Layoffs, health scares and family needs are forcing some into retirement before they're ready.
San Diego, California – California’s labor market is losing momentum in early 2025, with new data showing the state has shed 54,800 jobs since the beginning of the year—underscoring widening concerns about the state’s economic health. While pockets of growth remain, especially in health care and local government, layoffs in key industries like technology, entertainment, and manufacturing suggest the state may be slipping into a regional recession.
According to the latest data released Friday by the California Employment Development Department (EDD), the state lost 11,600 jobs in March alone, with the Bay Area accounting for 5,800 of those losses. Job downturns were reported in all three of the region’s major metro areas: San Francisco-San Mateo (-2,100), the South Bay (-1,900), and the East Bay (-1,200).
The state’s overall unemployment rate ticked down slightly in March to 5.3%—but remains elevated from its pandemic-era low of 3.8%, with over one million Californians currently seeking work. Job growth in the state has been slowing since mid-2022, diverging from the national trend. While the U.S. has added 456,000 jobs in 2025, California has consistently posted job losses, signaling structural challenges unique to the state.
The sectors driving the decline are familiar but worrying. Since September 2022, California’s information sector and professional and scientific services—home to tech firms and the Hollywood entertainment industry—have contracted by 15% and 4%, respectively. Administrative services and manufacturing have also seen sustained cuts.
Russell Hancock, president of Joint Venture Silicon Valley, attributed much of the slowdown to corporate belt-tightening. “Our tech companies have been on an efficiency push for the past year or more,” he said. “Now you add in the whiplash effect of tariffs, the threat of retaliation, and the general uncertainty that has created.”
Meanwhile, revisions to prior months’ data paint an even bleaker picture. Job loss estimates for January and February were revised downward, with the state losing a combined 43,200 jobs—more than double the original figures.
Still, California’s economy isn’t without glimmers of hope. Health care and local government added 29,000 jobs since January, cushioning the broader declines. Since September 2022, the health care and social assistance sector has grown 15%, while government employment has risen 6%, driven largely by local education jobs.
But experts warn that relying on public-serving sectors won’t be enough. “Without those gains, California would be in a much deeper hole,” said Michael Bernick, former EDD director. “What’s missing is broad-based private sector growth, especially in export-oriented industries.”
As California’s job count drops below 18 million for the first time in over two years, concerns mount over federal policy, global trade instability, and a shrinking risk appetite in one of the country’s most innovation-driven economies.
