Federal Workforce Cuts to Rattle San Diego’s Steady Employment

Policy & Innovation Center Chief Economist Analyzes Recent Data on Unemployment Rates

SAN DIEGO (April 7, 2025) — he unemployment rate in San Diego County decreased slightly last month, from 4.5% in January to 4.4% in March, according to new data released by the California Employment Development Department. 

Policy & Innovation Center (PIC) Chief Economist Dr. Daniel Enemark calculates that after accounting for seasonal trends, the adjusted unemployment rate held steady at 4.3% in February.  

The labor force grew, as it has in February in 34 of the 36 years since data was first collected. There was a drop in retail employment, which is also expected in February after the holiday season. This was nothing out of the ordinary and not a response to economic shocks such as tariffs, federal layoffs, or decreased federal spending on grants and programs. All these developments are likely to impact future jobs numbers, but the most recent data was collected in the second week of February, before most of these developments took place. 

That said, a national outsourcing firm that tracks all layoff reports across the country recently reported the highest February layoffs since 2009, affecting both public and private sector businesses, especially in retail and tech. California has not seen nearly the same surge in layoffs as the Midwest and East Coast, but the data are tied to the location of a company’s headquarters, so they may not always reflect local layoffs conducted by national firms. 

These numbers showed 62,000 federal layoffs — over 400 times the layoffs from the same month last year— but the Trump administration has even bigger cuts in mind, and is attempting to fire all 200,000 employees who were recently hired or promoted (and therefore easier to lay off because by government rules they are in a “probationary” period). That effort is currently being challenged in the courts, though at least one agency appears to be violating federal law concerning backpay for probationary workers who were fired and then rehired by judicial order.  

February layoffs were concentrated in the D.C. area, but federal cuts are making their way through to San Diego. There are about 49,000 federal civilian jobs in San Diego County (a concentration around 50% higher than the national average) and 89,000 military personnel (4.7 times the national average), so the potential downside is significant.  

One preliminary analysis suggests that DOGE grant cancellations have targeted counties like San Diego that voted blue in the last election. And UC San Diego and SDSU both stand to lose a tremendous amount of funding for their research as NIH cuts back on the “indirect” portion of research grants (which pay for the physical spaces and other overhead costs of research and are the lifeblood of big research universities). 

About the Policy & Innovation Center
The Policy & Innovation Center is a think tank and social-impact incubator. PIC conducts research and policy analysis to identify creative solutions to our communities’ biggest problems, and builds cross-sector, multijurisdictional partnerships to advance those solutions. Founding partners include the Brookings Institution, County of San Diego, and San Diego Foundation. For more information, visit ThinkPIC.org.