California Job Growth Skews to Low-Wage Care, Masking Tech Weakness

A 25% surge in low-wage healthcare jobs has papered over job losses in California's high-wage sectors, a new analysis of labor data reveals.

A boom in healthcare and social assistance hiring is single-handedly propping up California’s job market, masking a decline in other sectors of the state's economy. According to an analysis of Labor Department data by the Economic Innovation Group (EIG), these roles grew by 25% over the last four years, preventing the state from suffering a net job loss during that period.

This trend points to a structural shift in the Golden State's labor force, long associated with high-paying tech and entertainment industries. "You’re seeing far more seats open in low-wage sectors and seats go away in high-wage sectors," said Kenan Fikri, a senior fellow at EIG. California is "creating more jobs in low-paid, locally serving healthcare or healthcare-related sectors and losing jobs in high-paying, high-value, export-oriented manufacturing and highly paid service sectors."

The divergence is stark. Without the growth in health and social-assistance jobs, California would have seen a net decrease in employment over the period EIG analyzed. The phenomenon is also visible nationally, with healthcare and social assistance accounting for roughly 47% of the entire country's 115,000 job gain in April. Oregon showed a similar, though less pronounced, trend.

The growth highlights a critical vulnerability for California's economy: the creation of lower-wage jobs is replacing higher-paid ones. This could impact long-term tax revenues and consumer spending power, creating a bearish outlook for an economy heavily reliant on high-income earners. The trend is further threatened by potential cuts to federal healthcare funding.

Low Wages, High Growth

The data reveals a concerning trade-off. The largest growth came from some of the lowest-paying occupations.

Between the third quarter of 2022 and the third quarter of 2025, the sector for "Services for elderly/disabled" added nearly 200,000 jobs. The average weekly wage for these positions was just $487, according to the EIG analysis.

Similarly, home healthcare services saw employment jump by nearly 25% in the same period, yet average wages in that category actually declined by 2.7%. In contrast, jobs in outpatient care centers, which have a much higher average weekly wage of $2,304, grew by a significantly smaller number.

The boom is driven by powerful demographic and policy forces. An aging U.S. population is increasing demand for medical care nationwide. In California, this is amplified by a state-level push to provide in-home supportive services for older adults and billions in recent spending on behavioral health services. Hiring for mental health practitioners nearly doubled from Q3 2022 to Q3 2025.

However, the foundation of this growth may be unstable. Fikri noted that much of the expansion is supported by federal funds. California is already curtailing a program providing Medicaid for undocumented residents, and faces broader cuts related to the end of enhanced Affordable Care Act subsidies.

"If this federal support starts to dry up, we’re going to soon discover whether the healthcare boom has legs sufficient to stand independently,” Fikri said.

This article is for informational purposes only and does not constitute investment advice.