Despite Gov. Gavin Newsom’s repeated boasts about California’s economy ranking fourth in the world, the state is struggling to provide jobs for its residents. According to the U.S. Bureau of Labor Statistics, California had the highest unemployment rate in the nation in August at 5.5%, a figure unchanged from July. The Golden State is one of only a handful of states with an unemployment rate above 5%, well above the national average of 4.3%.
By comparison, neighboring western states are doing better: Utah came in at 3.3%, Arizona and New Mexico at 4.1%, and Oregon at 5%. Washington stood at 4.5% while Colorado posted 4.2%.
Dr. Wayne Winegarden, senior fellow at the Pacific Research Institute, says California’s sky-high cost of living, punitive regulations, and aggressive minimum wage laws are driving employers out and stalling job creation. “It’s too costly for companies to hire people here,” Winegarden said. Businesses are increasingly allowing workers to live out of state to avoid the costs of California’s expensive housing and taxes.
One key factor in the job losses is the $20-per-hour minimum wage for fast food workers, which has forced restaurants to lay off staff and shift toward automation. “Those kiosks cost money, and they may not have been worth the expense if you could pay someone less than $20 an hour,” Winegarden explained. Fast food job losses have been significant, with companies like McDonald’s increasingly using touch screens instead of front-line employees.
Additionally, California residents are burdened with the highest gas prices in the country—averaging $4.655 a gallon, compared to the national average of $3.171.
California’s modest job gains—just 3,800 new payroll jobs in August—are largely in the healthcare and retail sectors, driven by an aging population rather than business expansion. Manufacturing, meanwhile, continues to stagnate. High-profile companies have relocated to states like Texas, further weakening job growth.
Winegarden acknowledged California’s ranking as the world’s fourth-largest economy, but pointed out this shift came only because Germany’s economy contracted. “We’re not adding enough jobs,” he warned. “We’re averaging less than 4,000 jobs a month.”
He concluded that California’s economic recovery will require substantial policy reforms, including scaling back minimum wage hikes and slashing burdensome business regulations. He also dismissed tax incentives for Hollywood productions as ineffective. “A better way to win the game is to have an environment where you don’t have to bribe someone to stay,” he said.
