In a surprising turnaround, the yearly benchmark revision by the California EDD shows that the state’s labor force has grown twice as much as previously estimated, and that the state’s employment numbers were slightly overestimated.

“Over the last few years, California has added far more payroll jobs than workers, which typically suggests a sharp downward revision to the employment numbers when a new year of data starts on top of new benchmarks,” said Christopher Thornberg, Founding Partner of Beacon Economics. “The reason the 2024 employment revisions were not as bad as they might have been, is due to the growth in the state’s labor force.”

From December 2023 to December 2024, 125,400 workers joined the labor force in California, more than double the 57,300 originally estimated. This translates into 0.6% growth compared to the original estimate of 0.3%. The state’s 2023 labor force figures were also revised upwards, with growth from December 2022 to December 2023 increasing from 0.6% to 1.3%.

The annual benchmark revision revealed the opposite for California’s 2024 employment figures, revising them slightly downwards. Employment growth in the state from December 2023 to December 2024 was reduced from 1.0% to 0.9%. “This decline translates to about 100,000 jobs, not as many as anticipated,” said Thornberg. In addition, the state’s employment growth from December 2022 to December 2023 was revised down from 0.9% to 0.5%.

According to Thornberg, the increase in California’s labor force is a function of the undercounting of immigration into the United States over the last few years by the Census. “Recent estimates from the Congressional Budget Office used border detention data and indicate much larger inflows than the official numbers… that is now starting to show up in the labor force figures,” said Thornberg. “But given the current administration’s antipathy towards immigrants, it’s unlikely the state will see future upward workforce revisions of this scale.”

At the industry level, the benchmark revision was mixed, with growth rates in some sectors revised upwards, while others were revised downwards. The biggest upward revisions to year-over-year growth rates occurred in Transportation, Warehousing, and Utilities (revised from 2.4% to 3.7%), Health Care (revised from 4.2% to 5.3%), Manufacturing (revised from -3.4% to -2.7%), Education (revised from 2.8% to 3.4%), Information (revised from -2.1% to -1.5%), and Government (revised from 2.2% to 2.4%).

The biggest downward revisions in year-over-year growth rates were in Mining and Logging (revised from -0.5% to -3.1%), Administrative Support (revised from 1.9% to 0%), Finance and Insurance (revised from 0.6% to -1.1%), Leisure and Hospitality (revised from 0.8% to -0.5%), Retail Trade (revised from 0.4% to -0.5%), Construction (revised from -1.3% to -2.1%), Management (revised from -0.2% to -0.9%), Professional, Scientific, and Technical Services (revised from -0.2% to -0.8%), Other Services (revised from 0.5% to 0.2%), and Wholesale Trade (revised from -0.3% to -0.5%).

California’s benchmark revision also produced mixed news at the regional level, with growth rates revised up in the Central Valley and growth in other parts of California revised down. The largest upward revisions in annual growth rates occurred in Napa (revised from -0.5% to 4.0%), Modesto (revised from 1.0% to 2.9), Fresno (revised from 1.7% to 2.5%), Bakersfield (revised from 0.7% to 1.3%), Redding (revised from 1.5% to 2.1%), Sacramento (0.5% to 1.6%), Salinas (0.3% to 2.1%), Yuba (2.9% to 3.1%), San Diego (0.5%% to 0.8%), and Hanford (revised from 1.2% to 1.4%). Downward revisions occurred in Stockton (revised from 5.3% to 2.3%), Vallejo (revised from 0.9% to -0.9%), San Luis Obispo (revised from 1.1% to -0.6%), San Rafael (MD) (revised from 1.7% to 0.1%), Oakland (MD) (revised from 0.7% to -0.4%), Oxnard (1.3% to 0.3%), El Centro (revised from 1.9% to 1.2%), Santa Rosa (revised from 0.7% to 0.2%), Orange County (MD) (revised from 0.7% to 0.3%), Merced (revised from 2.2% to 1.9%), and Visalia (revised from 1.6% to 1.4%).