California’s job market is experiencing a downturn, with fewer jobs on the market. The job openings rate for the Golden State in December 2023 was 4.4%, this is a much lower number than the national average of 5.4%. In 2022, California’s job openings rate was 6.5 percent, which was much closer to the nation’s average of 6.8 percent.

Higher Unemployment Than The Rest Of The United States

Another concerning issue with the California job market is how the state makes up for one fifth of the unemployment claims nationwide.

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A whopping 16.6% of the unemployment rate comes from California.T 

The Unemployment Continues To Go Up 

Moreover, the unemployment rate in California continues to go up. It is now 5.2% as of January this year. 

Source: Psychology Today

While the rest of the country only occupies 4% of those that don’t have a job. This figure has maintained for 25 months, California is evidently trailing behind.

Not Enough Employment Opportunities 

The decline in hiring extends uniformly across the state, from Sacramento all the way to Los Angeles. 

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Since the onset of the pandemic in 2023, California has created around 640,000 jobs. However this still isn’t enough jobs for the 1.38 million workers that existed before the pandemic took place.  

Increased Labor Costs

Additional factors may include increased labor costs (healthcare and fast food employees were to receive a raise in the state) and other requirements that make it harder for a business to operate in California.

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As a result, many businesses have been forced to move to different states, in search of lower operational costs and less regulations. Meanwhile, the former employees of these businesses stay behind without being able to secure new jobs. All leading to higher unemployment. 

Continuing To Blame It On The Pandemic 

Analysts have explored a variety of causes for the lack of employment growth in the state. Leftover effects of the pandemic are somewhat to blame.

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John Blevins of Cornell University’s SC Johnson College of Business detailed, “Some businesses have not fully recovered and some went out of business and have been lost. Higher business operation hurdles make it harder for small businesses to weather this storm more than other states.” 

Entertainment Strikes Contribute To Economic Downturn 

The entertainment industry stands out as having the biggest employment drop, the union strikes by Writers Guild of America and SAG-AFTRA have had a significant effect on the employment of the entertainment workers. 

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Despite production occurring in different parts of the country, the industry as a whole is centered in Los Angeles, California. 38,000 jobs were reportedly lost in film and sound recording sectors between January 2023 and January 2024. 

Low Wage Workers Are Disappearing 

A contributing factor to unemployment in California may also be because of the decline in low wage workers.

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Due to the high cost of living in California, lower wage workers may have left for greener pastures in other states. Blevins said that their lack of presence has left a gap that Californian businesses struggle to fill. “Therefore, it reduces business productivity,” he added.

Other Industries Experiencing Decline 

Other industries are also grappling with job loss and cuts. Employment in the tech info business, transportation, and trade sectors have also declined.

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For example, computer programmers and engineers were down by more than 105,000 jobs in January compared to the year before. 

Housing And Taxes Could Be Too High 

Once more, the excessively high cost for housing and taxes that exist in California are pushing people away from the state.  

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An economist from LA’s Loyola Marymount University, Sung Won Sohn, compared the situation between other states. “The reason why Texas and Florida are doing well and California isn’t, it’s the cost of housing and high taxes. We have a lot of small businesses.”

A Challenge Across The Nation 

California has to exert considerable efforts to catch up, not just in regards to employment, but with the overall economy.   

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With a significant deficit in the state’s budget, the state faces an ongoing battle. Californians may find it difficult to remain optimistic, but it’s a challenge that the entire country will likely share.  

Cut The Red Tape

Blevins suggested that one way to boost the state’s employment rate is by decreasing “the cost of doing business.” 

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The state should reduce red tape and streamline procedures for doing business. He also recommended offering incentives for new business creations, operations, and expansions.