California job market ranks among the weakest of the weak nationwide

California’s booming economy is one of the world’s largest, but a peek behind the curtain exposes the forbidding reality of a statewide job market that is ranked as one of the nation’s worst.

“There’s no sugarcoating the situation in California. Our economic growth is weak compared to other states,” said Jeff Bellisario, executive director of the Bay Area Council Economic Institute.

Several reports, as touted by some top California leaders such as Gov. Gavin Newsom, have established that the state is among the world’s biggest economies as measured by gross domestic product.

Tech leaders such as Nvidia are spearheading an artificial intelligence boom that has caused market cap values to rocket higher.

Hiring trends, however, paint a starkly different picture of the state’s economic health: California has one of the nation’s weakest job markets.

“California is no longer the land of plentiful jobs,” said Scott Anderson, chief U.S. economist with BMO Capital Markets. “This is true even for California’s technology industry, which has reached new heights of stock market capitalization but sheds jobs on a regular basis.”

Measuring the annual pace of job growth among the states, California ranked 37th in 2025. In 2024, it was 32nd.

“It is no surprise that even with California’s many economic advantages, the state ranks low in adding payroll jobs,” said Michael Bernick, an employment attorney with law firm Duane Morris and a former director of the state Employment Development Department. “Over the past few decades, California has built an edifice of hiring costs and regulations that discourage employers.”

Weaknesses in the statewide job market might not relent anytime soon, some economists warn.

“California continues to experience job growth well below the national average,” said Steve Levy, director of the Palo Alto-based Center for Continuing Study of the California Economy. “The sluggish job trends are expected to continue into 2026.”

In 2025, California’s job market lost jobs for the first time in a calendar year since 2020, a period that was marred by massive disruptions arising from the COVID-19 pandemic.

“It’s a fact that Silicon Valley has been a major driver of job growth in California, but Silicon Valley has hit the pause button,” said Russell Hancock, president of Joint Venture Silicon Valley, a San Jose-based think tank. “Efficiency is the new buzzword.”

Newsom’s office has directed some of the blame for the state’s employment troubles at President Donald Trump and his administration’s policies, a situation that many states in the country are also having to endure.

“Actually, the entire U.S. job market is sputtering as a result of Trump’s failed economy and tariff policies and immigration raids impacting employers and workers alike,” said Brandon Richards, deputy director for rapid response in the governor’s office.

However, the Trump administration’s approach has jolted a wide array of industries in the state, Richards said.

“Trump’s policies are impacting many of California’s job sectors, not just tech, including agriculture and beverage industries,” Richards said, noting that agricultural and beverage exports are both falling in the state.

While Newsom’s office may be placing most of the blame on the Trump administration’s policies, California’s job market actually began to falter during Joe Biden’s presidency.

Job totals in California rose by 7.7% in 2021. But its job market slowed to 2.6% growth in 2022 and 0.5% in 2023. California job totals perked up a bit in 2024, growing 0.9%.

Then came 2025, which ushered in a loss of 11,200 jobs for a 0.1% decline in the statewide job totals. In contrast to California’s weakness, hiring nationwide expanded by 0.4%, according to official figures posted by the U.S. Bureau of Labor Statistics.

“California will continue to rank low in job growth until it begins to address the core impediments to hiring,” Bernick said. “The state has responded to the low job growth by funding various economic development programs and projects. These have marginal impacts.”

Elsewhere around the country in 2025, nonfarm payroll job totals expanded by 1.8% in Missouri, 1.6% in North Carolina, and 1.4% in South Carolina. Pennsylvania, Utah, and Louisiana all experienced approximately 1.2% growth.

Rivals such as Texas, Florida, New York, and Tennessee all added jobs as California was losing them.

Job totals expanded by 0.9% in Texas, 0.7% in both New York and Tennessee, and 0.4% in Florida, this news organization’s review of federal labor statistics shows.

For December 2025, a jobless rate of 5.5% in California was the worst in the nation.

Setbacks in the Bay Area have helped suppress hiring in California. In 2025, the region lost 20,000 jobs, a decline spawned by employment losses of 8,400 in the East Bay, 6,400 in the San Francisco-San Mateo region, and 3,500 in the South Bay.

“The Bay Area, once a leading job creator for California, has turned into a consistent laggard in recent years,” Anderson said.

The employment nosedive in the state has largely been fueled by the private sector.

In 2025, private-sector employers slashed 31,400 jobs, while government employers added 20,200. The additions were mainly due to an increase of 45,800 local government jobs, which countered a loss of 9,100 state government jobs and 16,500 federal government positions.

“There is a wave of private sector investment happening in many parts of the country,” Bellisario, with the Bay Area Council Economic Institute, said. “It’s just not happening here.”

California’s economy boasts a $4.22 trillion value, the governor’s office notes. Ranked by GDP, that would put California in 4th or 5th place worldwide, depending on which report is used.

Still, GDP rankings might not matter as much for a state whose workers face a forbidding reality, Levy said.

“Serious work is needed to restore competitiveness,” Levy said. “This is not a time for boasting about how big our economy is.”