August 21 2026
Beacon Employment Report | California
Presented by Beacon Economics
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Beacon Economics publishes a variety of online reports that analyze and forecast the U.S., California, and California regional economies. These publications provide users with the latest data, and with substantive commentary on the overall direction of the economy, employment and unemployment, international trade, real estate markets, consumer and business spending, and much more. The reports represent only a sampling of the kind of analysis Beacon Economics produces.
California's Restricted Job Growth Leans On Health Care Sector
Labor Supply Growth Turns Negative
20,500
Monthly Job Loss
California employment decreased in July but June’s losses were revised to a gain, according to an analysis of the state’s new job numbers.
Total nonfarm employment in the state fell to a seasonally adjusted 18,133,000 in July, a decrease of 20,500 positions over the month. June’s job losses were also revised, and as a result, employment grew by 6,100 from May to June.
From July 2025 to July 2026, California increased payrolls by 0.6%, outpacing a 0.2% increase nationally over the same period. California’s labor market continues to be supported primarily by locally serving industries such as Health Care, Leisure and Hospitality, and Education.
Without the state’s sizeable gains in Health Care, employment levels would be down 2,400 over the past year.
5.1%
Unemployment Rate
California’s unemployment rate dropped to 5.1% in July, down 0.1 percentage-points from the prior month. The state’s unemployment rate has fallen by 0.4 percentage-points over the last year, while the nation’s rate is down 0.2 percentage-points.
However, given California’s weak job gains, the decline in unemployment is being driven by a contraction in the state’s labor force, rather than a strong job market. California’s unemployment rate remains amongst the highest in the nation, behind only Washington D.C., Oregon, and Connecticut.
70,300
Labor Supply Decline
The state’s labor supply fell by 70,300, or -0.4%, month-over-month. Over the last year, the labor force has contracted by 286,300 workers, a 1.4% decline and steeper than the 0.8% drop nationally. Labor force growth in both California and the United States started to turn negative in 2026 for the first time since the pandemic.
Lower levels of international migration to the United States, an aging population, and the state’s chronic housing shortage continues to limit labor supply growth.
“California’s labor market is holding up, but its foundations remain troublingly narrow,” said Research Manager Justin Niakamal. “Health Care continues to mask weakness across much of the economy, while the falling unemployment rate reflects a shrinking labor force more than stronger hiring. Without broader job growth—and meaningful progress on housing and labor supply—the state will struggle to build lasting economic momentum.”
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The Beacon Employment Report | California is a unique analysis of California’s employment numbers and trends. Each month, we link our own econometric predictions to data released by the U.S. Bureau of Labor Statistics and the California Employment Development Department to identify important changes in employment across industries and regions. The Beacon Employment Report is also one of the few analyses that uses seasonally adjusted numbers, which are critical to revealing accurate trends and insights within data. The analysis is a sample of the kind of research available from Beacon Economics.
The contents of this report are based on information derived from carefully selected sources Beacon Economics believe are reasonable. We do not guarantee its accuracy or completeness and nothing presented here shall be construed to be a representation of such a guarantee.
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