipated more growth in the Golden State because it is home to more Fortune 500 companies than any other, and hosts 35 of the top 50 artificial intelligence companies in the world.
California also leads the nation in business investment, access to venture capital funding, manufacturing, high-technology employment, and agriculture, according to Mr. Newsom.