California Continues to Struggle with Labor Supply as Employment Expands Modestly

State’s Unemployment Rate Remains Highest In Nation

California’s labor market expanded modestly in April, with total nonfarm employment in the state growing by 5,200 positions over the month, according to an analysis released today by Beacon Economics. March’s gains were revised down to 18,200 in the latest numbers, a 10,100 decline from the preliminary estimate of 28,300.

As of April 2024, California has recovered all of the jobs that were lost in March and April 2020, and there are now 314,300 more people employed in the state compared to February 2020. Total nonfarm employment has grown 1.8% over this time compared to a 3.9% increase in the United States overall. California increased payrolls by 1.2% from April 2023 to April 2024, trailing the 1.8% increase nationally over the same period.

The state’s unemployment rate held steady at 5.3% in April 2024, unchanged from the previous month. California’s unemployment rate is the highest in the nation and remains elevated relative to the 3.9% rate in the United States as a whole. The state continues to struggle with its labor supply, which remained essentially unchanged in April (declining by a negligible 100). Since February 2020, California’s labor force has fallen by -246,200 workers, a -1.3% decline. In comparison, over the past twelve months the nation’s labor force has increased by 0.8%. 

Industry Profile  

• At the industry level, job gains were mixed in April. Health Care led the way with payrolls expanding by 10,100, an increase of 0.4% on a month-over-month basis. With these gains Health Care payrolls are now 13.6% above their pre-pandemic peak.
  
• Other sectors posting strong gains during the month were Transportation, Warehousing, and Utilities (3,700 or 0.4%), Leisure and Hospitality (3,100 or 0.2%), Government (2,600 or 0.1%), Education (1,800 or 0.4%), Retail Trade (1,000 or 0.1%), and Wholesale Trade (400 or 0.1%).
  
• Payrolls decreased a handful of sectors in April. Construction experienced the largest declines, with payrolls falling by -6,000, a contraction of -0.6% on a month-over-month basis. Note that this decline was largely due to late season storms affecting construction projects across the state.
  
• Other sectors posting significant declines during the month were Manufacturing (-5,300 or -0.4%), Professional, Scientific, and Technical Services (-3,600 or -0.3%), Real Estate (-700 or -0.2%), Finance and Insurance (-700 or -0.1%), Administrative Support (-600 or -0.1%), and Information (-600 or -0.1%).

Regional Profile

• Regionally, job gains were led by Southern California. Los Angeles (MD) saw the largest increase, where payrolls grew by 5,700 (0.2%) during the month. The Inland Empire (2,600 or 0.2%) and San Diego (1,200 or 0.1%) also saw their payrolls jump during the month. However, payrolls fell in Orange County (-2,700 or -0.2%), Ventura (-500 or -0.2%), and El Centro (-2,200 or -0.3%). Over the past year, El Centro (1.9%) has had the fastest job growth in the region, followed by the Inland Empire (1.5%), Ventura (1.4%), Orange County (1.1%), San Diego (0.8%), and Los Angeles (MD) (0.6%).
  
• In the Bay Area, the East Bay experienced the largest increase, with payrolls expanding by 2,600 (0.2%) positions in April. San Rafael (MD) (200 or 0.2%) and Napa (100 or 0.1%) also saw payrolls increase during the month. However, San Francisco (MD) (-1,700 or -0.1%), Santa Rosa (-600 or -0.3%), and Vallejo (-600 or -0.2%) experienced payroll declines during the month. Over the past 12 months, Vallejo (3.0%) enjoyed the fastest job growth in the region, followed by Santa Rosa (2.3%), Napa (2.2%), San Rafael (MD) (1.6%), the East Bay (0.9%), San Jose (0.2%), and San Francisco (MD) (-0.8%).
  
• In the Central Valley, Sacramento experienced the largest monthly increase as payrolls expanded by 900 (0.1%) positions in April. Payrolls in Yuba (400 or 0.8%), Bakersfield (300 or 0.1%), Fresno (300 or 0.1%), and Visalia (100 or 0.1%) increased as well. However, payrolls fell in Stockton (-500 or -0.2%), Modesto (-200 or -0.1%), Merced (-200 or -0.3%), Redding (-100 or -0.1%), and Hanford (-100 or -0.2%). Over the past year, Madera (5.7%) had the fastest growth, followed by Yuba (4.2%), Merced (3.7%), Modesto (3.6%), Sacramento (2.5%), Hanford (2.4%), Redding (2.3%), Fresno (2.2%), Visalia (2.1%), Stockton (2.0%), Chico (1.5%), and Bakersfield (1.1%).
  
• On California’s Central Coast, Salinas (200 or 0.1%) and Santa Cruz (200 or 0.2%) added the largest number of jobs during the month. Santa Barbara (-100 or -0.1%) saw payrolls decline. From April 2023 to April 2024, Salinas (1.9%) has added jobs at the fastest rate, followed by Santa Cruz (1.6%), Santa Barbara (0.8%), and San Luis Obispo (0.5%).