(The Center Square) – California’s unemployment rate rose to 5.5% in December according to preliminary December data from the U.S. Department of Labor, up from 5.4% in November. An analysis from the state-funded, nonpartisan Legislative Analyst’s Office found that state employment likely grew by 3,000 new workers as 6,000 workers became unemployed, highlighting the state’s economic challenges.
California’s state unemployment rate is now the second-highest in the nation, only behind Nevada, which had a 5.7% preliminary unemployment rate for December.
“About 3K workers entered the labor market but an additional 6k reported being unemployed,” wrote Chas Alamo, LAO Principal Fiscal & Policy Analyst.
This means the current unemployment rate is approximately 45% higher than it was in September 2022 when the unemployment rate was only 3.8% amid the post-pandemic recovery.
Early estimates for damage and losses from the Los Angeles area wildfires are approximately $250 billion, and could have a major effect on the state’s budget due to lost or shifted economic activity.
As noted in a report from the Public Policy Institute of California, the state faces major economic headwinds beyond the wildfires, and any potential impact from Trump administration cuts to federal spending in California or tariffs.
“In the last two decades, the share of the population participating in the labor force has fallen 5 percentage points (from 67% to 62% today) due to the aging of California’s population,” wrote Sarah Bohn, vice president and director of the PPIC Economic Policy Center.
With the state expecting one in four Californians to be 60 or older by 2030, a declining number of workers are left to pay for state benefits for a growing population of retirees, which could put further strain on the state budget in the coming years.
