California’s weak job market is a cry for help. Is anyone listening?

California’s job market continues to suffer from largely self-inflicted wounds, despite the fact that the overall economy is growing. 

In April, Gov. Gavin Newsom projected that California’s economy had grown larger than Japan’s, making it the fourth largest in the world (if it were its own economy, which it’s not). 

But those macro gains don’t necessarily mean that much to everyday Californians, as once again the state leads the nation in unemployment at 5.5% (behind only Washington, D.C.). California just rose to the top of the list in February this year, but has for decades outpaced the national average in terms of unemployment.  

That is bad. But things are so much worse than that.

Between January 2024 and July 2025, the state lost approximately 2,600 jobs. Perhaps that doesn’t seem like a lot in a state of nearly 49 million people, but it’s the trend that matters. In fact, job creation in California has stagnated since the COVID recovery wore off. 

One glaring area of weakness is the massive job loss in the “Accommodation and Food Services” sector. It’s been two-years since the Legislature mandated a $20 fast food minimum wage increase, which is believed to have killed close to 20,000 jobs in this sector according to the Employment Policies Institute.

“The vast majority of evidence shows the $20 wage has been a disaster for fast food workers and employers alike, leading to more and more layoffs, increased automation, and fewer hours for staff,” EPI published in a press release. 

Though Newsom has regularly bragged about California leading the nation in manufacturing, that sector has seen the biggest loss of jobs since the start of 2024. “Professional and Technical Services,” which are generally highly trained jobs like accountants, lawyers, engineers, architects and veterinarians, have lost jobs at a pace similar to manufacturing. 

“Transportation, Warehousing, and Utilities” was one of the job markets with the biggest growth last year but has been one of the biggest losers so far this year. Construction went the opposite direction, having been a massive loser last year and a tiny spot of growth this year. 

“Retail Trade, Wholesale Trade, Administrative Services and Information,” which is a broad sector that includes many tech and entertainment jobs, are all down over the past 18 months, though Retail Trade has seen a slight bump this year. 

This is mostly the result of bad policy and overregulation. The tech industry, for example, has consistently been moving out of state because of the cost of living in Silicon Valley, among other things. Meanwhile, the entertainment industry has suffered from cost of living concerns as well, along with escalating production costs, high taxes and onerous labor policies. Things have gotten so bad with Hollywood that California taxpayers are paying billions of dollars in tax credits to try to keep the industry in state (which is not really working). 

On the flip side, there have been a few winners: The previously mentioned Transportation, Warehousing, and Utilities, Government and Health Care and Social Assistance. What do these all have in common? Significant government spending. 

Federal and state spending on things like roads, public transportation, high-speed rail, utility infrastructure upgrades and maintenance have all boosted this sector (at the taxpayers’ expense), while Health Care and Social Assistance is heavily subsidized. Government, of course, is entirely supported by taxpayers.

So is this a problem?

Yes, it’s a big problem. 

“Ultimately, it is the private sector that generates prosperity,” said Wayne Winegarden, an economist and my colleague at the Pacific Research Institute, a Pasadena-based think tank promoting the free market. “Government jobs do not create growth; they are a function of growth.”

Though government spending can create a boost in economic growth, it’s unsustainable without a thriving private sector. The government can only spend what is given by taxpayers, therefore taxpayers need to thrive to keep the government afloat. That’s an oversimplification, but you get the point. 

It’s possible that since the overall state economy is growing that the job market just simply hasn’t caught up yet. Taken in that context, the stagnant job market is likely a bad sign. 

It’s more likely that bad policies, like those already described and many more, are depressing the job market, as well as other factors like AI and automation. 

This could very well pull down the overall market, especially with the state economy’s over-reliance on government spending and tax dollars.  

California is fortunate to have a massive, dynamic economy and could very well plow through any upcoming turmoil to minimize the impact on its citizens. But why take that risk? 

It’s very obvious that the state’s inability to build more housing, the cost of living, the high tax burden (with relatively little to show in return), onerous labor policies are limiting growth and have a significant impact on the economy.

Newsom and the Legislature need to pay attention and rollback some of the more egregious policies before it’s too late.

Matt Fleming is an opinion columnist for the Southern California News Group and is the director of communications at the Pacific Research Institute. Email him at flemingwords@gmail.com and follow him on X @FlemingWords.