Job Shortage Not a Concern, But It Should Be

The job market in California in mid-2025 is complicated. Officially, unemployment is at about 5.4 percent, but other problems are harder to see, like underemployment, unstable wages, and a lot of competition for skilled jobs. Layoffs in the tech industry, uncertainty in the economy, and rising living expenses are all changing the way people work in the state. We’ll give a full picture of California’s job market by looking at official data, trends in the gig economy, changes in the law, and responses from individuals and policymakers. This will help readers understand why the lack of good jobs is still a big problem.

Current State of California Employment

Labor Indicators

• As of June 2025, California’s unemployment rate went up a little, from 5.3% to 5.4%. This was because of more tech layoffs and job losses in business and professional services. There were some new jobs in health care and education, but not enough to make up for the overall drop.
• PPIC says that in April 2025, about 1.055 million Californians were actively looking for work (5.3% unemployment). When you add in underemployed people, the total stress on the workforce is close to 10% (~2 million people).

Tech Industry and Job Market Trends

• The tech industry lost 29,000 jobs across the country in March 2025. In California’s Bay Area, San Francisco and San Mateo lost 1,600 jobs, and Santa Clara and San Benito counties lost 500 tech jobs, even though the overall job market was getting better. That made California’s unemployment rate higher than the national average (5.5% vs. 4.5%).
• California has lost about 33,000 jobs since early 2025. This is because hiring has slowed down, and the market is still weak.

Gig Economy and Contractor Work

• California has more than 1.4 million gig economy workers (platforms such as Uber, Lyft, DoorDash), many of whom report irregular earnings and limited benefits.
• About 63.5% of self‑employed Californians are independent contractors or sole proprietors, while 36.5% are incorporated businesses employing others.
• Nationally, gig work constitutes about 16.4% of the U.S. workforce (~25 – 30 million people) in 2025, generating ~$455 billion in gross volume.

Legal Landscape

• AB 5 (2019) codified the “ABC test” to determine employee classification and extended labor protections to many workers, though it excluded roles like designers, accountants, and other professional contractors.
• Proposition 22 (2020) AB 5 didn’t apply to gig platforms for drivers. They were treated as contractors with limited benefits, like health stipends and mileage pay, and they couldn’t get unemployment insurance or the right to bargain collectively.
• AB 1340 (2025, pending) could enable ride‑hailing drivers to unionize and bargain collectively for better pay and benefits, contingent on enactment.
• Enforcement challenges remain: studies show Prop 22 benefits are not reliably delivered, and state agencies have limited jurisdiction to enforce violations.

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Why Job Scarcity and Underemployment Matter

• Income instability: Underemployment and variable gig income make budgeting and long‑term planning difficult.
• Lack of benefits: Many gig workers and contractors lack access to health coverage, unemployment insurance, or retirement plans.
• Mental health pressures: Financial insecurity and a mismatch between skills and jobs contribute to stress and reduced career satisfaction.
• Skills mismatch: Workers in roles below their qualifications may fall behind in evolving sectors, especially as tech advances.
• Equity concerns: Young adults, Black and Latino workers, and those without a college diploma face disproportionately higher unemployment rates in California.

Policy and Personal Responses

Individual-Level Strategies

• Invest in reskilling and continuous learning (e.g. certifications in tech, healthcare, cloud services).
• Use networking or freelance platforms to diversify income sources.
• Explore part-time roles with defined hours and some protections over purely gig-oriented work.

Policy-Level Interventions

• Strengthen enforcement of Prop 22 and ensure gig companies follow wage and benefits requirements.
• Support legislation like AB 1340 to improve labor bargaining power.
• Expand skills training programs, especially for underrepresented groups.
• Provide social protections to contractors and gig workers (e.g. portable benefits).
• Encourage small business development to create stable, local jobs.

Conclusion

California’s job market in 2025 shows two sides: even though the official unemployment rate is over 5%, there are even more people who are underemployed and working on a gig basis. Thousands of skilled workers aren’t using their full potential, gig workers have trouble making ends meet, and tech layoffs are still affecting the state’s economy. Strong policy action is needed, such as enforcing labor laws, giving unions more rights, and starting more training programs. Job scarcity and insecurity are not just economic problems; they are also important for the health of California’s communities, fairness in job opportunities, and people’s financial stability.

Frequently Asked Questions

What does California’s 5.4% unemployment rate mean?

It shows how many people in the labor force are actively looking for work. It doesn’t include people who are looking for full-time jobs while working part-time or people who have stopped looking for work, so the real labor stress is closer to 10%.

How many Californians work in the gig economy?

More than 1.4 million gig workers work for Uber, Lyft, DoorDash, and other similar companies. This is a large part of the state’s non-traditional workforce.

Has Prop 22 helped gig workers?

Not all the time. Prop 22 promised a minimum wage guarantee and stipends, but enforcement is weak, and many workers say they have trouble getting benefits because state agencies don’t always step in.

What could AB 1340 achieve?

If it passes, AB 1340 would let ride-hailing drivers in California form a union and negotiate pay and benefits as a group, which would make workers’ rights stronger.

Why is underemployment a concern even if unemployment seems moderate?

Underemployed people are working fewer hours or in jobs that are below their qualifications. This limits their income, career growth, and financial stability, even though they are counted as “employed.”

What can policymakers do to improve job quality in California?

They can make sure that gig workers are protected, support labor laws, give more chances for training and reskilling, set up portable benefits, and encourage small businesses to hire more people.

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Reviewed and edited by Albert Fang.

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Article Title: Job Shortage Not a Concern, But It Should Be

https://fangwallet.com/2025/08/19/job-shortage-not-a-concern-but-it-should-be/

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