The Center for Jobs and the Economy has released our full analysis of the June Employment Report from the California Employment Development Department. For additional information and data about the California economy visit www.centerforjobs.org/ca. 

Job Openings—the number of unfilled jobs at the end of the month—further softened in May, continuing to show erosion from the uptick that occurred at the end of 2024. The California number dropped 7.4%, while nationally the unfilled job backlog rose 5.0%.

Combined with the unemployment numbers, restrictions holding back jobs creation (other than Government and government-supported Healthcare & Social Assistance) in the state indicates how intractable the state’s unemployment situation has become. In June, California tied with Nevada for the highest unemployment rate among the states (2nd highest if DC is included), and the level of unemployment remained above 1 million for the 18th month in a row. As a result, the data shows only 0.6 unfilled job per unemployed worker in California—by far the highest among the states—while the national averages returned to a more accommodative 1.1.

The underlying job dynamics, however, showed little change. Employer hires and layoffs and discharges remained in the bands that have largely been in place since 2023, with businesses continuing to largely retain the workers they have and adding only modestly to the worker rolls. Workers similarly continued to remain within their current jobs, with total quits at the lower levels of the last two years.

Our Califormers series initially began in response to media reports about a potential Tech migration from the state. This effort was an attempt to assess the scale of this trend, but the results have instead indicated that companies shifting all or a portion (including through expansions) of their operations out of the state have instead tended to be in manufacturing. This conclusion is consistent with the recent PPIC analysis of headquarters relocations that found that 55% of the companies moving between 2011 and 2021 were in manufacturing.

Recent experimental data released by US Census Bureau adds another dimension to this issue by tracking construction spending on new manufacturing and on manufacturing improvements. The results show a more direct indication of where companies are moving along with the states in which they are choosing to expand. The data is developed by Census Division (see map) rather than individual states, but the extreme disparity in the results is a clear indication of how much California has fallen behind on these key investments.

The Southeastern and Intermountain states along with an emerging center in the historic industrial cities in the East South Central States have secured an overwhelming share of these investments. The Pacific Division (containing California and 4 other states) in sharp contrast at best can be termed an “also ran.” Between 2023 and May 2025, the top 4 Divisions saw manufacturing investments totaling $421.3 billion, while the 5 states of the Pacific Division shared $17.5 billion.

Jobs follow investments. California remains the largest manufacturing state—and the Los Angeles-Santa Ana MSA remains the nation’s leading manufacturing center—but these leads are slipping. California’s near-term high was 10.5% of the nation’s manufacturing jobs in 2022. Following a 9.2% decline in the state’s jobs, that share slipped to 9.7% in the most recent data for 2024:Q4. As the recently announced investments in new production facilities for electric vehicles, batteries and other components, chips, defense equipment, and other products are completed and begin operation, this trend is likely to continue.

As with most things economic, the comparison between California and Texas is the most pronounced. While Texas manufacturing has seen a steady rise, California instead has experienced a sharp drop in recent years. On the current trendlines, Texas would surpass California by 2027.

However, there are many factors that could affect the current trends. The recent CEQA reforms included a conditioned exemption for advanced manufacturing, but there are many other areas where California remains at a competitive disadvantage for these middle-class job investments, including:

• Energy costs are not just higher, they are massively higher. In the latest data, the average industrial electricity rate is 83.8% higher than the average for all the other states and 290% higher than the lowest cost state, industrial natural gas rates 96.6% higher overall and 322% higher than the lowest cost state, and diesel is 45.0% higher overall and 62.2% higher than the lowest cost state. Not surprisingly, Texas is the lowest cost state in 2 out of the 3 categories.
• The state’s labor laws increase costs and reduce operating flexibility, including the state’s unique overtime rules, PAGA litigation risks, and other aspects throughout the labor code.
• The state’s ports were a key competitive advantage in the development of this industry, providing ready access to supplies and components and to export markets. In recent years, this infrastructure has been under regulatory and cost pressure, including litigation and restrictions on critical warehousing infrastructure, Air Board’s at-berth rules, and attempts at indirect source rules and operation limits. Under the recent Air Board proposal for broader indirect source rules, manufacturing facilities themselves also face the prospect of increased costs and operation limits directly. In contrast, other states have made major investments in port and intermodal transport infrastructure, and now provide trade access often at lower cost and with competitive total transport timelines.
• The emergence of the High School Movement and shift to vocational training were key events developing the workforce with reading and mathematical proficiency along with vocational skills that were essential to the nation’s growth as the global manufacturing center. The state’s poor school performance combined with a still-limited vocational pipeline reverses these advances and has undermined the availability of workers in this industry.

Recent press stories mistakenly suggested that In-N-Out Burger was about to become another CaliFormer by moving to Tennessee. As clarified by the company, however, only the company’s CEO is moving. The company continues to phase out its Irvine facilities to its headquarters consolidation in Baldwin Park. Tennessee instead will host a secondary headquarters operation focused on expansion in the Eastern US.

The initial stories missed the key point. The company’s CEO (estimated net worth of $7.3 billion by Forbes) is yet another high income taxpayer choosing to leave the state. While the company actions we track have implications to jobs and the overall economic health of the state, such moves have more immediate implications to the health of the state budget. We will provide an update on this topic once the annual IRS tax migration data is released.

Additional CaliFormer companies identified since our last report are shown below. The listed companies include those that have announced: (1) moving their headquarters or full operations out of state, (2) moving business units out of state (generally back office operations where the employees do not have to be in a more costly California location to do their jobs), (3) California companies that expanding out of state rather than locate those facilities here, and (4) companies turning to permanent telework options, leaving it to their employees to decide where to work and live. The list is not exhaustive but is drawn from a monthly search of sources in key cities.

Both initial claims and insured unemployment (4-week moving averages) continued to follow the 2024 trends.

With unemployment remaining above the 1 million mark for the 18th month in a row, California workers remain more dependent on this program than in other states. California accounted for 19.0% of all initial claims nationally, and 20.2% of all insured unemployment.

Yet in spite of workers’ reliance on this program in the absence of more robust jobs creation, the recently enacted budget bills ignore the state’s unsustainable and growing $21.6 billion debt. While earlier versions contain a provision to allow some payments as part of the state’s Prop. 2 obligations, the enacted version remains silent on this debt.