CENTRAL VALLEY – The number of California residents in the labor force has dropped by 142,000 in the past year. That is roughly as many as joined the pool of available workers in each of the previous two years, according to the state’s Employment Development Department.
Overall, there are fewer people looking for work, whether they have retired, died, moved away, left the country or are having less children.
The same trend is happening in Central California, where these dynamics are creating surprising results. In Fresno County, there are 3,500 fewer residents in the labor force while the number of jobs in Fresno County ticked up year-over-year by a few hundred. Meanwhile, there has been a big decline in the unemployment rate from 8% in May 2025 to 7.4%.
Fewer Find Work
The decline in the labor force appears tied to many factors, including difficulties in finding work.
Normally after a year, about half of unemployed Californians find employment, based on the EDD data that tracks the same worker over time. However, the number of people finding work has fallen in recent years. In 2026, about 31% of those who were unemployed one year ago are working full-time and 13% are working part-time. These patterns are similar to unemployment trajectories before the COVID pandemic, when unemployment rates were at record lows.
Job searches may be lasting longer because recent growth has been concentrated in a few sectors. Health care, accommodation and food services and “other services” sectors have seen the strongest job gains since mid-2022, while information, construction and manufacturing jobs have continued to decline.
Government hiring, previously a source of growth, has fallen off, especially at federal and state levels.
More Leave the Labor Force
Some unemployed Californians are opting to leave the labor force. Thirty-eight percent of Californians unemployed a year ago are out of the labor force today (comparing January-April of 2025 and 2026) — up from 27% for 2022–2023.
The decline in the labor force has a silver lining. The jobless rate among those that are available for work is also going down.
Consider the San Francisco County metro area, which just reported 494,300 people in the labor force in May 2026 compared to 501,800 in May 2025 and 534,900 in May 2019. That’s pretty much a steady decline year after year in the number of people available for work in metro San Francisco.
While the unemployment rate improved in San Francisco to 3.3%, down from 3.7% in May 2025, the labor pool dropped by around 5,000 workers.
Similarly in Fresno County, the unemployment rate dropped from 8% in May 2025 to 7.4% this May. While the number of jobs are up slightly, the dramatic drop in the jobless rate is largely because there are fewer people looking for work.
In Tulare County, the labor force is about 5,000 less than May 2025 while the number of jobs is down about 2,000. Despite the lower number of people employed in Tulare County, the jobless rate in 2026 is 9.5%, down from 10.3% in May 2025. In Tulare County, that means there are fewer unemployed, but mostly because there are fewer potential workers out there.
Less Immigration, Migration
There are a number of reasons people are leaving the labor force, such as retirement, starting school, caregiving responsibilities and health limitations. But the combination of longer unemployment and a larger share of unemployed workers out of the labor force suggests that a neutral labor market may be less supportive of reemployment than the unemployment rate indicates.
The labor force is also shrinking due to the population aging, baby boomers retiring and, critically, a sharp decline in net immigration, a major factor in the Central Valley where foreign-born residents are a majority and ag is the top industry.
A Sacramento Bee report from this January notes that Census numbers reflect California’s migration numbers dropping nearly 70% compared to the previous year, from roughly 361,000 to 109,000.
“In some ways, I guess it makes some sense, since California is the home to the most immigrants, and if it’s going to drop, it’s going to hit California the hardest,” said UC Davis Law Professor Kevin Johnson in the Bee’s report. “The state, particularly Southern California, has become a focal point for Trump’s mass deportation agenda. Thousands of immigrants were arrested or deported in 2025.”
As any farmer will tell you, agricultural regions are heavily reliant on immigrant labor, but are experiencing severe structural shortages.
California’s population as a whole declined by about 200,000 over the last five years, according to the Census Bureau. Most of that change reflects more residents dying or leaving the state than those arriving or being born. Last year alone, 229,000 people left California — making it one of only five states to experience a population decline, notes the Sacramento Bee.
The EDD also notes a significant wave of older employees opted for early retirement during the pandemic and chose not to return to the workforce.
More Choose No Kids
Younger generations are having fewer children, meaning less native-born citizens are aging into the workforce to replace retirees. Birth rates at Kaweah Delta hospital in Visalia have declined from nearly 5,000 annually in 2018-19 to 3,800 in 2025-26 — a 20% drop.
Finally, there’s a long-term trend in California where more people are moving out of state due to the high cost of living. For over 20 years, California has experienced negative net domestic migration, in which the number of people moving out of the state in a year exceeds the number moving in.
Now comes worries that AI may already be accelerating high-tech jobs losses around the Bay Area. That includes companies like Meta, Intuit and LinkedIn, all of which announced layoffs this year.
