San Diego's 6-month streak of a falling jobless rate comes to an end

SAN DIEGO — San Diego County saw its six-month streak of a falling unemployment rate come to an end in June, as teachers went on summer recess, but the region still managed to eke out a small net gain in job growth last month.

The latest figures from the state Employment Development Department show a jobless rate of 4.4%, up from 3.9% in May, but still lower than the county’s year-ago rate of 4.7% and California’ 5.2% in June. The national rate was also 4.4% last month.

Thanks to strong growth in the leisure and hospitality sector — 2,500 new jobs added between May and June — the county saw a modest month-over-month gain of 200 jobs.

It’s a typical June, say analysts, as teachers take a break from their jobs, and hotels, casinos, theme parks, bars and restaurants gear up for the always critical summer season. Within the leisure and hospitality sector, lodging and food services accounted for more than 60% of the job gains, according to the state report released on Friday.

“You always see this shift in the labor market in summer, and June is the beginning of that,” said Daniel Enemark, chief economist of the San Diego Regional Policy and Innovation Center. “The same pattern will continue into July. We’ll see even more leisure and hospitality jobs added, a little bit more in August. And the same thing with schools. You’ll see even more job losses in July, and then eventually in August, we’ll see those jobs start to pick up again.”

It’s common, he said, to see a half percentage point drop in the unemployment rate between May and June. Enemark noted, though, that once the jobless rates for the two months are adjusted for seasonal fluctuations, the difference is nominal — 4.5% for May and 4.4% for June.

What does trouble him, he said, is the outsized growth in the healthcare and social assistance sector compared to the remainder of the job market. Between June 2025 and June 2026, the healthcare category added 17,400 jobs, while the rest of the economy lost 1,000 jobs, he said. Even more striking, said Enemark, are the 67,000 jobs added within healthcare and social assistance since February 2020, compared to a job loss of 12,900 for the rest of the economy during that same period.

“Our economy seems to be very, very dependent on healthcare and that’s not really ideal,” he said. “You’d like to have a more diversified economy where lots of different sectors are growing, and that’s not necessarily what we are seeing, so that’s a cause for concern.”

Overall, June employment increased year over year by 16,700. The biggest contributors were health services, and leisure and hospitality, which gained 7,300 jobs over the last year.

Six sectors were responsible for year-over-year job losses of 14,800, led by government, with a decline of 8,500 jobs, most of those coming from the federal government. Construction and information saw the next largest declines, accounting for 3,700 fewer jobs.

Phil Blair, co-founder of Manpower West Staffing, says he is seeing hiring tick up in his own business, which is a good sign.

“Employers are looking for specific talent. They can’t find who they need on their own, so they’re coming to us to do a deeper dive,” Blair said. “We’re also seeing some companies that have put off projects because they’ve been worried about inflation, grant cuts, and they go, ‘Hey, we can’t wait any longer. We’ve got to move forward.’ So we’re seeing companies start to move, where they’ve been very hesitant to do it before.”

While lodging and food places were a standout for hiring last month, that doesn’t mean all hotels are on a hiring spree, says Robert Gleason, CEO of Evans Hotels, which includes the Catamaran and Bahia resorts on Mission Bay and the Lodge at Torrey Pines. Countywide, hotel occupancy is up slightly compared to last year at this time, but Evans Hotels is hiring fewer people than it did a year ago, he said.

“Occupancy is still not back to what it was pre-pandemic, but it is higher than last year. and that’s what drives employment,” said Gleason, who also chairs the San Diego County Lodging Association. You also have Gaylord (Pacific Resort & Convention Center) in the marketplace, and they were hiring last year.

“Other things are also going on. There’s a lot of concern around the status of immigrant workers, particularly Haitian refugees, so there is some hiring in anticipation of those employees losing their temporary protective status. People are still traveling, but it’s a little shakier this summer than it’s been, and headwinds like gas prices affect the cost of everything,” he said.

Despite year-over-year growth in jobs, the county’s overall labor force — which includes the employed as well as the unemployed who are looking for work — continues to decline. The total was 1,640,500 last month, down more than 23,000 over the last year. The size of the labor force, said Enemark, peaked in April of 2025.

“The problem is people are living longer and having fewer kids, and our population is aging,” he said. “We’ve also had a significant decline in immigration over the last year. At the end of the day, the shrinking labor force means there are fewer people out there who are earning money, and that means a smaller economy.”

Compared with other parts of California, San Diego County’s jobless rate of 4.4% was about in the middle.

The unemployment rate was 5.3% in Los Angeles County, 4.1% in Orange County, 3.7% in San Francisco County, 4% in Santa Clara County, 5.2% in Santa Cruz County and 5.4% in Riverside County.