A custodial worker vacuums inside an office building in San Francisco. California’s unemployment numbers continue to rise, partially because of a tough tech sector. Jessica Christian/S.F. Chronicle
California’s unemployment rate rose to 5.5% in July, the highest among U.S. states, as tech and other office jobs showed more weakness and hiring remained sluggish, according to state data released Friday.
The state added a net 15,000 jobs, pushing the unemployment rate up 0.1 percentage points from June to the highest rate since December. California’s rate was higher than the national unemployment rate of 4.2% in July.
The state unemployment rate is calculated by a survey of 4,400 households in California, which found an estimated 18,200 more people were searching for jobs in July compared to June, despite the overall increase in employed workers.
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Revised figures also showed a net loss of 9,500 jobs in June.
California’s slowing job market mirrored the national economy, which saw 73,000 jobs added in July, lower than monthly job gains earlier this year, and downward revisions for May and June.
San Francisco’s unemployment rate rose slightly to 4.4% in July, up 0.2 percentage points from June.
Michael Bernick, former head of the state Employment Development Department, said people seeking tech jobs are grappling with the toughest market in years, especially for new graduates and entry-level workers.
“It’s brutal out there,” said Bernick, who is special counsel at Duane Morris LLP. While artificial intelligence is partly to blame as it automates some tasks performed by entry-level workers, Bernick noted that tech companies are still shedding some of the roles that they overhired for during the pandemic.
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Bernick said there was a disparity between California’s layoffs and cost-cutting in office jobs, particularly in tech, and some growth in manufacturing and logistics.
“The blue collar economy is making a comeback,” he said. “But the white collar economy is tightening.”
California’s trade, transportation and utilities sector saw a net gain of 1,300 jobs statewide in July compared to June, while manufacturing was up by 300 jobs, though it’s lost 32,500 jobs since July 2024.
In contrast, professional and business services were down 7,100 jobs in July, the worst of any sector, and the tech-heavy information sector lost 1,000 jobs.
Two areas of strength in California’s economy are the health care sector — which along with private education added 23,100 jobs statewide in July — and perhaps surprisingly, government, which added 7,200 jobs.
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But the public sector faces a difficult future, with the Trump administration’s widespread federal layoffs and spending cuts. Federal jobs in California declined by 400 in July, and that’s not counting workers who were laid off but remain on payrolls for a time.
Both the state and local governments including San Francisco, Oakland and San Jose are facing huge deficits and implementing hiring freezes.
Tariffs are another hurdle, but it remains unclear how much they will affect the economy, Bernick said.
“Certainly things haven’t collapsed,” he said. “The job market’s holding up.”