Following a swift recovery from the pandemic, California's employment growth has slowed in recent months, raising concerns about the state's long-term economic outlook, especially in the face of ongoing budget deficits. A closer examination of pre- and post-pandemic employment trends reveals a more complex picture. While employment growth patterns have shifted since the pandemic, this shift highlights that regions with the fastest growth have largely seen increases in low-wage sectors.

From 2015 to 2019, employment growth was strong across California. The Inland Empire (14.7%) and the Central Valley (10.4%) experienced the highest growth, followed by the San Francisco Bay Area (9.8%). By 2023, employment levels in the Bay Area and Los Angeles metro area had dipped slightly below 2019 levels, whereas the Inland Empire and Central Valley saw more significant growth (8.2% and 6%, respectively). This disparity is partly due to the varying severity of initial pandemic job losses, with the Central Valley and Inland Empire experiencing the smallest declines (-4.3% and -3.7%, respectively) from 2019 to 2020.

A detailed look at regional growth trends reveals differences among low-wage sectors (e.g., leisure and hospitality, other services, and trade, transportation, and utilities), middle-wage sectors (e.g., construction, manufacturing, education, and health services), and high-wage sectors (e.g., finance, information, and professional services). From 2015 to 2019, low- and middle-wage sectors led job growth in the Inland Empire and Central Valley, while high-wage sectors grew at slower rates. In contrast, the Bay Area and San Diego–Orange metros saw the most significant growth in high- and middle-wage sectors, with Los Angeles experiencing relatively balanced growth across wage levels.

From 2019 to 2023, these patterns shifted. The Inland Empire saw growth across low-, middle-, and high-wage sectors, although low-wage sectors contributed most to this growth.

Conversely, the Central Valley lost jobs in high-wage sectors despite overall high employment growth. The Bay Area’s low-wage sectors remain nearly 7% below pre-pandemic levels, while its middle- and high-wage sectors have continued to grow, though at a slower pace than before the pandemic.

Post-pandemic growth also varies regionally across sectors. In the Central Valley and Inland Empire, there has been high growth in low-wage sectors like other services, leisure and hospitality, and trade, transportation, and utilities. Specifically, trade, transportation, and utilities jobs have increased by 15.5% in the Inland Empire and 9.4% in the Central Valley. Conversely, the Bay Area has experienced declines in leisure and hospitality (-8.4%) and trade, transportation, and utilities (-6.1%).

Overall, these regional and sector-specific trends indicate diverging labor market conditions across California. Differences are influenced by the sector mix and the performance of these sectors in each region. Factors such as changing migration patterns, cost-of-living pressures, and the persistence of remote work contribute to this divergence. While inland regions have shown more economic promise recently, their employment growth remains concentrated in low-wage sectors. For long-term economic improvement, these regions will need to leverage positive trends to not only boost employment but also increase wages, addressing the economic disparity between coastal and inland California.