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California's Unemployment Rate: California continues to hold the highest unemployment rate among the states and DC, reaching 5.3% in March 2024, the highest since December 2021 and higher than Department of Finance's forecast of 4.9% for this period. Despite a modest 0.5% growth in the labor force since early 2023, employment has dropped by 104,200 jobs since last July.
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Job Market Challenges: The number of unemployed individuals has risen sharply by 20.4% since early 2023. Employer hiring plans remain largely unchanged at an average of 800,000 unfilled job openings over the past 4 months—translating to 0.8 jobs per unemployed in contrast to the general labor shortage conditions that continue in the other states.
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Unemployment Insurance Claims: California accounts for a significant portion of national unemployment insurance claims, with 21% of initial claims and 22% of insured unemployment, exacerbating the strain on the state's unemployment insurance fund. This mounting debt, ignored in state budget planning, is on track to exceed $20.8 billion by the end of 2024.
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Impact on State Budget and Jobs Growth: The state's reliance on high-tech growth sectors, which have been hit by layoffs, has masked the broader employment challenges stemming from California's regulatory environment. Job growth has primarily been fueled by public funding-dependent industries, such as government and healthcare, while other private sectors have experienced declines. Challenges in sustaining job growth persist as the state grapples with reduced revenues.
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