January 27, 2025
Beacon Employment Report | California
Presented by Beacon Economics
Copyright © Beacon Economics LLC
CALIFORNIA’S JOB GROWTH CONTINUES IN LATEST DATA
Unemployment Rate Ticks Up… So Does Labor Supply
15,000
Monthly Job Growth
California’s labor market expansion continued in the latest numbers. Total nonfarm employment in the state grew to a seasonally adjusted 18,119,400 in December, an increase of 15,000 positions over the month. November’s jobs gains were revised down to a 9,600 increase, 1,500 fewer jobs than the preliminary estimate of a 11,100 indicated.
The state’s labor market has remained relatively resilient despite slowdowns in handful of industries such as manufacturing, tech, and entertainment. However, employment growth in California has trailed the nation in recent years. Since February 2020 (the start of the pandemic), total nonfarm employment in the state has grown 2.6% compared to a 4.7% increase nationally. California increased payrolls by 1.0% from December 2023 to December 2024, just behind the 1.4% increase nationally over the same period.
5.5%
Unemployment Rate
“The monthly job numbers are lagged and of course don’t account for any impact the fires in Los Angeles may have,” said Christopher Thornberg, Founding Partner of Beacon Economics. “However, as tragically painful as the personal and community losses have been, we expect the aggregate employment and general economic effect to be relatively short-lived.” Thornberg notes that disasters such as the fires are generally characterized by temporary dips in employment and spending followed by surges in activity fueled by recovery spending.
California’s unemployment rate increased to 5.5% in December, up 0.1 percentage points over the previous month. The state’s unemployment rate remains among the highest in the nation. and has increased over the last year, notably for younger workers. In contrast, initial claims for unemployment insurance have remained stable.
2,900
Monthly Labor Supply Growth
California continues to struggle with its labor supply, which grew by 2,900 in December. Since February 2020, the state’s labor force has fallen by -196,900 workers, a -1.0% decline. This is being driven primarily by California’s ongoing housing shortage and by the retirement of aging workers. Also, affecting the job numbers, the two surveys that make up the monthly estimates have diverged in recent years. Total nonfarm employment is up 1.9% over the last two years according to the payroll survey, while household employment is down 0.2% over the same period according to the household survey. The divergence between the two surveys suggests there may be a downward revision in payroll employment when the annual revision of employment figures occurs in March.
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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